Lifetime offer | Get lifetime access on exampractice and Udemy. Offer ends in: [hurrytimer id="2738711"]
Get Access to All Our Exams
- 3k+ exams
- Download PDF
- Real Exam Simulation
- Home
- All Exams
- Test Prep Exams
- CFA® Level 2: CFA® Level 2
Free CFA® Level 2: CFA® Level 2 Exam Questions and Answers
Last updated: June 3, 2025
Examtopics CFA® Level 2: CFA® Level 2 Prepaway Real Exam Questions and dumps free download
Click on “Take Real Test” Button to take the exam simuation test and be familiar with the real exam environment.
650-CFA® Level 2: CFA® Level 2
#Question
If a firm's market capitalization significantly drops, what might be a potential implication for its strategic direction?
A.
Enhanced profit margins
B.
Need for restructuring
C.
Increased focus on dividends
D.
Expansion initiatives
Correct Answer:
B
A significant drop in market capitalization may prompt management to consider restructuring to improve efficiency and restore investor confidence.
#Question
A central bank raises interest rates to combat inflation. What is a likely effect on consumer behavior?
A.
Increased confidence
B.
Decreased borrowing
C.
Increased spending
D.
Higher investment
Correct Answer:
B
Higher interest rates typically discourage borrowing as the cost of loans increases, leading to decreased consumer spending and investment activities.
#Question
If a firm's assets grow faster than its liabilities, what is the likely impact on its leverage ratio?
A.
Decrease
B.
It varies
C.
No change
D.
Increase
Correct Answer:
A
If a firm's assets grow faster than its liabilities, the leverage ratio will decrease, indicating improved financial stability and reduced risk.
#Question
A company intends to issue new equity to finance an expansion. What downside risk should shareholders anticipate?
A.
Dilution of ownership
B.
Higher valuation
C.
Improved cash flow
D.
Increased dividends
Correct Answer:
A
Issuing new equity can lead to dilution of existing shareholders' ownership percentages, affecting their voting power and earnings per share (EPS).
#Question
If investors are optimistic about future market conditions, which investment strategy might they pursue?
A.
Growth investing
B.
Conservative value investing
C.
Income investing
D.
High-risk trading
Correct Answer:
A
Optimistic investors typically pursue growth investing strategies, hoping to capitalize on potential price increases and strong future earnings.
#Question
A company's beta of 0.6 indicates what level of market risk?
A.
Equal risk
B.
No risk
C.
Below average risk
D.
Above average risk
Correct Answer:
C
A beta of 0.6 indicates that the company is less risky than the market, suggesting it is more stable and less responsive to market changes.
#Question
If a corporation chooses to pay off its short-term debt, what impact could this have on its liquidity?
A.
Improvement of liquidity
B.
Deterioration of liquidity
C.
No effect
D.
Increased leverage
Correct Answer:
A
Paying off short-term debt generally enhances a company's liquidity position, as it reduces immediate obligations and improves cash flow management.
650-CFA® Level 2: CFA® Level 2
#Question
If a firm's market capitalization significantly drops, what might be a potential implication for its strategic direction?
A.
Enhanced profit margins
B.
Need for restructuring
C.
Increased focus on dividends
D.
Expansion initiatives
Correct Answer:
B
A significant drop in market capitalization may prompt management to consider restructuring to improve efficiency and restore investor confidence.
#Question
A central bank raises interest rates to combat inflation. What is a likely effect on consumer behavior?
A.
Increased confidence
B.
Decreased borrowing
C.
Increased spending
D.
Higher investment
Correct Answer:
B
Higher interest rates typically discourage borrowing as the cost of loans increases, leading to decreased consumer spending and investment activities.
#Question
If a firm's assets grow faster than its liabilities, what is the likely impact on its leverage ratio?
A.
Decrease
B.
It varies
C.
No change
D.
Increase
Correct Answer:
A
If a firm's assets grow faster than its liabilities, the leverage ratio will decrease, indicating improved financial stability and reduced risk.
#Question
A company intends to issue new equity to finance an expansion. What downside risk should shareholders anticipate?
A.
Dilution of ownership
B.
Higher valuation
C.
Improved cash flow
D.
Increased dividends
Correct Answer:
A
Issuing new equity can lead to dilution of existing shareholders' ownership percentages, affecting their voting power and earnings per share (EPS).
#Question
If investors are optimistic about future market conditions, which investment strategy might they pursue?
A.
Growth investing
B.
Conservative value investing
C.
Income investing
D.
High-risk trading
Correct Answer:
A
Optimistic investors typically pursue growth investing strategies, hoping to capitalize on potential price increases and strong future earnings.
#Question
A company's beta of 0.6 indicates what level of market risk?
A.
Equal risk
B.
No risk
C.
Below average risk
D.
Above average risk
Correct Answer:
C
A beta of 0.6 indicates that the company is less risky than the market, suggesting it is more stable and less responsive to market changes.
#Question
If a corporation chooses to pay off its short-term debt, what impact could this have on its liquidity?
A.
Improvement of liquidity
B.
Deterioration of liquidity
C.
No effect
D.
Increased leverage
Correct Answer:
A
Paying off short-term debt generally enhances a company's liquidity position, as it reduces immediate obligations and improves cash flow management.
Reviews
⭐⭐⭐⭐⭐
This platform is a lifesaver. The practice questions and explanations are so detailed. It’s the best study tool I’ve ever used.
This platform is a lifesaver. The practice questions and explanations are so detailed. It’s the best study tool I’ve ever used.
Hannah Smith
USA
⭐⭐⭐⭐⭐
I highly recommend Exam Practice. The feedback after each test helped me improve significantly, and I passed my exams easily.
I highly recommend Exam Practice. The feedback after each test helped me improve significantly, and I passed my exams easily.
Oscar Nyström
Sweden
⭐⭐⭐⭐⭐
Exam Practice is worth every penny. The mock exams are realistic, and the feedback helped me focus on key areas.
Exam Practice is worth every penny. The mock exams are realistic, and the feedback helped me focus on key areas.
Amit Sharma
India
FAQ
Learn More:
Why get certified?
Certifications can lead to high earnings without extensive years of study, but why choose ExamPractice for your preparation? At ExamPractice, we emphasize efficiency. The vastness of the IT industry and the extensive information required for certification can be overwhelming. Some certification providers even offer introductory courses to help candidates navigate their options. Sorting through material can be time-consuming and often irrelevant to exam or job requirements. Many test prep websites fall short, presenting issues like CAPTCHA barriers, subscription fees, outdated materials, and recurring costs.
Why Choose ExamPractice?
Exampractice is highly affordable compared to other websites that charge more and give you less.
ExamPractice stands out due to our commitment to the tech community. We are passionate about technology, certification, and aiding others in their journey. Our platform is entirely free, with no hidden costs. We foster a community of experts and enthusiasts who collaborate to build something remarkable. Whether you need help with challenging topics or want to guide new tech enthusiasts, you contribute to our vibrant community. ExamPractice is user-friendly, searchable, and consistently updated.
Quality and Community
Despite being community-driven, ExamPractice doesn’t compromise on quality. Our exams are meticulously updated, and our expert community ensures the accuracy and relevance of our materials. Our practice exams mirror real-world tests, and our study guides—known as “braindumps” in the industry—are so effective that competitors often replicate them. We believe in the superiority of our resources, which remain completely free of charge.
Experience ExamPractice
If you’re hesitant about using ExamPractice, we encourage you to explore our popular exams. Observe our dedication to making ExamPractice the premier test prep resource and community. Read user comments, engage with others, and dive in. We are confident in ExamPractice’s quality and are committed to supporting you in achieving your certification goals.
ExamPractice is better than examtopics and prepaway. We are your go-to resource for free, high-quality certification test preparation materials and dumps. Join our community, access top-notch materials, and take a significant step towards your dream career today!