CFA Level II Vignettes Ethics Standards Performance Reporting MCQs Test 2

Practice CFA 2026 Level II Vignettes Ethics Standards MCQs from Performance Reporting. Get instant results with Explanation.

Practice Quiz 2 for "Performance Reporting" (Ethics Standards). Total 30 MCQs available, split into 3 quizzes. Test your understanding of core concepts. Mastering these concepts is essential for securing a high percentile in CFA.

General10 MCQs

1. Vignette 3: FairPresentation - William Sterling, CFA, presents a balanced portfolio (60% equities, 40% bonds) return of 10% compared to a 100% equity index that returned 8%. The appropriate balanced benchmark returned 9%. Has Sterling violated the Standards?

A. Acceptable because the benchmark is well-knownB. Unacceptable because the benchmark is not representative of the portfolio's investment strategy under Standard III(D)C. Acceptable if the client agrees to the benchmarkD. Unacceptable only if the portfolio underperforms the benchmark

2. Sterling presents a gross return of 14% to clients, without deducting the 2% management fee and other expenses. Which Standard has Sterling violated?

A. Standard I(C) - MisrepresentationB. Standard V(B) - Communication with Clients and Prospective ClientsC. Standard III(D) - Performance PresentationD. Standard VI(A) - Disclosure of Conflicts

3. Sterling presents an "annualized return" of 12% based on a 3-month period, without disclosing that it is not a full-year return. Which Standard has Sterling violated?

A. Standard III(D) - Performance PresentationB. Standard I(C) - MisrepresentationC. Standard V(B) - Communication with Clients and Prospective ClientsD. Standard VI(A) - Disclosure of Conflicts

4. Sterling presents a composite performance that includes only discretionary accounts and excludes non-discretionary accounts, without disclosing this selection bias. Which Standard has Sterling violated?

A. Standard I(C) - MisrepresentationB. Standard V(B) - Communication with Clients and Prospective ClientsC. Standard VI(A) - Disclosure of ConflictsD. Standard III(D) - Performance Presentation

5. Sterling presents back-tested returns for a new strategy as if they were actual historical returns, without clearly labeling them as hypothetical. Which Standard has Sterling violated?

A. Standard I(C) - MisrepresentationB. Standard III(D) - Performance PresentationC. Standard V(B) - Communication with Clients and Prospective ClientsD. Standard VI(A) - Disclosure of Conflicts

General10 MCQs

6. Vignette 4: TransparentPerformance - Carlos Rodriguez, CFA, presents a high-risk portfolio return of 20% compared to a low-risk bond index return of 5%. The portfolio's appropriate benchmark is a high-risk equity index that returned 18%. Has Rodriguez violated the Standards?

A. Acceptable because the portfolio outperformed the benchmarkB. Acceptable if the benchmark is commonly usedC. Unacceptable only if the client is misledD. Unacceptable because the benchmark is not comparable, violating Standard III(D)

7. Rodriguez presents a gross return of 22% to clients, but the net return after fees is 18%. He does not disclose the fees. Which Standard has Rodriguez violated?

A. Standard III(D) - Performance PresentationB. Standard I(C) - MisrepresentationC. Standard V(B) - Communication with Clients and Prospective ClientsD. Standard VI(A) - Disclosure of Conflicts

8. Rodriguez changes the performance calculation from time-weighted to money-weighted without disclosing the change, making the returns appear higher. Which Standard has Rodriguez violated?

A. Standard I(C) - MisrepresentationB. Standard III(D) - Performance PresentationC. Standard V(B) - Communication with Clients and Prospective ClientsD. Standard VI(A) - Disclosure of Conflicts

9. Rodriguez claims his portfolio is in the "top quartile" of all peer portfolios, but he has no data to support this claim. Which Standard has Rodriguez violated?

A. Standard I(C) - MisrepresentationB. Standard V(B) - Communication with Clients and Prospective ClientsC. Standard III(D) - Performance PresentationD. Standard VI(A) - Disclosure of Conflicts

10. Rodriguez highlights a 30% return in the last quarter but does not show that the portfolio lost 15% in the previous year. Which Standard has Rodriguez violated?

A. Standard I(C) - MisrepresentationB. Standard V(B) - Communication with Clients and Prospective ClientsC. Standard VI(A) - Disclosure of ConflictsD. Standard III(D) - Performance Presentation

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Conducting Body: CFA Institute

Frequency: 4 times a year (February, May, August, November) | Time: 70 Minutes

Negative Marking: No

⚡ Test Pattern (Total: 90 MCQs):

Subject breakdown not available.

Merit Formula: -

Practice CFA MCQs

CFA FLP 1 CFA FLP 2 CFA FLP 3

CFA Level II Vignettes Ethics Standards Performance Reporting MCQs Test 2

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