Free Practice CFA Institute ESG-Investing Exam Questions 2025

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Total 667 Questions | Updated On: Jun 05, 2025

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Question 1

Performance materiality:

A : is usually higher than overall materiality

B : is set lower when financial controls are strong.

C : can indicate the auditor's level of trust in a company’s financial systems.

Answer: A

Question 2

Formal corporate governance codes are most likely to:

A : be found in all major world markets.

B : call for serious consequences for non-compliant organizations.

C : be interpreted by proxy advisory firms when corporate compliance is assessed.

Answer: A

Question 3

When an external auditors performance materiality level is 60% of its overall materiality threshold, the auditor most likely:

A : Has a low level of confidence in the company's financial controls

B : Will apply tailored audit procedures for the smallest 40% of the company's segments

C : Uses a sample that covers 60% of the total number of the company's transactions during the financial year

Answer: A

Question 4

Upon conducting a comprehensive risk assessment, an analyst identifies significant risk factors pertaining to a company's social performance. Given the potential impact of these social risks on the company's future financial performance, how would the analyst most likely adjust the cash flow estimates within your financial model?

A : A lower discount rate and higher liabilities

B : A higher discount rate and higher liabilities

C : A higher discount rate and lower liabilities

Answer: B

Question 5

Investors focused on the environmental impact of companies must carefully consider sectors with high reliance on natural resources and ecosystem services. Which of the following industries are characteristically associated with operations that can pose significant threats to biodiversity?

A : airlines and travel

B : banking and insurance

C : agriculture and food production

Answer: C

Page: 1 / 134

Total 667 Questions | Updated On: Jun 05, 2025

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