Halloween Special Sale Limited Time 70% Discount Offer - Ends in 0d 00h 00m 00s - Coupon code: buysanta

Exact2Pass Menu

Question # 4

One of the mam principles of stewardship codes calls for institutional investors to:

A.

regularly monitor investee companies

B.

avoid considering conflicts of interest regarding stewardship matters.

C.

act independently of other investors when escalating stewardship activity

Full Access
Question # 5

According to the UK Investor Forum which of the following is a key success factor for effective engagement?

A.

Transparency on conflicts of interest

B.

Regulatory approval of the collaboration

C.

Clear leadership with appropriate relationships, skills and knowledge

Full Access
Question # 6

ESG engagement is a two-way dialogue to share perspectives between:

A.

investors and investees

B.

asset owners and fund managers

C.

senior executives and board of directors

Full Access
Question # 7

Among asset owners, which of the following is most likely a challenge to ESG integration?

A.

Consultants and retail financial advisors offer too many options for ESG products

B.

Even large asset owners have limited resources to conduct their own ESG assessment

C.

The scale of investments is not enough to influence the products offered by fund managers

Full Access
Question # 8

A company reduces water usage and increases usage of more expensive resources after regulations become more stringent. This most likely impacts:

A.

revenues

B.

provisions

C.

operating expenditure

Full Access
Question # 9

What type of provider of ESG-related products and services is CDP (formerly known as Carbon Disclosure Project)?

A.

nonprofit

B.

large for-profit

C.

boutique for-profit

Full Access
Question # 10

The signatories of the Kyoto Protocol are committed to:

A.

transition their investment portfolios to net-zero greenhouse gas (GHG) emissions by 2050

B.

limit and reduce their greenhouse gas (GHG) emissions in accordance with agreed individual targets

C.

strengthen the response to the threat of climate change by keeping a global temperature rise well below 2°C (3.6°F) above pre-industrial levels

Full Access
Question # 11

Formal corporate governance codes are most likely to:

A.

be found in all major world markets.

B.

call for serious consequences for non-compliant organizations.

C.

be interpreted by proxy advisory firms when corporate compliance is assessed.

Full Access
Question # 12

Which of the following statements about social trends is most accurate?

A.

Companies within a sector are equally exposed to social trends

B.

Social trends have a similar impact across sectors in developed countries

C.

The importance of a social trend depends on a country’s regulatory framework

Full Access
Question # 13

When integrating ESG analysis into the investment process, deriving correlations on how ESG factors might impact financial performance over time is an example of a:

A.

passive approach.

B.

thematic approach.

C.

systematic approach.

Full Access
Question # 14

Regrowing previously logged forests is most likely an example of climate:

A.

resilience.

B.

change mitigation.

C.

change adaptation.

Full Access
Question # 15

Norms-based screening is the largest investment strategy in

A.

japan

B.

europe

C.

the united states

Full Access
Question # 16

Which of the following is part of the ASEAN Taxonomy for an economic activity to be considered environmentally sustainable?

A.

Contributing substantially to at least one of the six environmental objectives

B.

Complying with minimum, ASEAN-specified social and governance safeguards

C.

A principles-based Foundation Framework, which is applicable to all ASEAN member states

Full Access
Question # 17

When employing an ESG integration strategy, asset managers are most likely to:

A.

corroborate ESG data with multiple sources

B.

include only verified ESG data that have been audited

C.

use a multi-decade time horizon to backtest ESG data

Full Access
Question # 18

Which of the following factors is most relevant to the performance outlook of a military equipment manufacturer?

A.

Offshoring

B.

Gender equality

C.

Artificial intelligence

Full Access
Question # 19

Which of the following is an environmental megatrend that has a severe social impact?

A.

Urbanization

B.

Globalization

C.

Mass migration

Full Access
Question # 20

When assessing the investment risk of a coal mining company, the concept of double materiality refers to the company reporting on matters of:

A.

current and future materiality

B.

people and planet materiality

C.

financial and impact materiality

Full Access
Question # 21

With respect to the current state of ESG disclosure globally, issuer reporting frameworks for ESG information are:

A.

mandatory

B.

fragmented

C.

harmonized

Full Access
Question # 22

A drawback of ESG index-based investment strategies is that they:

A.

focus only on environmental factors

B.

cannot accommodate factor-based investing styles

C.

rely on established datasets for construction that lack historical data

Full Access
Question # 23

Which of the following statements about voting is most accurate?

A.

Voting is a necessary but not a sufficient element of good stewardship

B.

Concerns about the diversity of a company's board cannot be reflected in voting decisions

C.

If there are concerns about the financial viability of a business, investors need to pay close attention to voting decisions on the reappointment of members of the audit committee

Full Access
Question # 24

Increased investment crowding into more ESG-friendly sectors is most likely to increase

A.

valuations

B.

expected returns.

C.

materiality thresholds

Full Access
Question # 25

Compared with younger people, older people are more likely to have:

A.

lower accumulated savings and spend less on consumer goods

B.

higher accumulated savings and spend less on consumer goods.

C.

higher accumulated savings and spend more on consumer goods

Full Access
Question # 26

Which of the following statements about proxy voting is most accurate? The majority of asset owners:

A.

retain direct control of voting

B.

delegate voting rights to fund managers so long as those managers reflect the asset owner's voting policies

C.

leave voting decisions to their fund managers after having assessed the alignment between the fund manager’s voting policies and their own

Full Access
Question # 27

Corporate disclosures in line with the recommendations of the Corporate Sustainability Reporting Directive (CSRD) are a regulatory requirement for companies in:

A.

the EU only

B.

the UK only

C.

both the EU and the UK

Full Access
Question # 28

With reference to data security and customer privacy issues, a technology company in the research and development stage with no commercially marketed products is most likely to have:

A.

low risk exposure to this factor in the short run

B.

medium risk exposure to this factor in the short run

C.

high risk exposure to this factor in the short run

Full Access
Question # 29

Which of the following is most likely the primary driver of ESG investment for a life insurer?

A.

Reputational risk

B.

Recognition of lengthy investment time horizons

C.

Awareness of financial impacts of climate change

Full Access
Question # 30

Formal corporate governance codes are most likely to

A.

be found in all major world markets

B.

call for serious consequences for non-comphant organizations.

C.

be interpreted by proxy advisory firms when corporate compliance is assessed

Full Access
Question # 31

Measuring a portfolio's carbon intensity using the European Union's Sustainable Finance Disclosure Regulation (SFDR) accounts for:

A.

Scope 1 emissions only.

B.

Scope 1 and Scope 2 emissions only.

C.

Scope 1, Scope 2, and Scope 3 emissions.

Full Access
Question # 32

Under the UK listing regime, Class 1 transactions:

A.

must be approved via shareholder vote.

B.

can be completed at management's discretion.

C.

require additional disclosures to shareholders but no approval via shareholder vote.

Full Access
Question # 33

Which of the following governance initiatives was focused on increased oversight of banks?

A.

The Dodd-Frank Act

B.

The Greenbury Report

C.

The Sarbanes-Oxley Act

Full Access
Question # 34

Corporate engagement and shareholder action is the predominant investment strategy in:

A.

Japan

B.

Europe

C.

the United States

Full Access
Question # 35

The adoption of ESG investing by retail investors has generally been:

A.

slower than its adoption by institutional investors.

B.

at the same pace as its adoption by institutional investors.

C.

faster than its adoption by institutional investors.

Full Access
Question # 36

According to the Active Ownership study, which of the following statements regarding ESG engagement is most accurate?

A.

Unsuccessful engagements often have adverse impacts on returns

B.

Success is typically achieved within 12 months of the initial engagement

C.

Successful engagement activity was followed by positive abnormal financial returns

Full Access
Question # 37

Which of the following climate risks are systemic risks to the financial system?

A.

Policy and legal risks

B.

Technology and stability risks

C.

Physical and transitional risks

Full Access
Question # 38

According to the Brunel Asset Management Accord, which of the following is least likely a cause for concern when evaluating an asset manager against an ESG investment mandate?

A.

Change in investment style

B.

Loss of key personnel in the organization

C.

Short term underperformance compared to benchmark

Full Access
Question # 39

Information for use in ESG tools can be collected directly via:

A.

news articles.

B.

third-party reports.

C.

company communications.

Full Access
Question # 40

Which of the following ESG screening methodologies is most likely to result in a well-diversified portfolio? Screening on:

A.

a relative basis only

B.

an absolute basis only

C.

both a relative basis and an absolute basis

Full Access
Question # 41

The Kyoto Protocol established emissions targets that are:

A.

binding on all countries.

B.

voluntary for all countries.

C.

binding only on developed countries.

Full Access
Question # 42

An ESG scorecard for sovereign debt issuers has the following information:

Country 1No carbon policy and high corruption risk

Country 2High-level carbon policy and low corruption risk

Country 3Detailed carbon policy and low corruption risk

Based only on this information, the country with the lowest ESG risk is:

A.

Country 1.

B.

Country 2

C.

Country 3

Full Access
Question # 43

Under the UK listing regime, Class 1 transactions:

A.

must be approved via shareholder vote

B.

can be completed at management's discretion

C.

require additional disclosures to shareholders but no approval via shareholder vote

Full Access
Question # 44

With regard to screening, exclusions that are not supported by global consensus are best described as:

A.

universal exclusions

B.

idiosyncratic exclusions

C.

conduct-related exclusions

Full Access
Question # 45

A company’s emission reduction commitments are best evaluated using:

A.

Scope 3 emissions.

B.

science-based targets.

C.

financial modelling of material environmental factors.

Full Access
Question # 46

Which of the following statements about corporate governance is most accurate?

A.

Most markets lack an official corporate governance code

B.

The Sarbanes-Oxley Act was the world's first formal corporate governance code

C.

Corporate scandals have been a powerful driver for the development of corporate governance codes

Full Access
Question # 47

In the European Union, publicly listed firms are obliged to change auditors at least every:

A.

5 years

B.

10 years

C.

20 years

Full Access
Question # 48

When integrating ESG analysis into the investment process, deriving correlations on how ESG factors might impact financial performance over time is an example of a:

A.

passive approach

B.

thematic approach

C.

systematic approach

Full Access
Question # 49

The perpetual compound annual rate that a company’s cash flow is assumed to change by after the discrete forecasting period is referred to as the:

A.

discount rate

B.

terminal growth rate

C.

required rate of return

Full Access
Question # 50

Which of the following sectors has the highest percentage of corporate profits at risk from state intervention?

A.

Banking

B.

Consumer goods

C.

Pharmaceuticals and healthcare

Full Access
Question # 51

Which element of EU Taxonomy for Sustainable Activities screening is most closely associated with social factors?

A.

Do no significant harm

B.

Substantially contribute

C.

Comply with minimum safeguards

Full Access
Question # 52

Institutional investors achieve their stewardship and engagement objectives in practice through which of the following?

A.

Engaging directly with companies only

B.

Utilizing proxy voting advisory firms only

C.

Both engaging directly with companies and utilizing proxy voting advisory firms

Full Access
Question # 53

Which of the following statements regarding optimization of portfolios for ESG criteria is most accurate?

A.

ESG integration may enhance the risk and return profile of portfolio optimization

B.

Optimization is limited to carbon data because of its absolute nature and more standardized reporting metrics

C.

ESG optimization via constraints is similar to exclusionary screening because it also applies a fixed decision on specific securities

Full Access
Question # 54

The financial crisis of 2008 led to which of the following legislative changes?

A.

The Cadbury Code

B.

The Dodd-Frank Act

C.

The Greenbury Report

Full Access
Question # 55

Wastewater treatment facilities:

A.

are highly capital intensive to develop

B.

require minimal ongoing maintenance expenditures.

C.

can be maintained by lower-skilled workers once developed

Full Access
Question # 56

Over the past several years, the proportion of sustainable investing relative to total managed assets has fallen in:

A.

Europe

B.

Canada

C.

the United States

Full Access
Question # 57

With respect to ESG integration in private equity, which of the following is most likely a challenge an investor may face?

A.

Lack of strategy and long-term orientation from private equity managers

B.

Lack of capacity within the investee company to fulfill ESG reporting requirements

C.

Reporting frameworks that do not account for the relative lack of transparency found in private markets relative to public markets

Full Access
Question # 58

An unfavorable corporate governance assessment would most likely be incorporated in valuation through reduced:

A.

discount rates.

B.

risk premia in the cost of capital.

C.

levels of confidence in the valuation range.

Full Access
Question # 59

A company is accused of surveying employees to prevent them from forming a union. The decision of an asset manager to divest from holding shares in the company is an example of:

A.

universal exclusion.

B.

idiosyncratic exclusion.

C.

conduct-related exclusion.

Full Access
Question # 60

A hurdle to adopting ESG investing is most likely a:

A.

lack of suitable benchmarks.

B.

focus on short-term performance.

C.

lack of options outside of equities.

Full Access
Question # 61

The role of auditors is to assess the financial reports prepared by management and to provide assurance that:

A.

the numbers are correct

B.

there is no fraud within the business.

C.

the reports fairly represent the performance and position of the business

Full Access
Question # 62

When searching for an asset manager with an ESG approach, in the request for proposal (RFP) an institutional asset owner would most appropriately ask:

A.

which broad market index the asset manager tracks.

B.

detailed questions on specific portfolio holdings of the asset manager.

C.

if the asset manager aims for positive, measurable ESG outcomes beyond financial returns.

Full Access
Question # 63

In ESG integration, model adjustments are typically performed at the:

A.

research stage

B.

valuation stage.

C.

portfolio construction stage

Full Access
Question # 64

Non-recyclable waste is eliminated in the:

A.

reuse economy

B.

linear economy

C.

circular economy

Full Access
Question # 65

Which of the following ESG investment approaches would most appropriately be used to construct a balanced and diversified portfolio?

A.

Thematic investing

B.

Screening on a relative basis

C.

Screening on an absolute basis

Full Access
Question # 66

Third-party assessments that highlight events, behaviors, and practices that may lead to reputational and business risks and opportunities are best classified as:

A.

advisory services

B.

integrated research

C.

ESG news and controversy alerts

Full Access
Question # 67

Applying ESG screens to quantitative strategies directs the portfolio on:

A.

an asset basis.

B.

a top-down basis.

C.

an individual issuer basis.

Full Access
Question # 68

Which of the following statements about ESG integration in fixed income is most accurate?

A.

ESG factors cannot affect credit risk at geographic level

B.

Equity investors generally focus more on the risk of default than fixed-income investors

C.

Municipal bonds have ESG integration considerations similar to those of sovereign debt

Full Access
Question # 69

Which of the following investor types most likely prefers exclusions as an ESG approach?

A.

Life insurers

B.

Foundations

C.

General insurers

Full Access
Question # 70

A difficulty of integrating ESG into sovereign debt analysis is most likely the:

A.

shrinking pool of sovereign investment research available

B.

low correlation among credit ratings compared to ESG ratings

C.

smaller number of issuers compared to corporate debt or equities

Full Access
Question # 71

In France, shareholders eligible for being awarded double voting rights are

A.

founding shareholders during an IPO

B.

long-standing shareholders of at least two years.

C.

minority shareholders that are employee representatives

Full Access
Question # 72

Which of the following is an example of shareholder engagement? Institutional investors:

A.

responding to policy consultations

B.

making ESG recommendations to policy makers

C.

discussing ESG issues with an investee company’s board

Full Access
Question # 73

Jurisdictions are most likely to impose extraterritorial laws in relation to:

A.

bribery and corruption

B.

paying suppliers appropriately and promptly.

C.

upholding high standards in health and safety

Full Access
Question # 74

According to the Capitals Coalition, the stock of renewable and non-renewable natural resources that combine to yield a flow of benefits to people is best described as

A.

nature

B.

natural capital.

C.

ecosystem assets

Full Access
Question # 75

Which of the following statements about the decoupling of economic activities from resource usage is most accurate?

A.

Moving to a circular economy boosts decoupling

B.

The Jevons paradox explains why decoupling happens

C.

Absolute long-term decoupling is more common than relative decoupling

Full Access
Question # 76

The divergence of ratings among ESG providers most likely.

A.

enhances the credibility of empirical research

B.

ensures that ESG performance is reflected in asset prices.

C.

hampers the ambition of companies to improve their ESG performance

Full Access
Question # 77

According to the McKinsey framework which of the following elements of sustainable investing is allocated to the investment dimension of tools and processes?

A.

Proactive engagement

B.

Review of external managers

C.

Integration with investment teams

Full Access
Question # 78

The United Nations Sustainable Development Goals (SDGs) are particularly aimed at

A.

investors

B.

corporations.

C.

governments

Full Access
Question # 79

In ESG integration, which of the following best describes a data-mformed analytical opinion designed to support investment decision-making?

A.

ESG screening

B.

Integrated research

C.

Voting and governance advice

Full Access
Question # 80

Which of the following social factors most likely impacts a company's external stakeholders?

A.

Working conditions, health, and safety

B.

Employment standards and labor rights

C.

Product liability and consumer protection

Full Access
Question # 81

In the ESG rating process, an assessment of risk, policies, and preparedness is best categorized as part of a(n):

A.

operational assessment.

B.

fundamental assessment.

C.

disclosure-based assessment.

Full Access
Question # 82

When incorporating ESG factors into valuation inputs, which of the following would most likely require the lowest discount rate?

A.

A company with strong ESG practices

B.

A high-growth technology company operating in emerging markets

C.

A company that is judged to have a negative environmental impact

Full Access
Question # 83

Suppose the average price-to-earnings (P/E) ratio for the financial industry is 10x. A financial institution with high ESG risk compared to its industry, is most likely assigned a fair value P/E ratio:

A.

lower than 10x

B.

of 10x

C.

higher than 10x

Full Access
Question # 84

In contrast to engagement dialogues, monitoring dialogues most likely involve:

A.

a two-way sharing of perspectives.

B.

discussions intended to understand the company, its stakeholders and performance.

C.

conversations between investors and any level of the investee entity including non-executive directors.

Full Access
Question # 85

Philanthropy is most likely associated with:

A.

impact investing

B.

shareholder engagement

C.

corporate social responsibility

Full Access
Question # 86

In which country is the proposal of shareholder resolutions most common?

A.

UK

B.

US

C.

Australia

Full Access
Question # 87

ESG screens embedded within portfolio guidelines can be used as:

A.

a risk management tool only.

B.

a source of investment advantage only.

C.

both a risk management tool and a source of investment advantage.

Full Access
Question # 88

To produce a rating, an ESG rating provider will most likely apply a weighting system to

A.

qualitative data only

B.

quantitative data only

C.

both qualitative data and quantitative data

Full Access
Question # 89

Which of the following parties is most likely to help investors identify the extent and depth to which investment funds integrate ESG?

A.

Fund labellers

B.

Investment platforms

C.

Investment consultants

Full Access