100+ Free CIPM Level I Practice Questions

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Question 1

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Standard I(C) Misrepresentation prohibits members from knowingly making any misrepresentation relating to investment analysis, recommendations, or other professional activities, which includes:

Plagiarism, such as presenting another's work or performance figures as one's own

Disclosing assumptions in a model

Using a clearly labeled hypothetical illustration

Citing the source of borrowed analysis

to track

2026 Statistics

Key Facts: CIPM Level I Exam

100

Multiple-Choice Questions

CFA Institute CIPM Exam Page

3 hours

Exam Length

CFA Institute CIPM Exam Page

35%

Performance Measurement Weight

CFA Institute CIPM Curriculum

25%

Performance Attribution Weight

CFA Institute CIPM Curriculum

155 hrs

Average Study Time

CFA Institute

Mar and Sep

Exam Windows

CFA Institute CIPM Exam Page

The CIPM Level I (Principles) exam has 100 multiple-choice questions in one 3-hour session, offered in March and September at about 400 test centers in 80 countries. Official 2026 topic weights are Performance Measurement 35%, Performance Attribution Analysis 25%, Ethics and Professionalism 15%, Portfolio Performance Presentation 15%, and Performance Evaluation and Appraisal 10%. CFA Institute does not publish a fixed raw passing score; it sets a Minimum Passing Score. Successful candidates report studying about 155 hours per exam.

Sample CIPM Level I Practice Questions

Try these sample questions to test your CIPM Level I exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1A portfolio is valued at $100 at the start of the period and $112 at the end, with no external cash flows. What is the holding period return?

A.12.0%

B.10.7%

C.11.2%

D.8.0%

Explanation: Holding period return with no cash flows equals (Ending value - Beginning value) / Beginning value = (112 - 100) / 100 = 12.0%. The numerator captures both income and capital appreciation; the denominator is the amount invested.

2Which return measure is unaffected by the timing and size of external cash flows controlled by the client rather than the manager?

A.Money-weighted return

B.Internal rate of return

C.Time-weighted return

D.Dollar-weighted return

Explanation: The time-weighted return (TWR) removes the distorting effect of external cash flows by breaking the period into sub-periods at each cash flow and geometrically linking the sub-period returns. Because the client, not the manager, typically controls cash-flow timing, TWR is the preferred measure for evaluating manager skill.

3A portfolio earns 5% in the first month and 3% in the second month. What is the two-month time-weighted (geometrically linked) return?

A.8.15%

B.8.00%

C.7.85%

D.4.00%

Explanation: Time-weighted returns are geometrically linked: (1 + 0.05)(1 + 0.03) - 1 = 1.05 x 1.03 - 1 = 1.0815 - 1 = 8.15%. Simple addition (8.00%) ignores the compounding of the first-month gain into the second month.

4An investor deposits $1,000 today and the account grows to $1,210 after exactly two years with no other cash flows. What annualized money-weighted (compound) return does this represent?

A.21.0%

B.10.5%

C.10.0%

D.9.5%

Explanation: With a single inflow and outflow, the money-weighted return equals the compound annual rate r where 1,000(1 + r)^2 = 1,210. Thus (1.21)^(1/2) - 1 = 1.10 - 1 = 10.0% per year.

5A portfolio returns 2% per quarter. Using compounding, what is the annualized return?

A.8.00%

B.8.16%

C.8.24%

D.6.12%

Explanation: Annualizing by compounding four equal quarterly returns gives (1.02)^4 - 1 = 1.08243 - 1 = 8.24%. Multiplying 2% by 4 (8.00%) ignores intra-year compounding.

6Under the GIPS standards, when a large external cash flow occurs mid-period, the most accurate way to compute the time-weighted return is to:

A.Ignore the cash flow if it is under 10% of assets

B.Use the modified Dietz method for the full period

C.Value the portfolio at the time of the cash flow and link sub-period returns

D.Use only the beginning and ending values

Explanation: The most accurate TWR revalues the portfolio at the date of each large external cash flow, computing a true sub-period return, then geometrically links the sub-periods. GIPS requires valuation on the date of all large cash flows so that approximation error is minimized.

7The Modified Dietz method weights each external cash flow by:

A.The size of the cash flow relative to total assets

B.The benchmark return for the period

C.The portfolio's beta during the period

D.The proportion of the measurement period the cash flow is held in the portfolio

Explanation: Modified Dietz approximates a time-weighted return by weighting each external cash flow by the fraction of the period it was present in the portfolio (a day-weighting). This avoids the need to value the portfolio at every cash-flow date while still adjusting for cash-flow timing.

8A portfolio gains 20% in year one and loses 20% in year two. What is the geometric mean (compound) annual return?

A.0.00%

B.-4.00%

C.2.00%

D.-2.02%

Explanation: The geometric mean is [(1.20)(0.80)]^(1/2) - 1 = (0.96)^(1/2) - 1 = 0.9798 - 1 = -2.02%. A gain and an equal-percentage loss do not cancel because the loss applies to a larger base; this is why the geometric mean is negative.

9Which statement about arithmetic versus geometric mean returns is correct?

A.The geometric mean is always greater than or equal to the arithmetic mean

B.The arithmetic mean better represents the actual compound growth of an investment over multiple periods

C.The geometric mean better represents the compound growth realized over multiple periods

D.They are equal whenever returns are volatile

Explanation: The geometric mean captures the actual multi-period compound growth of an investment, while the arithmetic mean is a simple average best used as an unbiased estimate of a single-period expected return. The geometric mean is less than or equal to the arithmetic mean, with the gap widening as volatility rises.

10A US-based investor holds a UK stock that returns 8% in local (GBP) terms while the GBP appreciates 3% against the USD. What is the approximate home-currency (USD) return?

A.11.24%

B.11.0%

C.5.00%

D.8.24%

Explanation: The home-currency return compounds the local return with the currency return: (1 + 0.08)(1 + 0.03) - 1 = 1.1124 - 1 = 11.24%. Simple addition (11.0%) omits the cross-product term where the currency gain applies to the appreciated asset value.

About the CIPM Level I Exam

CIPM Level I (Principles) is the first exam in the Certificate in Investment Performance Measurement Program, testing performance measurement, attribution, appraisal, presentation, GIPS, and the CFA Institute Code and Standards through 100 multiple-choice questions in a 3-hour session.

Questions

100 scored questions

Time Limit

3 hours (one session)

Passing Score

CFA Institute Minimum Passing Score; no public fixed raw percentage

Exam Fee

Set by CFA Institute with early-registration savings; see the CIPM dates and fees page for current amounts before local taxes (CFA Institute)

CIPM Level I Exam Content Outline

35%

Performance Measurement

Holding period, time-weighted vs money-weighted returns, Modified Dietz, annualization, geometric vs arithmetic means, currency, leverage, short positions, fee and tax impact, composite and unit-value returns.

25%

Performance Attribution Analysis

Active return decomposition, Brinson-Hood-Beebower and Brinson-Fachler models, allocation, selection, interaction, multi-period linking, fixed-income, returns-based, holdings-based, and factor attribution.

15%

Ethics and Professionalism

CFA Institute Code of Ethics and Standards of Professional Conduct, integrity, independence, fair dealing, confidentiality, conflicts, supervision, and fair performance presentation.

15%

Portfolio Performance Presentation

Global Investment Performance Standards (GIPS), composite construction, compliance, verification, benchmarks, dispersion, required history, carve-outs, and fair representation.

10%

Performance Evaluation and Appraisal

Sharpe, Treynor, Jensen's alpha, information ratio, Sortino, M-squared, appraisal ratio, maximum drawdown, Value at Risk, and distinguishing manager skill from luck.

How to Pass the CIPM Level I Exam

What You Need to Know

Passing score: CFA Institute Minimum Passing Score; no public fixed raw percentage
Exam length: 100 questions
Time limit: 3 hours (one session)
Exam fee: Set by CFA Institute with early-registration savings; see the CIPM dates and fees page for current amounts before local taxes

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

CIPM Level I Study Tips from Top Performers

1Allocate the most time to Performance Measurement and Attribution, which together make up 60% of the exam.

2Practice return-calculation problems by hand so you can distinguish time-weighted, money-weighted, and Modified Dietz methods quickly.

3Memorize the GIPS composite-construction and presentation requirements, including 2026 rules on switching, including, and excluding portfolios.

4Drill the appraisal ratios (Sharpe, Treynor, Jensen's alpha, information ratio, Sortino, M-squared) and know when each is appropriate.

5Study the CFA Institute Code and Standards with scenario practice, since ethics rewards repeated application.

6Build an error log tagged by topic and by calculation versus judgment mistakes, and rehearse the full 3-hour timing.

Frequently Asked Questions

How many questions are on the CIPM Level I exam?

CFA Institute states that the CIPM Level I (Principles) exam has 100 multiple-choice questions delivered in a single 3-hour session, so candidates should budget roughly 108 seconds per question.

What is the CIPM Level I passing score?

CFA Institute does not publish a fixed raw passing percentage for the CIPM Program. It sets a Minimum Passing Score for each exam window through a standard-setting process, so candidates should aim for consistent mastery rather than a fixed 70% rule.

What topics are weighted most heavily on CIPM Level I?

Performance Measurement is the heaviest topic at 35%, followed by Performance Attribution Analysis at 25%. Ethics and Professionalism and Portfolio Performance Presentation are each 15%, and Performance Evaluation and Appraisal is 10%.

When is the CIPM Level I exam offered?

CFA Institute offers the CIPM exams in March and September each year at approximately 400 local computer-based test centers across 80 countries.

How much study time does CIPM Level I require?

CFA Institute reports that successful CIPM candidates study an average of about 155 hours per exam. Most candidates prepare over roughly 8 to 16 weeks depending on their background in performance measurement.

Do I need a degree to take CIPM Level I?

No specific degree is required to enroll in the CIPM Program. The certificate is designed for professionals working in investment performance measurement, attribution, analytics, and related operations roles.

How is GIPS tested on CIPM Level I?

GIPS is central to the Portfolio Performance Presentation topic and appears throughout the curriculum. Level I covers composite construction, compliance, verification, benchmarks, dispersion, required history, and fair representation.

What comes after CIPM Level I?

After passing Level I (Principles), candidates take the Level I (Expert) exam. Earning the CIPM certificate also requires relevant professional work experience and CIPM Association membership.