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CFA Institute ESG-Investing - Certificate in ESG Investing

Page: 12 / 13
Total 618 questions

A small company based in Sweden operates in an industry that has good sustainability ratings. The company has a low ESG rating that an analyst believes to be biased. The bias would most likely result from the company's:

A.

industry.

B.

company size.

C.

geographical base of operations.

A globally aging population has resulted in the ratio between the active and inactive parts of the workforce to:

A.

decrease.

B.

remain about the same.

C.

increase.

When an external auditor’s 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

If a company faces significant environmental regulations, investors would most likely decrease the company’s:

A.

discount rate.

B.

terminal growth rate.

C.

cash flow projections.

Alignment of an investment manager's performance against a long-term ESG investor’s objectives is best achieved by which of the following?

A.

Benchmarking against the market

B.

Engaging in a monitoring dialogue frequently

C.

Early reporting of deviations from the expected investment process or style

With respect to ESG reporting:

A.

management has little discretion over ESG disclosures.

B.

larger companies face more resource constraints than smaller companies.

C.

business customers may receive ESG information that is not publicly available to investors.

Engagement is least appropriate for which of the following investment types?

A.

Private debt

B.

Infrastructure

C.

Sovereign debt

A mature company has launched a product that reduces customers' electricity usage. This should be incorporated into the company’s discounted cash flow (DCF) analysis by increasing its:

A.

cost of capital.

B.

revenue projections.

C.

required rate of return.

Under the International Corporate Governance Network's (ICGN) Global Governance Principles, a board chair's independence is most likely to be questioned if the person:

A.

is a representative of the state.

B.

has a mandate for a short tenure.

C.

is a former non-executive employee of the company.

In a request for proposal from managers, for which of the following asset classes are voting policies least likely to be considered?

A.

Active equity

B.

Active fixed income

C.

Passive/index tracking

Which of the following is an example of indirectly sourced primary ESG data?

A.

News articles

B.

Company reports

C.

Bloomberg ESG Disclosure scores

The Task Force on Climate-related Financial Disclosures (TCFD) recommends measuring carbon exposure on a:

A.

per asset basis.

B.

per company basis.

C.

portfolio-weighted basis.

Compared to other ESG strategies, fully integrated ESG strategies tend to feature:

A.

less concentrated positions.

B.

similarly concentrated positions.

C.

more concentrated positions.

Will including additional ESG constraints in a portfolio optimization model most likely affect tracking error?

A.

No

B.

Yes, it will reduce tracking error

C.

Yes, it will increase tracking error

Which of the following would most likely be the initial step when drafting a client’s investment mandate?

A.

Clarifying the client's ESG investment beliefs

B.

Defining how ESG performance will be measured

C.

Reflecting the client's investment beliefs operationally in the fund manager’s investment approach