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>> CFA Institute ESG-Investing Pdf Exam Dump <<
We recommend you use CFA Institute ESG-Investing practice material to prepare for your ESG-Investing certification exam. Actualtests4sure provides the most accurate and real CFA Institute ESG-Investing Exam Questions. These CFA Institute ESG-Investing practice test questions will assist you in better preparing for the final CFA Institute ESG-Investing exam.
NEW QUESTION # 189
Which of the following would most likely be the initial step when drafting a client's investment mandate?
Answer: A
Explanation:
The initial step when drafting a client's investment mandate is most likely clarifying the client's ESG investment beliefs. This step is fundamental in ensuring that the investment strategy aligns with the client's values and objectives.
Step-by-Step Explanations:
Defining Investment Beliefs:
Clarifying the client's ESG investment beliefs involves understanding their values, priorities, and objectives related to ESG issues. This step is crucial to tailor the investment strategy to the client's specific needs and preferences.
According to the CFA Institute, establishing a clear understanding of the client's ESG beliefs helps in setting the framework for the overall investment approach and ensures alignment with their long-term goals.
Creating a Statement of Investment Principles:
This involves drafting a Statement of Investment Principles (SIP) that outlines the client's ESG beliefs and how these will be integrated into the investment strategy. The SIP serves as a guiding document for the investment manager.
The CFA Institute emphasizes that a well-defined SIP provides clarity and direction, ensuring that ESG considerations are consistently applied in investment decisions.
Operational Implementation:
Once the client's ESG beliefs are clarified, the next steps involve defining how ESG performance will be measured and reflected operationally in the fund manager's approach. However, these steps come after the initial clarification of beliefs.
The Principles for Responsible Investment (PRI) report suggests that aligning investment mandates with client beliefs and strategies is essential for effective ESG integration across asset classes.
Ensuring Alignment:
Ensuring that the client's ESG beliefs are accurately reflected in the investment approach requires continuous engagement and review. This helps in maintaining alignment with the client's evolving objectives and market conditions.
The CFA Institute notes that ongoing dialogue and review processes are vital to ensure that the investment strategy remains aligned with the client's ESG beliefs and delivers on their expectations.
Reference:
CFA Institute, "Environmental, Social, and Governance Issues in Investing: A Guide for Investment Professionals." Principles for Responsible Investment (PRI) reports on aligning investment mandates with ESG beliefs.
NEW QUESTION # 190
Considering ESG integration, an advantage relevant to private real estate markets but not equities and fixed income is most likely:
Answer: A
Explanation:
In ESG integration, private real estate markets have specific characteristics that differ from equities and fixed income. One of the key distinctions is the framework used for sustainability assessment and reporting:
* Majority ownership (A): Majority ownership is not unique to private real estate markets; it can also be
* relevant to equity markets, particularly in cases of private equity investments or controlling stakes in public companies.
* Coverage of assets by ESG rating agencies (B): ESG rating agencies cover a wide range of asset classes, including equities, fixed income, and real estate. While the extent of coverage and focus may vary, it is not a distinctive advantage unique to private real estate markets.
* Adherence to the Global Real Estate Sustainability Benchmark (GRESB) rather than the Sustainability Accounting Standards Board (SASB) framework (C): The GRESB is specifically designed for assessing the sustainability performance of real estate assets and portfolios. This benchmark provides a comprehensive framework tailored to the unique aspects of real estate, such as energy efficiency, water usage, and building certifications. In contrast, the SASB framework is more general and applies to a broad range of industries, including equities and fixed income. Therefore, the adherence to GRESB is an advantage particularly relevant to private real estate markets and not typically applicable to equities and fixed income.
References:
* Global Real Estate Sustainability Benchmark (GRESB)
* CFA ESG Investing Principles
* Sustainability Accounting Standards Board (SASB)
NEW QUESTION # 191
An unfavorable corporate governance assessment would most likely be incorporated in valuation through reduced:
Answer: B
Explanation:
An unfavorable corporate governance assessment would most likely be incorporated in valuation through increased risk premia in the cost of capital. Poor governance practices can increase the perceived risk of a company, leading investors to demand higher returns for taking on that risk. This results in a higher cost of capital for the company, which can negatively affect its valuation. Adjusting the discount rate to reflect governance risks is a common practice in valuation models.
NEW QUESTION # 192
Which of the following ESG integration techniques is an example of policy engagement? An investor:
Answer: B
Explanation:
Policy engagement refers to efforts by investors to influence regulatory frameworks. An example of this would be responding to a regulator's public consultation on ESG issues, therebycontributing to the development of ESG policies that can drive broader change across markets and industries.ESG Reference:
Chapter 6, Page 280 - Engagement and Stewardship in the ESG textbook.
NEW QUESTION # 193
Which of the following data are most likely the easiest to optimize in a portfolio?
Answer: B
Explanation:
Governance data is generally the easiest to optimize in a portfolio because it ismore standardized, quantifiable, and widely disclosedcompared to social and environmental data. Corporate governance indicators, such as board composition, executive compensation, and shareholder rights, are commonly reported in financial statements and regulatory filings.
In contrast, environmental and social data can be moresubjective, complex, and inconsistentdue to varying reporting standards and lack of historical data. For example, carbon emissions (E) and employee well-being (S) often lack standardized disclosures across regions and industries.
References:
* CFA Institute ESG Integration Guide
* MSCI ESG Ratings Methodology
* Corporate Governance Codes (UK, US, EU)
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NEW QUESTION # 194
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