Free CFA® Level I diagnostic test

12 questions across every Level I topic, scored on this page. No account, no email, nothing stored. You will see which topics to start with.

Questions are drawn in proportion to each topic’s weight in the exam and change each month. Pick an answer for each, then check them all at once.

Question 1 of 12 · Ethical and Professional Standards

A member writes that they hold 'a CFA'. What is wrong with that?

The mark is used as a noun, not an adjective Nothing, it is a standard formulation It understates the designation

Answer and explanation

Answer: A. The mark is used as a noun, not an adjective

Standard VII(B) requires the marks to function as adjectives. What the member holds is the CFA charter, and what they are is a CFA charterholder.

Why the other options are wrong:

B. Nothing, it is a standard formulation — Widespread usage does not make it correct, and the Standard sets out the proper form.
C. It understates the designation — The meaning conveyed is accurate enough; the objection is grammatical rather than about degree.

Question 2 of 12 · Ethical and Professional Standards

Presenting a composite return that excludes the firm's worst-performing accounts breaches:

confidentiality, III(E) performance presentation, III(D) suitability, III(C)

Answer and explanation

Answer: B. performance presentation, III(D)

Standard III(D) Performance Presentation requires a fair, accurate and complete picture. Dropping the weakest accounts flatters the record while every remaining figure stays true.

Why the other options are wrong:

A. confidentiality, III(E) — Standard III(E) protects what clients disclose, and excluding accounts reveals nothing about them.
C. suitability, III(C) — Standard III(C) concerns whether an investment fits a client rather than how a record is assembled.

Question 3 of 12 · Equity Investments

In an asset pricing model, what does a broad index stand in for?

The risk-free rate The investor's liability stream The systematic risk factor, or market portfolio

Answer and explanation

Answer: C. The systematic risk factor, or market portfolio

It is a proxy, and the model's conclusions inherit whatever the proxy gets wrong.

Why the other options are wrong:

A. The risk-free rate — That comes from short-dated government securities and is the one input an equity index cannot supply.
B. The investor's liability stream — Liabilities are specific to the investor and belong to asset-liability work, not to the market factor in a pricing model.

Question 4 of 12 · Equity Investments

A share traded 420,000, 380,000, 510,000, 290,000 and 400,000 shares over five days. A fund holds 1.2 million shares and will trade no more than 25% of average daily volume per day. How many days will it need to sell the position?

3 days 2.4 days 12 days

Answer and explanation

Answer: C. 12 days

ADV = 2,000,000 / 5 = 400,000. Daily sales limit = 0.25 x 400,000 = 100,000. Days = 1,200,000 / 100,000 = 12.

Why the other options are wrong:

A. 3 days — Dividing by the full average daily volume of 400,000 shares. The 25% participation limit cuts daily sales to 100,000.
B. 2.4 days — Applying the 25% limit to the five-day total of 2.0 million shares instead of the daily average.

Question 5 of 12 · Financial Statement Analysis

Pemberton Capital Partners values three holdings at the reporting date. Holding 1 is a listed company's shares, priced from the exchange's closing quote. Holding 2 is a corporate bond that rarely trades, so it is priced from the yields of similar bonds that do trade. Holding 3 is a stake in a private company, valued with a discounted cash flow model built on management's own projections. Which holding falls in Level 3 of the fair value hierarchy?

The stake valued from management's projections The bond priced from similar bonds' yields The shares priced at the exchange quote

Answer and explanation

Answer: A. The stake valued from management's projections

The fair value hierarchy ranks measurements by how far they depend on the preparer's own assumptions. Level 1 uses quoted prices in active markets for identical assets, which is the exchange-listed shares. Level 2 uses inputs other than those quotes that can be observed, such as yields on comparable bonds, which is the thinly traded bond. Level 3 relies on unobservable inputs, here management's projections feeding a discounted cash flow model for the private company. The Level 3 holding is the least reliable and the one an analyst should examine most carefully.

Why the other options are wrong:

B. The bond priced from similar bonds' yields — This is Level 2. The inputs are observable, but they come from comparable instruments rather than a quoted price for the identical bond, so some adjustment is needed.
C. The shares priced at the exchange quote — This is Level 1, the most reliable tier: a quoted price in an active market for the identical asset.

Question 6 of 12 · Fixed Income

Whom does the trustee act for?

The bondholders The issuer The rating agency

Answer and explanation

Answer: A. The bondholders

Dispersed holders cannot each enforce the contract, so enforcement is concentrated in one appointed party.

Why the other options are wrong:

B. The issuer — The trustee is appointed under the indenture but acts for the holders, including against the issuer when necessary.
C. The rating agency — The agency has no rights under the indenture and nobody acts on its behalf.

Question 7 of 12 · Quantitative Methods

An algorithm sorts customers into groups that nobody defined in advance. What is it doing?

Supervised classification Unsupervised learning Overfitting

Answer and explanation

Answer: B. Unsupervised learning

With no labels to predict, the algorithm can only look for structure already in the data. The groups it returns are a hypothesis about that structure, and whether they mean anything is a separate judgement.

Why the other options are wrong:

A. Supervised classification — Classification needs the categories defined beforehand and examples of each. Here there are neither.
C. Overfitting — Overfitting is a way any model can fail by memorising its training data. It is not a task a model performs.

Question 8 of 12 · Portfolio Management

An investor refuses to sell a stock until it returns to the price they paid for it. Which bias is at work?

Anchoring on the purchase price Overconfidence Availability bias

Answer and explanation

Answer: A. Anchoring on the purchase price

The purchase price is irrelevant to the stock's future prospects, but it becomes a reference point the investor cannot let go of. The market has no memory of what you paid.

Why the other options are wrong:

B. Overconfidence — Would show as excessive trading and oversized positions, not as immobility around one number.
C. Availability bias — Would mean over-weighting a vivid recent event. The purchase price is neither vivid nor recent — it is simply personal.

Question 9 of 12 · Alternative Investments

In a default, the holder of real estate debt relative to the equity owner:

shares losses equally with the equity owner has the prior claim on the property ranks behind the equity owner

Answer and explanation

Answer: B. has the prior claim on the property

Debt is repaid before equity receives anything, which is why the debt position is the lower-risk, lower-return end of the same asset.

Why the other options are wrong:

A. shares losses equally with the equity owner — The priority of claims exists precisely so losses are not shared equally.
C. ranks behind the equity owner — Inverts the capital structure. The lender is paid first and the owner takes what is left.

Question 10 of 12 · Corporate Issuers

Which cash flows are discounted in a net present value calculation?

Accounting profits Total company cash flows The project's incremental after-tax cash flows

Answer and explanation

Answer: C. The project's incremental after-tax cash flows

Incremental means the difference the project makes, which excludes anything that would have happened anyway.

Why the other options are wrong:

A. Accounting profits — Profit includes non-cash charges and excludes capital spending, neither of which belongs in a cash calculation.
B. Total company cash flows — The decision turns on what changes because of the project, not on the whole company's position.

Question 11 of 12 · Derivatives

A put has an exercise price of 40 and the underlying is at 45. What is its moneyness?

Out of the money In the money At the money

Answer and explanation

Answer: A. Out of the money

Exercising the right to sell at forty when the market pays forty-five would make no sense.

Why the other options are wrong:

B. In the money — Would require the underlying below 40. Selling at 40 when the market pays 45 is a loss.
C. At the money — That would need the underlying at exactly 40.

Question 12 of 12 · Economics

A currency's forward rate is above its spot rate, quoted price/base. What does this tell you about the base currency?

It is expected to be devalued It is trading at a forward discount It is trading at a forward premium

Answer and explanation

Answer: C. It is trading at a forward premium

A forward price above spot means the base currency buys more of the price currency for future delivery, which is a forward premium. It reflects the interest rate differential, not a forecast of appreciation.

Why the other options are wrong:

A. It is expected to be devalued — Devaluation is a policy decision under a fixed regime. A forward premium reflects an interest differential, not an expectation of that kind.
B. It is trading at a forward discount — A discount is a forward rate below spot. Here it is above.

Each question’s explanation opens when you check.

What the questions cover

The 12 questions follow the exam’s topic weights. The 2027 Level I exam weights, from CFA Institute’s published ranges, are:

Topic	Weight in the exam
Ethical and Professional Standards	10–15%
Equity Investments	11–14%
Financial Statement Analysis	11–14%
Fixed Income	11–14%
Quantitative Methods	11–14%
Portfolio Management	8–12%
Alternative Investments	6–9%
Corporate Issuers	6–9%
Derivatives	6–9%
Economics	6–9%

How to use your result

Treat the topics you missed as where to start, and the topics you got right as “not yet shown to be weak”, not as done: one correct answer on a topic is weak evidence. A mock exam of 180 questions is a far firmer measure; see why a mock score is a range and the mock-score readiness checker.

Questions people ask

How many questions is the CFA Level I diagnostic test?

This one has 12, drawn across the 10 topics in proportion to their weight in the exam. The real exam has 180 questions in 4 hours 30 minutes, about 1.5 minutes each.

Is my score on a short quiz reliable?

Only roughly. 12 questions is a small sample, so the result shows the range of levels your score is consistent with rather than a single number. Use it to decide what to study first, not whether you are ready.

What is the difference between this and the diagnostic in the app?

This quiz is a free taster with nothing to sign up for and nothing stored. The app's diagnostic is adaptive: each answer changes what is asked next, and the result becomes a study plan weighted by what you do not yet know.

Are these real CFA exam questions?

No. The questions are written for Charta Learning and are not CFA Institute material. They follow the style of the exam: a short stem and three options.

The app's diagnostic adapts as you answer and turns the result into a study plan, free.

Take the full diagnostic →