CFA Institute Sustainable-Investing Exam Practice Test Instant Access

Question 1

Which of the following ESG investment approaches would most appropriately be used to construct a balanced and diversified portfolio?

AThematic investing

BScreening on a relative basis

CScreening on an absolute basis

Answer : B

Question 2

A fund focused on investing in the best ESG performers relative to industry peers across a range of different criteria is most likely engaged in:

Apositive screening only.

Bnorms-based screening only.

Cboth positive screening and norms-based screening.

Answer : C

Question 3

An investment analyst evaluates an oil producer and identifies climate change policy as a significant sector-wide risk for the company. The analyst notes that government policies subsidize electric alternatives for transportation. Which adjustment might the analyst make to incorporate this information into a discounted cash flow (DCF) analysis? The analyst might:

Adecrease the discount rate only.

Breduce revenue projections only.

Cdecrease the discount rate or reduce revenue projections.

Answer : B

Question 4

Analyzing a portfolio's social impact exposure is best achieved by first understanding material social topics at:

Athe company and country levels, then the sector level

Bthe country and sector levels, then the company level

Cthe company and sector levels, then the country level

Answer : B

Question 5

Which of the following statements about quantitative ESG analysis is most accurate?

AQuantitative ESG analysis is only based on third-party data

BThe length of the timeseries for ESG data is shorter than for financial data

CApplication programming interfaces (APIs) are used to bring structure to the ESG dataset

Answer : B

Question 6

Which of the following ESG megatrends relates to issues around human rights, including free speech, and tensions between big social media companies and sovereign nation-states that point in the direction of a possible new ordering of societal power?

ATechnological innovation

BEmerging markets and urbanization

CDemographic changes and wealth inequality

Answer : A

Question 7

A governance structure that features non-board members on the nominations committee is most likely present in:

AItaly.

BSweden.

CAustralia.

Answer : B

CFA Institute Sustainable Investing Certificate(CFA-SIC) Sustainable-Investing Exam Practice Test