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Free CFA Portfolio Management Practice Questions & Answers

1,100 exam-style Portfolio Management questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.

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Question 1

A portfolio manager updates factor signals monthly using a 12‑month rolling window. What is the main benefit of this approach?

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Question 2

A short backtest period most likely increases the risk of:

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Question 3

A stock has a sensitivity of 1.5 to a profitability factor. What does this imply?

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Question 4

A portfolio has factor exposures of 0.8 to Value and 1.2 to Momentum. The factor premiums are 3% and 2% respectively. Risk‑free rate is 1%. Expected return = ?

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Question 5

VaR — Interpretation A 1‑day 5% VaR of $3 million means:

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Question 6

VaR — Parametric Method A portfolio has daily mean return 0.05% and daily volatility 1%. Using a 1.65 z‑score for 5% VaR, the 1‑day VaR is closest to:

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Question 7

Scenario analysis is most useful for:

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Question 8

Historical Scenarios Historical scenarios differ from hypothetical scenarios because they:

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Question 9

Hypothetical Scenarios A hypothetical scenario is most appropriate when:

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Question 10

A bond portfolio has a duration of 6. A 50 bps increase in yields will cause the portfolio value to:

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Question 11

A call option has delta 0.6. If the stock rises $2, the option price should rise by:

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Question 12

Credit spreads typically widen when:

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Question 13

A bond has a 4% default probability and 40% recovery rate. Expected loss = ?

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Question 14

Risk parity portfolios allocate weights based on:

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Question 15

Momentum strategies typically buy:

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Question 16

Value strategies typically buy:

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Question 17

A model that performs extremely well in-sample but poorly out-of-sample most likely suffers from:

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Question 18

VaR — Historical Simulation Historical simulation VaR assumes:

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Question 19

Monte Carlo VaR Monte Carlo VaR is most useful when:

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Question 20

Stop-Loss Limits Stop-loss limits are designed to:

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Question 21

Multifactor Risk Attribution A portfolio’s volatility is mostly explained by its exposure to a single factor. This implies:

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Question 22

Liquidity Risk Liquidity risk is highest when:

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Question 23

The term premium compensates investors for:

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Question 24

A recovery rate of 30% means:

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Question 25

During early economic expansion, analysts typically expect:

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Question 26

Price‑to‑earnings multiples tend to be highest when:

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Question 27

Cap rates tend to rise when:

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Question 28

Risk budgeting involves:

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Question 29

Position limits are primarily used to:

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Question 30

Correlation stress tests are useful because:

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Free CFA Portfolio Management Practice Questions & Answers

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