CFA Level II Vignettes Ethics Standards Performance Reporting MCQs Test 3

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

Practice Quiz 3 for "Performance Reporting" (Ethics Standards). Total 30 MCQs available, split into 3 quizzes. Challenge yourself with advanced application-based questions. Mastering these concepts is essential for securing a high percentile in CFA.

General10 MCQs

1. Vignette 5: GIPSCompliance - Margaret Kent, CFA, states in marketing materials that her firm is "GIPS compliant" when in fact the firm has not yet completed the verification process. Has Kent violated the Standards?

A. Acceptable because the firm is working on GIPS complianceB. Acceptable if the firm discloses that it is not yet fully compliantC. Unacceptable because the firm is not GIPS compliant, and claiming so violates Standard III(D)D. Unacceptable only if the performance is inflated

2. Kent presents performance data that has not been verified by a third party but labels it as "verified." Which Standard has Kent 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

3. Kent presents a 5-year performance track record that actually covers only 3 years, without disclosing the inception date. Which Standard has Kent 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

4. Kent uses a custom benchmark that is not publicly available and does not disclose its construction or how it compares to standard benchmarks. Which Standard has Kent 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

5. Kent presents performance net of fees in one period and gross of fees in another period without disclosing the change. Which Standard has Kent 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

General10 MCQs

6. Vignette 6: PerformanceEthics - David Sterling, CFA, presents back-tested returns for a new quantitative strategy as "historical returns" in marketing materials, without clearly indicating they are hypothetical. Has Sterling violated the Standards?

A. Acceptable because the strategy is based on sound researchB. Unacceptable because the back-tested returns are not actual performance and are misleading under Standard III(D)C. Acceptable if the back-tested returns are clearly labeled as hypotheticalD. Unacceptable only if the back-tested returns are inaccurate

7. Sterling highlights a 40% return in a single year but does not show the portfolio's negative returns in other years. 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

8. Sterling presents gross returns to clients and does not disclose the management fees and expenses that reduce net returns. 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

9. Sterling presents performance of a leveraged strategy without disclosing the use of leverage, making the returns appear to be from unleveraged investments. 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

10. Sterling presents the performance of one high-performing client account as "typical" of all accounts managed by the firm, without disclosing that other accounts underperformed. 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

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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: -

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CFA Level II Vignettes Ethics Standards Performance Reporting MCQs Test 3

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