Can you answer these practice questions?


It’s the start of a new year, and that means thousands of investment industry hopefuls will try their hand at the chartered financial analyst exams.

For many, this may be their second, third or fourth attempt to conquer the three-part CFA Institute test, known for being one of the finance industry’s most gruelling qualifications. Successful candidates typically spend around 1,000 hours over four years preparing for the tests.

Pass rates have been on the decline: only 35% of test takers passed the Level I exam in November 2023, while 44% passed the more complex Level II exam the same month, which were both below their historic average.

However, this year the CFA Institute has overhauled its curriculum with changes to the Level I and II tests, including new practical skills modules on artificial intelligence and Python programming to make them more accessible and limit the number of no-shows.

Exam structure

The Level II CFA exam consists of 22 case studies, called “item sets”, with 88 accompanying multiple choice questions.

It is split into two equal sessions that take approximately four and a half hours to complete, with an optional break in between.

Topics include portfolio management and wealth planning, financial statement analysis, equity valuation and ethical and professional standards.

CFA Level II Exam dates

Candidates wishing to take a crack at the Level II qualification will be able to sit the exam in May, August and November in 2024.

The CFA Level II exam dates are as follows:

  • 22-26 May 2024
  • 27-31 August 2024
  • 20-24 November 2024

The registration deadline for the earliest exam slot in May is 6 February.

Financial News picked out three sample questions from the CFA Institute’s Level II mock exam to test your skills. Answers at the bottom…


A market structure characterised by many sellers with each having some pricing power and product differentiation is best described as:

  • Oligopoly
  • Perfect competition
  • Monopolistic competition


With which sector of the economy would analysts most commonly associate credit cycles?

  • Exports
  • Construction and purchases of property
  • Food retail


A company’s management may choose not to use financial leverage because the company has:

  • An investment-grade credit rating
  • A high degree of operating leverage
  • A lower net debt to EBITDA ratio than its peers



Question 1 — C

Monopolistic competition is characterised by many sellers, differentiated products, and some pricing power.

Question 2 — B

Credit cycles are associated with availability of credit, which is important in the financing of construction and the purchase of property.

Question 3 — B

B is correct. The degree of financial leverage and the degree of operating leverage together equal the degree of total leverage in the business. If the company already has a high degree of operating leverage, using financial leverage may increase total leverage and risk to too high a level.

A is incorrect. An investment-grade credit rating generally indicates that the company could borrow economically, which would be a reason to use financial leverage.

C is incorrect. A lower net debt to EBITDA ratio than its peers is an indicator of borrowing capacity, which would be a reason to use financial leverage.

To contact the author of this story with feedback or news, email Kristen McGachey


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