Free CFA® Level 3 Exam Questions and Answers
CFA® Level 3 is one of the Test Prep tests covered here. These are standardised tests from different organisations rather than one programme — the Praxis series for US teacher licensure is awarded by ETS, and admissions and licensure tests alongside it come from other bodies entirely, each with its own format and scoring.
The first 10 questions on this page are free to read, answers included — no account and no card. A plan opens the rest of the bank, the full timed practice test and your weak-topic reporting.
Last updated: August 29, 2026
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- 1000+
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- First 10, with answers
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- 130 mins · 70%
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- Multiple choice
Recommended: Switch to Test Mode to start a practice test that simulates the real exam experience.
Question #1
A portfolio manager is evaluating two securities: Security X has a higher return but also a higher volatility than Security Y. What should the manager prioritize?
Please select an optionIncorrectCorrect answer: D
The manager should focus on risk-adjusted return as it helps evaluate the return in relation to the risk taken.
Was this answer correct?Question #2
During a quarterly review, a client expresses concern about the underperformance of their bond portfolio. What is the first step you should take?
Please select an optionIncorrectCorrect answer: D
The first step should be to review benchmarks to determine if the underperformance is relative or absolute.
Was this answer correct?Question #3
After an investment in a new startup, you notice rapid growth in revenue but also increasing cash burn. What should you investigate next?
Please select an optionIncorrectCorrect answer: C
Investigating customer acquisition costs can indicate the sustainability of growth against the cash burn rate.
Was this answer correct?Question #4
An investor wants to pivot from fixed income to equities due to rising interest rates. What is a potential risk they should consider?
Please select an optionIncorrectCorrect answer: D
Market volatility is a significant risk when shifting to equities, especially in unstable economic environments.
Was this answer correct?Question #5
A pension fund is underfunded and facing long-term liabilities. What strategy might they consider to mitigate risks?
Please select an optionIncorrectCorrect answer: A
Using derivatives to hedge liabilities can help manage risks associated with being underfunded.
Was this answer correct?Question #6
You are managing a diversified portfolio that includes international stocks. What economic factor could most affect your portfolio's performance?
Please select an optionIncorrectCorrect answer: B
Foreign exchange rates can have a significant impact on the value of international stocks in your portfolio.
Was this answer correct?Question #7
A client wants to invest passively in a low-cost index fund. What should you explain about this investment strategy?
Please select an optionIncorrectCorrect answer: B
While passive investing is cost-effective, it does expose investors to market risk, including potential declines.
Was this answer correct?Question #8
In a client meeting, you notice the client has little understanding of investment terms. What should your focus be?
Please select an optionIncorrectCorrect answer: B
Simplifying terminology will help the client better understand their investments and your recommendations.
Was this answer correct?Question #9
A key financial ratio, the current ratio, indicates what about a company's operations?
Please select an optionIncorrectCorrect answer: A
The current ratio measures a company's ability to cover short-term liabilities with its short-term assets, indicating liquidity.
Was this answer correct?Question #10
During the annual portfolio review, which of the following factors should be assessed to determine reallocation needs?
Please select an optionIncorrectCorrect answer: B
Changes in the macroeconomic environment can significantly impact asset allocation decisions and should be assessed during reviews.
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FAQ
- Q1: What is the CFA® Level 3 exam?
- A: CFA® Level 3 is a Test Prep certification exam. Judging by the questions in our bank, it concentrates on portfolio, investor, investment, ratio and market.
- Q2: What topics does the CFA® Level 3 exam cover?
- A: Questions in our CFA® Level 3 bank cluster around portfolio, investor, investment, ratio, market, fund, bonds and retirement. Working through the full set is the quickest way to find which of these you are weakest on.
- Q3: How should I prepare for CFA® Level 3?
- A: Work through the CFA® Level 3 practice questions here, checking your answer on each one, then sit the practice test to rehearse the exam under timed conditions before the real thing.
- Q4: Are these real CFA® Level 3 exam questions?
- A: They are drawn from officially released past questions and from community members who have sat CFA® Level 3. Answers are verified and updated weekly.
- Q5: Where do I register for the CFA® Level 3 exam?
- A: Register through Test Prep directly. Exampractice is not affiliated with Test Prep and does not administer the exam.
- Q6: Is there a free CFA® Level 3 sample?
- A: Yes. Every CFA® Level 3 page shows a free sample of real questions. Upgrading opens the full bank and the practice test.