Cfa Level 2 Mock Exam Am

Morning SessionCFA Level II Mock Exam 2014Specially designed as preparation for the Level II 2014 CFA Exam

The morning session of the Schweser 2014 Level II Mock Exam comprises 10 item sets. Each item set has 6 multiple-choice questions. For grading purposes, each question is worth 3 points, corresponding to the average number of minutes available per question.

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2014 Kaplan, Inc.

MORNING SESSSION SCHWESER 2014 CFA LEVEL II MOCK EXAM

2014 Kaplan, Inc. All rights reserved.

Published in 2014 by Kaplan Schweser.

Printed in the United States of America.

ISBN: 978-1-4277-4974-1 / 1-4277-4974-4

PPN: 3200-4084

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Disclaimer: Schweser study tools should be used in conjunction with the original readings as set forth by CFA Institute in their 2014 CFA Level II Study Guide. The information contained in these Notes covers topics 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. The authors of the referenced readings have not endorsed or sponsored Schweser study tools.


1. A B C

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27. A B C

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30. A B C

3. A B C

5. A B C

7. A B C

9. A B C

11. CBA

13. CBA

15. CBA

17. CBA

19. CBA

21. CBA

23. CBA

25. CBA

27. CBA

29. CBA

31. A B C

32. A B C

33. A B C

34. A B C

35. A B C

36. A B C

37. A B C

38. A B C

39. A B C

40. A B C

32. CBA

34. CBA

36. CBA

38. CBA

40. A CB

41. A B C

42. A B C

43. A B C

44. A B C

45. A B C

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60. A B C

42. A B C

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52. CBA

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60. CBA

Morning Session Answers


2014 Kaplan, Inc. Page 5

Questions 1 through 6 relate to Ethical and Professional Standards.

Antares Investment Management Case Scenario

Antares Investment Management is a mid-sized operation based in Boston, Massachusetts. Antares provides investment analysis, advice, and account management services for individuals, investment banking services for corporate clients, and manages assets for several

!"#Policies and Procedures Manual.

Antares has a research staff of 30. Antares compensates its research analysts in three ways. They receive a base amount and two bonus amounts. One bonus amount is based on the quality $%!!#!#!##!&the investment banking division.

Antares has a written policy on the independence and objectivity of its research and makes this policy available to clients and prospective clients. The policy is disseminated to all employees.

#!###!#!##

###'#&(#(hardship, are as follows:

Policy 1: All covered employees and their immediate families are prohibited from )!#!investment recommendations.

Policy 2: Covered employees are prohibited from sharing a proposed change in a securitys recommendation or its price target with the management of the subject company prior to distribution of an updated research report.

*!+/ 7'!#assess the suitability of recommended securities for their accounts.

&89!&&*9!9!"&

#"9!##!!from participating in IPOs of subject companies, but she is unsure whether it is prohibited under the CFA Standards of Practice or the Research Objectivity Standards.


2014 Kaplan, Inc.

#"8"&

Institutes Research Objectivity Standards. Scott is paying particular attention to the section regarding the selection of brokers. Scott is focused on the need to select a broker that can provide the best trade execution; however, she is also concerned about how much Antares )#!#"#)9!%"8Standards.

##)!#!""8"'

"8*/

Practice 1: Antares must require that brokers with whom they have soft dollar arrangements provide best execution.

Practice 2: Soft dollars from client-directed brokerage will not be used to provide goods and services to the client unless they aid in the investment management process.

Practice 3: For any services that both aid in the investment decision making process &-

Mary Phillips Case Scenario

\!*#&&!8)'8''&!#!!8)!'8'#)~^!')!assets: an equity index fund, a corporate bond index fund, and other assets including asset Q and asset R.

*#(#8)##Z%!)

%!*##'&8)explains that she had attempted to replicate the market portfolio of risky assets, a concept #)!\)Z

8&*#)8)/

"_/ 7'%##&9!portfolio and therefore lowers expenses in the portfolio.

#!8)&*#(8'#"^^{`|)#\*and that asset R has a beta of 1.28 relative to the market portfolio. Phillips determines that the )#)!`^#^"*^^*#(8)

Exhibit A

%+&

,Asset Class - S&P 500 T-BillsReturns 0.0573 0.1245 0.0370Variance 0.0051 ^^`~ 0.0000"8 0.0714 0.2227 0.0000


2014 Kaplan, Inc. Page 33

Exhibit B

%7:Asset Class - S&P 500 T-BillsBonds 1.0000S&P 500 0.3500 1.0000T-bills 0.0000 0.0000 1.0000*Note: The assets classes in Exhibits A and B are: Bonds = Corporate Bond Index, S&P 500 = S&P ^^(&'~^!'

(##8)&*#)assumptions underlying the capital asset pricing model (CAPM) and its resulting conclusions:

Statement 2: The CAPM assumes that an optimal portfolio can be created by knowing only expected returns, variances, and covariances of assets.

Statement 3: The CAPM provides an assets required return based on its level of !#)

2014 Kaplan, Inc.

58. As part of her analysis, Phillips needs to calculate beta for asset Q relative to the market portfolio. The beta of asset Q is to:A. 0.16. B. 0.66. C. 1.16.

~ *#(##!'expected return of asset R is to:

__ _`~ _{

60. Which of Phillipss three statements regarding the assumptions and conclusions of the capital asset pricing model (CAPM) is &?A. Statement 2.B. Statement 3.C. Statement 4.


Notes


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