Free CFA Level 2 Mock Exam: Best 40 Questions & Answers

Free CFA Level 2 Mock Exam: Candidates for the CFA Level 2 exam should be aware that passing one of the more difficult CFA levels requires a lot of practice questions. So, in order to give you extra preparation, here is our free CFA Level 2 mock exam, courtesy of our partner IFT.

This practice test has 40 questions, is 2 hours and 12 minutes long, and is weighted in accordance with recommendations from the CFA Institute. This is a legitimate mock test because it follows the identical item set and narrative pattern as the real exam, as opposed to using independent question-bank-style questions.

You can take the test online or download the PDF questions, with full answers and analytics included, for free, just like our free CFA Level 1 or Level 3 mock exams.

You will receive a customized report right away after completing your online answers that include your score, thorough answer explanations, and a comparison of your performance to the performance of the other candidates. In the results email, we’ve also provided some fantastic extras, such as monthly performance trends and topic-by-topic analyses.

Avoid missing out!

What’s included in the online Schweser mock exam

A trio of modes

  • Exam Sim: Use the same interface that you will on the computer-based CFA exam to take the test.
  • Online: Use the regular Kaplan Schweser online interface to take the test.
  • the four hours and thirty minutes set by CFA Institute (each exam consists of two sessions of 2 hours and 15 minutes)
  • Topic weightings and exam structure for CFA Institute
  • Online explanations for answers
  • Online evaluation, topic-area performance tracking, and candidate comparison
  • For each question, provide LOS references in your answer justifications.
  • Exam Tutorial is only offered for Mock Exams 5 and 6.
  • Instructional videos that go into great detail about how to reach each answer

Options for mock exams:

  • Mock Exams 1-4: Each exam has three attempts and four different sets of questions.
  • Six different sets of questions with three tries each make up the mock exams from 1 to 6. The exam instruction is included in Mock Exams 5 and 6.
  • Two distinct sets of questions with three attempts each are on Mock Exams 5 and 6. The exam instruction is included in Mock Exams 5 and 6.
  • The system permits three tries for each mock exam. Once an exam has started, exam modes cannot be changed.

Free CFA Level 2 Mock Exam: 40 Questions & Answers

Free CFA Level 2 Mock Exam
Free CFA Level 2 Mock Exam
  1. Is Alpine’s policy of updating the IPS consistent with required and recommended CFA
    Institute Standards?

    A. Yes.
    B. No, update is only when there is a change in investor constraints.
    C. No, update is only when the performance benchmarks are not met.
  2. Does Sharma violate any CFA Institute Standards by trading for her personal account prior to
    her clients’ trades?

    A. Yes, relating to conflicts of interest.
    B. Yes, relating to fair dealing.
    C. No.
  3. When discussing the ABC Pension Fund, does Sharma violate any CFA Institute Standards?
    A. Yes, relating to misrepresentation.
    B. No.
    C. Yes, relating to duties to clients.
  4. Does Sharma violate any CFA Institute Standards when she places a buy order for shares in
    the biotechnology firm for two of her client’s accounts?

    A. Yes, relating to fair dealing.
    B. No. C. Yes, relating to diligence and reasonable basis.
  5. Is Alpine’s IPO policy with respect to trade allocations of new shares consistent with the CFA
    Institute Standards?

    A. Yes.
    B. No, because the different fees disadvantage certain clients.
    C. No, because the IPO policy disadvantages certain clients.
  6. Does Sharma violate any CFA Institute Standards in her allocation of IPO shares to her
    clients’ accounts?

    A. No.
    B. Yes, because she does not treat all her clients fairly.
    C. Yes, because the IPO is not suitable for Jones
  7. Given a bid-side quote on the three-month forward contract of AUD1.3028 per U.S. dollar, the
    three-month forward U.S. dollar is quoted at an annualized:

    A. 0.28% discount.
    B. 0.28% premium.
    C. 0.36% premium.
  8. Using Exhibit 1, according to the international Fisher effect, Spalding should most likely
    increase holdings in:

    A. Australia.
    B. China.
    C. neither countries.
  9. If a dealer’s bid-side quote for the Australian Dollar/Chinese Yuan is AUD 0.2020, Spalding’s
    profit on a USD 1,000,000 initial investment in the triangular arbitrage opportunity is closest

    A. USD 12,278.
    B. USD 21,269.
    C. USD 19,270.
  10. The specific parity condition referred to by Spalding is most likely the:
    A. covered interest rate parity.
    B. ex ante PPP.
    C. uncovered interest rate parity.
  11. Based on Exhibit 1, which change in assumptions will most likely result in an increase in
    compensation expense?

    A. The change in the risk-free rate.
    B. The change in volatility.
    C. The change in dividend yield.
  12. The portion of the compensation expense related to the stock option component awarded in
    2016 is closest to:

    A. USD 317,200.
    B. USD 487,300.
    C. USD 178,200.
  13. The poor investment performance most likely caused the periodic pension cost (in
    $-millions) reported in the 2016 income statement (assuming no amortization of past service
    costs or actuarial losses) to be:

    A. unaffected.
    B. higher by $74.80 million.
    C. higher by $340 million.
  14. Based on the type of acquisition between Essential and Modern, which of the following
    stages of the industry life cycle is the furniture industry least likely in?

    A. Growth.
    B. Shakeout.
    C. Decline.
  15. Given Exhibit 1 and the information given in the case, the takeover premium if Essential
    accepts Modern’s offer is closest to:

    A. 68.50.
    B. 190.00.
    C. 308.50.
  16. If Modern proposed an all-cash offer of $15 per share of Essential stock, compared to the
    mixed offer, the post-merger value with this cash offer would most likely be:

    A. higher.
    B. the same.
    C. lowe
  17. The situation Rogers describes to his supervisor is most likely an example of which of the
    following post-offer takeover defence mechanisms?

    A. Pac-man defence
    B. White knight defence
    C. White squire defence
  18. Regarding conditional heteroskedasticity, the most appropriate conclusion is that the
    variance of the error term is correlated with:

    A. both the dependent and the independent variables.
    B. the dependent variable only.
    C. the independent variable only.
  19. If Manan assumes that the monthly yield spread is 1.35% and the monthly value of NASDAQ
    is -1.05%, the predicted monthly return of UVS Telecom is closest to:

    A. 0.37%.
    B. 0.25%.
    C. 0.63%.
  20. The value of the test statistic relating to Manan’s null hypothesis that the value of the
    coefficient on YC is equal to 1 is closest to:

    A. 0.67.
    B. 0.91.
    C. 4.53.
  21. If the standard error of the coefficient is 0.070 and the degrees of freedom is 200, the 95%
    confidence interval for the coefficient on the NASDAQ is closest to:

    A. 0.31 to 0.58.
    B. -0.20 to 0.07.
    C. 0.04 to 0.31.
  22. Which of the attributes of buyout investments is least likely correct?
    A. Attribute 1.
    B. Attribute 2.
    C. Attribute 3.
  23. Which of these clauses is most likely to be added in the leaflet that shows alignment of
    Delver’s interests with the managers of the portfolio companies?

    A. Earn-outs.
    B. Tag-along, drag-along rights.
    C. Reserved matters.
  24. When Skiffy, Inc. is sold the part of its capital structure that will most likely have decreased in
    size is?

    A. Preference shares.
    B. Common equity.
  25. Compared to the exit route chosen, the least likely alternate exit route for Skiffy, Inc
    investment is a(n)
    A. IPO.
    B. Private equity firm.
    C. Liquidation
  26. With respect to Comment 1, perceived mispricing is most likely the difference between:
    A. estimated intrinsic value and market price.
    B. intrinsic value and estimated value.
    C. intrinsic value and market price.
  27. The sources of perceived mispricing are most likely:
    A. true mispricing or alpha and the error in the intrinsic value estimate.
    B. true, unobservable intrinsic value and the error estimate. C. valuation estimate less the unobservable intrinsic value, and going-concern value.
  28. With respect to Comment 2, which of the following statements is least likely correct?
    A. For most companies, the going-concern value is greater than the liquidation value.
    B. The value of nonperishable inventory if liquidated immediately is higher rather than its
    value if it were to be sold over a longer time.
    C. An analyst will typically forecast free cash flow of a financially sound company rather
    than estimating its liquidation value.
  29. According to Comment 3, analysts at Remy Capital use valuation techniques to:
    A. infer market expectations.
    B. provide fairness opinions.
    C. to value acquisitions
  30. Which of Brie’s assumptions underlying APT is least likely correct?
    A. Assumption 1.
    B. Assumption 2.
    C. Assumption 3.
  31. Based on Exhibit 1, can an arbitrage portfolio be created with a combination of portfolios A, B
    and C?

    A. No.
    B. Yes, the portfolio would earn an expected return of 1.0%.
    C. Yes, the portfolio would earn an expected return of 17.0%.
  32. Assuming that portfolio A and B’s returns are represented by a single-factor equation of
    E(Rp) = RF + λ1βp, the value of λ1 is closest to:
    A. 0.05.
    B. 0.025.
    C. 0.010.
  33. Based on its factor sensitivity, portfolio B can be best characterized as:
    A. an arbitrage portfolio.
    B. a market-neutral portfolio.
    C. a pure factor portfolio.
  34. Based on Table 1, Bond A relative to Bond B, is most likely:
    A. overpriced.
    B. fairly priced.
    C. underpriced.
  35. The effective duration of Bond F is:
    A. lower than or equal to 1.0
    B. lower than or equal to 4.0
    C. lower than or equal to 0.5
  36. In Table 2, the bond whose effective duration will shorten if interest rates rise is:
    A. Bond C
    B. Bond D
    C. Bond E
  37. The effective duration of Bond C is closest to:
    A. 33.15
    B. 3.315
    C. 0.3315
  38. The value of Bond G is equal to the value of Bond H:
    A. plus the value of a call option on Galaxy’s bond.
    B. plus the value of a call option on Galaxy’s common stock.
    C. minus the value of a call option on Galaxy’s common stock.
  39. The minimum value of Bond G is equal to the:
    A. lesser of the conversion value of Bond G and the current value of Bond H.
    B. greater the conversion value of Bond G and the current value of Bond H.
    C. greater of the current value of Bond H and a call option on Galaxy’s common stock.
  40. The forward rate at which the company initiated its FRA is closest to the:
    A. 1.19 %
    B. 1.24%
    C. 1.31%


Q. Are the CFA practice tests harder?

Although they are both supposed to be challenging, most readers seem to think that at least the Level 1 mock is harder than the real exam. It’s possible that this is their very first time engaging in this behavior. The questions frequently appear more challenging under stress.

Q. What is a suitable score on the CFA Level 2 practice exam?

The target score for the CFA Level 2 mock exam is 70% or above.

Q. Why is CFA Level 2 challenging?

Simply put, Level 2 is more difficult than Level 1 since it is more demanding. Because Level 2 is more application-focused, there is more depth and detail covered in it (and tested on).

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