The CFA exam is one of the most difficult and respected finance exams in the world. It is offered in three levels—Level I, Level II, and Level III—each of which tests various skills with respect to investment, ethics, and financial analysis. Level I is designed to test candidates on the most basic topics, including quantitative methods, financial reporting, economics, and ethics. There are multiple-choice questions that test not just memory but also understanding. The preparations require time, effort, and smart strategies. Working through CFA Level 1 sample questions is among the most essential parts of the preparation. These questions are usually made under conditions that are most similar to the real exam concerning difficulty, topics, and language. They help candidates understand the framing of questions and the type of logic that will be needed to solve them. By consistently practicing various sample question sets, candidates can really develop their time management skills to know when to leave a question and come back later if there are any tricky choices that they are doubtful about and generally enhance their accuracy.
Best Sources for CFA Level 1 Practice Questions
CFA Level 1 practice questions are easy to find, but not all are helpful. Some sites copy old questions or give wrong answers. It is essential to use only trusted and updated sources.
CFA Institute’s Official Curriculum
The CFA Institute is the best place to start. They give real questions in their books. Each chapter has end-of-topic practice sets. These follow the CFA Level 1 exam pattern and test exact learning outcomes.
Kaplan Schweser QBank
Schweser’s CFA Level 1 question bank is popular with many students. It has over 3000 questions. They sort the questions by topic and difficulty. Their dashboard tracks your weak areas and helps you improve.
AnalystPrep and IFT
These two platforms give daily quizzes, chapter-wise tests, and detailed feedback. AnalystPrep has CFA Level 1 online questions in MCQ format, and IFT provides CFA Level 1 PDF questions that match the real exam structure.
Wiley Efficient Learning
Wiley offers topic-wise tests and live dashboards. Students can see where they stand. Past CFA charterholders write their CFA Level 1 test questions.
FinQuiz, 300Hours, and Reddit
Free community platforms like Reddit’s r/CFA and 300Hours let users download CFA Level 1 sample papers and CFA Level 1 past papers. FinQuiz gives trial access to CFA Level 1 solved questions and mini quizzes.
CFA Level 1 Sample Questions with Answers
This section shares real sample questions and answers. These come from high-yield topics like ethics, quant methods, FRA, and portfolio management. Solving these helps improve your accuracy. CFA Level 1 sample questions with answers are the most powerful tool for students preparing for the CFA exam. These questions match the real CFA exam in structure, tone, and logic. They build the right mindset and help identify topic strengths and weaknesses. Here are some real examples from the CFA Institute’s official question bank with brief explanations. These cover essential topics like portfolio management, ethics, financial reporting, and quantitative methods.
Question 1: Portfolio Management
Which of the following types of investors is most likely to have the most extended investment time horizon?
A. Insurance company
B. College endowment fund
C. Bank trust department
Correct Answer: B. College endowment fund
Explanation:
A college endowment fund invests for future generations and has no short-term liabilities. That makes its investment time horizon much longer than that of an insurance company, which must meet payout obligations or a bank trust that handles varied short-term distributions. Long horizons usually allow for greater risk-taking and long-term planning.
Question 2: Ethical and Professional Standards
According to the CFA Institute Code of Ethics and Standards of Professional Conduct, a CFA charter holder is least likely required to:
A. Disclose all potential conflicts of interest
B. Put client interests before employer interests
C. Guarantee investment performance to clients
Correct Answer: C. Guarantee investment performance to clients
Explanation:
CFA charterholders do not guarantee investment returns. Such behavior would violate ethical standards such as risks and uncertainties inherent in financial markets. Rather, they must disclose all conflicts and always put the interests of their clients ahead of their own and their employer’s.
Question 3: Financial Reporting and Analysis (FRA)
Under U.S. GAAP, which inventory costing method is not permitted?
A. FIFO
B. Weighted Average Cost
C. LIFO
Correct Answer: None (Trick Question—All are permitted under U.S. GAAP, but LIFO is not permitted under IFRS)
Clarification:
U.S. GAAP allows FIFO, LIFO, and weighted average. However, LIFO is not under IFRS. This difference affects reported net income and tax calculations. Understanding this helps in comparing global financial statements.
Question 4: Quantitative Methods
What is the standard deviation of returns if the variance is 0.0025?
A. 0.05
B. 0.025
C. 0.0025
Correct Answer: A. 0.05
Explanation:
Standard deviation is the square root of variance. √0.0025 = 0.05. This value measures risk and volatility in investments. High standard deviation means high variability in returns.
Question 5: Economics
If a central bank wants to decrease inflation, what policy action is it most likely to take?
A. Lower the reserve ratio
B. Buy government securities
C. Increase interest rates
Correct Answer: C. Increase interest rates
Explanation:
To fight inflation, central banks raise interest rates. Higher rates reduce consumer spending and borrowing. This slows down the economy, lowering inflation pressure. Buying securities or lowering reserve ratios stimulates, not mitigates, inflation.
Question 6: Corporate Finance
What is a corporation’s primary goal from the shareholder theory perspective?
A. Maximize employee benefits
B. Minimize taxes
C. Maximize shareholder wealth
Correct Answer: C. Maximize shareholder wealth
Explanation:
Shareholder theory focuses on increasing the firm’s value for its owners. Maximizing wealth aligns with financial return expectations. Though ethical and social duties are essential, profit is the primary focus in shareholder models.
Question 7: Derivatives
What is the primary purpose of using derivatives in portfolio management?
A. To maximize portfolio returns
B. To hedge risk
C. To increase portfolio liquidity
Correct Answer: B. To hedge risk
Explanation:
Derivatives like options and futures are used to offset potential losses. Portfolio managers use them to reduce exposure to risks like interest rates or currency movements.
Question 8: Equity Investments
Which of the following best describes a primary market transaction?
A. Investor buys shares from another investor on a stock exchange
B. Investor purchases newly issued shares in an IPO
C. A hedge fund sells equity short in a public market
Correct Answer: B. Investor purchases newly issued shares in an IPO
Explanation:
Primary markets deal with the sale of new securities. An IPO (Initial Public Offering) is the best example of a primary market transaction where funds go directly to the issuing company.
Question 9: Fixed Income
What happens to the price of a bond when market interest rates rise?
A. Bond price increases
B. Bond price remains unchanged
C. Bond price decreases
Correct Answer: C. Bond price decreases
Explanation:
Bond prices and interest rates move in opposite directions. When rates rise, new bonds offer better returns, so existing bonds with lower rates fall in price.
Question 10: Alternative Investments
Real estate investments are most likely to provide which of the following benefits?
A. Low transaction costs
B. High liquidity
C. Inflation protection
Correct Answer: C. Inflation protection
Explanation:
Real estate values often rise with inflation, making it a good hedge. However, it has low liquidity and high transaction costs.
Question 11: Corporate Finance
Which of the following increases a company’s weighted average cost of capital (WACC)?
A. Issuing more debt
B. Higher tax rates
C. Higher equity cost
Correct Answer: C. Higher equity cost
Explanation:
The cost of equity is usually higher than debt. If the price of equity increases, the overall WACC rises because equity forms a part of the capital structure.
Question 12: Quantitative Methods
If a stock’s expected return is 12% and its beta is 1.5, what is the risk-free rate when the market return is 10%?
A. 4%
B. 3%
C. 6%
Correct Answer: A. 4%
Explanation:
Using CAPM:
Expected return = Rf + β(Market return – Rf)
12% = Rf + 1.5(10% – Rf)
Solving gives Rf = 4%
Question 13: Economics—Currency Exchange
If the domestic currency appreciates, what will happen to the price of exports from the domestic country?
A. Export prices will rise
B. Export prices will fall
C. Export prices stay the same
Correct Answer: A. Export prices will rise
Explanation:
When domestic currency strengthens, foreign buyers must pay more in their currency, making exports more expensive and less competitive.
Question 14: Financial Reporting—Cash Flow
Which activity is most likely included in a firm’s financing cash flows?
A. Buying inventory
B. Paying interest on a loan
C. Issuing new shares
Correct Answer: C. Issuing new shares
Explanation:
Cash from issuing shares or paying dividends is classified under financing activities. Interest payments are considered operating activities under U.S. GAAP.
Question 15: Ethics—Soft Dollar Arrangements
According to the Standards of Professional Conduct, soft dollar arrangements must benefit whom?
A. The broker
B. The investment firm
C. The client
Correct Answer: C. The client
Explanation:
To meet the fiduciary standard, all soft dollar benefits must be directed to the client’s advantage, not the investment manager or broker.
Question 16: Portfolio Concepts
Which type of risk does a diversified portfolio reduce?
A. Systematic
B. Market
C. Unsystematic
Correct Answer: C. Unsystematic
Explanation:
Diversification eliminates unsystematic (company-specific) risk. Systematic risk (market risk) remains even in diversified portfolios.
These official CFA Level 1 sample questions are directly taken from the CFA Institute and aligned with the latest CFA Level 1 exam questions. Use them to evaluate your readiness and to get a real feel for the exam’s logic and structure. Practice them daily using platforms that offer CFA Level 1 practice exam free, CFA Level 1 question papers, or CFA Level 1 mock test materials.
How to Effectively Use CFA Level 1 Mock Exams?
Mock exams prepare you for real CFA exam pressure. A CFA Level 1 mock test helps you practice time management, question types, and complete curriculum review. Follow these methods to gain the best results.
Simulate the Exam Environment
Practice in a quiet room with no phone or breaks. Use a timer to give yourself 4.5 hours for two sessions. Stick to the CFA 1 exam guide rules while practicing.
Review Every Answer
After the test, study your mistakes. Look at each wrong answer. Check why it’s bad and why the correct one works. This improves retention and reduces repeated errors.
Focus on Weak Topics
Use your results to spot weak areas. Are you weak in ethics or equity? Use the CFA Level 1 question bank to take small quizzes on those.
Retake for Improvement
Retake the same mock test after two weeks. Try to beat your last score. This shows your progress and boosts your memory.
Use Mixed Topic Sets
Don’t only study one subject per test. Real exams mix all topics. Use platforms offering CFA Level 1 questions across topics like FRA + Quant + Ethics.
CFA Exam Pattern
The CFA exam is split into three levels—Level I, Level II, and Level III. Each level is harder than the one before and tests different financial skills. The exams are held online and follow a strict structure. All levels include ethics, finance, and investment topics.
CFA Level I Exam Pattern
Level I uses only multiple-choice questions. There are 180 questions, divided into two equal sessions. Each session is 2 hours and 15 minutes long. The focus is on basic concepts, formulas, and ethics.
CFA Level II Exam Pattern
Level II includes 88 case-based questions called “vignettes.” Each vignette is followed by several questions. The exam is split into two 2-hour-12-minute sessions. It tests deeper understanding and application of finance topics.
CFA Level III Exam Pattern
Level III has two parts: essay questions and vignette-based multiple-choice. The essays test how well you explain financial decisions. The total exam time is 4 hours and 24 minutes. It focuses on portfolio management and wealth planning.
CFA Exam Pattern Summary Table
| Level | Format | Total Questions | Duration (hrs) | Main Focus Areas |
| Level I | Multiple Choice | 180 (90 per session) | 4 hrs 30 mins | Basics of finance, ethics, tools |
| Level II | Vignette-based MCQs | 88 (44 per session) | 4 hrs 24 mins | Valuation, asset classes, financial reports |
| Level III | Essay + Vignette-based MCQs | 8–12 essays + 44 MCQs | 4 hrs 24 mins | Portfolio strategy, ethics, client planning |
CFA Level 1 Sample Questions FAQs
1. Where can I find real CFA level 1 sample questions with answers?
You can find them in the CFA Institute’s books, Kaplan Schweser’s QBank, AnalystPrep, and Wiley test banks. These match the exam style closely and provide solutions with explanations.
2. What is the best way to use a CFA level 1 mock test?
Take complete mock exams in a quiet environment and simulate real exam time. After finishing, review each question, understand your errors, and retake weak topics using a focused CFA level 1 question set.
3. How are CFA level 1 multiple choice questions designed?
Each question has three choices (A, B, C) with only one correct answer. They test conceptual understanding, not memory. Questions may contain charts, formulas, or scenario-based setups.
4. Can I find a CFA level 1 practice exam free of cost?
Platforms like IFT, FinQuiz, 300Hours, and CFA Institute offer free sample papers. Reddit’s r/CFA also has many links to free tests shared by past candidates.
5. Is it worth solving the CFA level 1 past paper?
Yes, past papers from CFA level 1 help you understand old question styles and difficulty levels. Although CFA Institute does not release actual past papers, mocks created by top educators closely match real exams.
