Morning SessionCFA Level I Live Mock Exam 2014Specially designed as preparation for the Level I2014 CFACI Exam

The morning session of the Schweser 2014 Level I Mock Exam comprises 120 questions. For

-erading purposes, each question is worth 1.5 points, corresponding to the average number ofminutes available per question.

Questions

1-18t9-3233_/"445-6869-7879-8485-96

9t -r10111-116II7-t20

Minutes

27

2T

18

3615

9

18

2I9

6

Total: 180

Topic

Ethical and Professional Standards

Quantitative MethodsEconomicsF inancial Reporting and AnalysisCorporate FinancePortfolio ManagementEquity InvestmentsFixed IncomeDerivativesAlternative Investments

Do not proceed until instructed to do so.

SCHOOL OF PROFESSIONAL ANDCONTINUING EDUCATION

Start Time:

I(APLANU N IVERSITY

SCHWESER

Morning SessionCFA Level I Live Mock Exam 2014Specially designed as preparation for the Level r 2014 CFao Exam

The morning session of the Schweser 20L4 Level I Mock Exam comprises 120 questions. Forgrading purposes, each question is worth 1.5 points, corresponding to the average number ofminutes available per question.

SCHOOL OF PROFESSIONAL ANDCONTINUING EDUCATION

SCHWESER

I(APLANU N IVERSITY

MORNING SESSION SCH\TESER 2OI4 CFA LEVEL I MOCK EXAM

@2014 KapIan, Inc. All rights reserved.

Published in 20L4 by Kaplan Schweser.

Printed in the United States of America.

ISBN: 97 8-r-4277 -497|-a I 14277 -497|-X

PPN: 3200-408t O,

Required CFA Institute disclaimer: "CFA@ and Chartered Financial Analyst@ are trademarks ownedby CFA Institute. CFA Institute (formerly the Association for Investment Management and Research)does not endorse, promote, review, or warrant the accuracy of the products or services offered by KaplanSchweser."

Certain materials contained within this text are the copyrighted property of CFA Institute. The followingis the copyright disclosure for these materials: "Copyright, 2013, CFA Institute. Reproduced andrepublished from 2014 Learning Outcome Statements, Level I, II, and III questions from CFA@ ProgramMaterials, CFA Institute Standards of Professional Conduct, and CFA Institute's Global InvestmentPerformance Standards with permission from CFA Institute. All Rights Reserved."

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Disclaimer: Schweser study tools should be used in conjunction with the original readings as set forth byCFA Institute in their 20L4 CFA Level I Study Guide. The information contained in these Notes coverstopics contained in the readings referenced by CFA Institute and is believed to be accurate. However,their accuracy cannot be guaranteed nor is any warranty conveyed as to your ultimate exam success. Theauthors of the referenced readings have not endorsed or sponsored Schweser study tools.

a'

FPage 2 @2014 Kaplan, Inc.

1.

Questions 1 through 18 relate to Ethical and Professional Standards.

For a portfolio manager to accept a bonus from a client, such as a free vacation, if herperformance is good in a future period, is:

A. a violation of the Standards if the bonus is from a client and not a third-party vendor.B. a violation of the Standards unless the manager gets consent from her employer.C. not a violation of the Standards as long as the manager informs her employer that she

intends to accept the bonus.

Victor Baltz, CFA, manages the investment account of Martha Stallings, rt widow wholives off her investment accounts and is relatively risk averse. One of the securities in heraccount has a beta of 1.5 and he has also sold call options on these shares. With respect tothese actions, Baltz has:

A. violated the Standards. both b1' buying the high-beta stock and by selling the calls.B. violated the Standards b1 selling the options but not by purchasing the high-beta

stock.C. not necessarilv violated the Standards because it is the risk of the entire portfolio that

is relevant in judging suitability.

For a CF-\ Institute member to write and distribute a research report on a company that ispaid lor L'r the subject company is:

A. a r iolation of the Standards.B. not a violation of the Standards if the member discloses that the research is company

runded.

C. not a violation of the Standards if the member receives aflatfee and discloses that theresearch is company funded.

Joanna Burgess, CFA, sends all of her investor clients a report w$jch highlights industriesthe firm's research department believ.es will outperform over theiext year. She alsoincludes her firm's recommended list, which contains only the names of the 20 domesticstocks on which the firm has a buy recommendation. With respect to these actions,Burgess has:

A. not violated the Standards of Practice.B. violated the Standards by not considering suitability for her clients who received the

list.C. violated the Standards by not indicating the basic investment characteristics of the

recommended stocks.

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5. Brett Germaine is a CFAInstitute member who manages client portfolios. He has theauthority to buy and sell securities on behalf of his clients. His mother is a client andGermaine manages her trust. With respect to his mother's account, he must:

A. treat her account with a bit more care and concern than those of other clients.B. place trades in this "family" account after those of other clients but before employer

trades.C. treat her account like any other firm account and should not give her account any

advantage or disadvantage.

6. Which of the followingis most likely required of members and candidates by the CFAInstitute Code of Ethics?

A. Encourage others to practice in a professional manner.B. Judge the suitability of investments in the context of a client's overall portfolio.C. Disclose to clients and prospects the basic principles of the firm's investment

processes.

7 . Joey Balder, CFA, an employee of Flagship Investment Managers, is offered a positionas Flagship's Southtown branch supervisor. Balder is reluctant to accept the positionbecause certain compliance procedures have not been adopted in that branch. To complywith the Standards, Balder should most appropriately:

A. accept the position on condition that his concerns will be addressed.B. decline in writing to accept the supervisory position until the firm adopts appropriate

procedures.

C. discuss his concerns with management and not accept the position unless and until heis given authority over compliance procedures.

8. James Copley, CFA, a pension fund manager, receives discounted transactions costs onhis personal brokerage from a firm that executes trades for the pension fund. Copley ismost likely:

A. violating the Standard related to fair dealing.B. vioiating the Standard related to loyalty, prudence, and care.C. not violating the Standards of Practice.

9. Alan Powers, CFA, is a trader with Rogers Securities. His sister works for Potter Steeland has told him that Potter's earnings, which will be released two days from now, aresignificantly less than expectations. Powers receives a buy order for the firm's clientaccounts for a block of Potter shares. According to the Code and Standards, Powers' mostappropriate action is to:

A. enter the trade without mentioning the coming earnings disappointment.B. ask his compliance officer to place Potter stock on the firm's restricted list because he

has material nonpublic information, to avoid making the trade.C. inform only the flrm's head of trading thatthe trade would not be in clients'best

interest, without disclosing the information. {

Page 6 @2014 Kaplan, Inc.