CFA® Level I Exam Equity Practice Questions

What our equities questions cover

• Common and preferred shares, voting rights and share classes
• Issuance and trading: IPOs, buybacks, order types, margin purchases and short sales; types of equity indexes
• Sources of equity returns: dividends, growth and changes in valuation multiples
• Dividend discount models, the Gordon growth model, preferred stock and free cash flow to equity
• Price multiples, justified multiples and enterprise value multiples
• Industry and competitive analysis, forecasting and analyst research reports
• The required return on equity from the CAPM, the market model and multifactor models

This list is our own summary of the topic, written for practice. The official topic outline and learning outcomes are published by CFA Institute for registered candidates. The 2026 curriculum called this topic Equity Investments.

Ideas the questions test most

1. The Gordon growth model values a share at next year’s dividend divided by (required return − growth rate); it needs the required return to exceed the growth rate.
2. A justified forward P/E from the Gordon model is the payout ratio divided by (r − g).
3. Enterprise value is the market value of equity plus debt and preferred stock minus cash; it suits comparisons across firms with different capital structures.
4. Buying on margin magnifies returns in both directions. A margin call comes when equity in the account falls below the maintenance margin.
5. The CAPM sets the required return on equity at the risk-free rate plus beta times the equity risk premium.

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Common questions

More Level I topics

• Ethical and Professional Standards · 10–15%
• Quantitative Methods · 11–14%
• Economics · 6–9%
• Financial Statement Analysis · 11–14%
• Corporate Finance · 6–9%
• Fixed Income · 11–14%
• Derivatives and Risk Management · 6–9%
• Alternative Investments · 6–9%
• Portfolio Construction · 8–12%