CFA Institute Certificate in ESG Investing Exam Practice Test

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Total 468 questions
Question 1

A common characteristic of the EU Paris-Aligned Benchmarks and the EU Climate Transition Benchmarks is that they both:



Answer : C

Both the EU Paris-Aligned Benchmarks and the EU Climate Transition Benchmarks require an initial reduction in carbon emissions intensity in the starting year, to ensure alignment with climate goals and the Paris Agreement. (ESGTextBook[PallasCatFin], Chapter 3, Page 153)


Question 2

Which of the following is a challenge of integrating ESG analysis into investment processes?



Answer : A

One of the main challenges in integrating ESG analysis into investment processes is the cultural challenges and biases within investment firms. Some firms may resist adopting ESG practices due to entrenched views or conflicting priorities. (ESGTextBook[PallasCatFin], Chapter 7, Page 319)


Question 3

Tools that evaluate companies, countries, and bonds based on their exposure or involvement-specific factors, sectors, products, or services are referred to as:



Answer : C

ESG screening tools evaluate investments by assessing their exposure to or involvement in specific ESG factors, sectors, products, or services. This screening process is a key element in responsible investing. (ESGTextBook[PallasCatFin], Chapter 7, Page 364)


Question 4

Which of the following is an example of a social factor affecting external stakeholders?



Answer : A

Human rights are a social factor that primarily affects external stakeholders, such as communities or populations impacted by a company's operations. (ESGTextBook[PallasCatFin], Chapter 4, Page 192)


Question 5

For private equity investments, an especially important ESG factor is:



Answer : C

Governance is particularly important in private equity investments, as governance structures directly influence the management and operation of portfolio companies. This helps ensure sustainable practices and mitigate risks. (ESGTextBook[PallasCatFin], Chapter 5, Page 236)


Question 6

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



Answer : C

Fully integrated ESG strategies tend to have more concentrated positions as they focus on companies with strong ESG practices, often limiting the investment universe to a smaller selection of high-performing companies. (ESGTextBook[PallasCatFin], Chapter 8, Page 451)


Question 7

According to a study of the Hermes UK Focus Fund, which of the following engagement objectives was most likely to be achieved through shareholder activism?



Answer : C

Shareholder activism, particularly through funds like the Hermes UK Focus Fund, often leads to restructuring and changes in financial policies as these are critical areas where investors can drive long-term value improvements. (ESGTextBook[PallasCatFin], Chapter 6, Page 285)


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Total 468 questions