EMT Practice Test

1. Question Content...

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Question1: When searching for an asset manager with an ESG approach, in the request for proposal (RFP) an institutional asset owner would most appropriately ask:

Question2: Which of the following is one of the five main drivers of nature change described by the Taskforce on Nature-related Financial Disclosures (TNFD)?

Question3: New technologies have enabled workers to:

Question4: Which of the following is one of the four realms of nature described by the Taskforce on Nature-related Financial Disclosures (TNFD)?

Question5: The debate around regulating the social media industry is based on risks associated with:

Question6: A bond issued to finance construction of a solar farm is an example of a:

Question7: When searching for an asset manager with an ESG approach, in the request for proposal (RFP) an institutional asset owner would most appropriately ask:

Question8: Which of the following is most likely to cast doubt on a director's independence?

Question9: Which of the following is an environmental megatrend that has a severe social impact?

Question10: Globalization has led to a reduction in:

Question11: Avoiding long-term transition risk can most likely be achieved by:

Question12: According to the Sustainability Accounting Standards Board (SASB), GHG emission is material for more than
50% of the industries in which sector?

Question13: The UK's Green Finance Strategy identifies the policy lever of financing green as

Question14: Which of the following is most likely categorized as an external social factor?

Question15: To fall in scope of mandatory compliance with the EU's Corporate Sustainability Reporting Directive (CSRD), companies would need to meet which of the following conditions?
Condition 1EUR40 million in net turnover
Condition 2EUR20 million in assets
Condition 3250 or more employees

Question16: Measuring a portfolio's carbon intensity using the European Union's Sustainable Finance Disclosure Regulation (SFDR) accounts for:

Question17: Natural language processing (NLP) is employed as a tool in ESG investing to:

Question18: A discount retailer facing high employee turnover due to poor working conditions will most likely experience:

Question19: When incorporating ESG factors into valuation inputs, which of the following would most likely require the lowest discount rate?

Question20: When accounting for a critical weakness in a company's environmental management process, an analyst using a discounted cash flow (DCF) valuation model should:

Question21: According to the Brunel Asset Management Accord, which of the following is most likely a concern for the asset owner? A fund manager:

Question22: In contrast to engagement dialogues, monitoring dialogues most likely involve:

Question23: Information for use in ESG tools can be collected directly via:

Question24: ESG screens embedded within portfolio guidelines can be used as:

Question25: Which of the following would credit rating agencies (CRAs) most likely focus on in order to test how well an issuer's management uses the assets under its control to generate sales and profit?

Question26: A portfolio manager may need to adopt a more appropriate ESG benchmark rather than a broad market benchmark if the degree of exclusions results in:

Question27: Norms-based screening is the largest investment strategy in

Question28: Compared to an optimal portfolio that does not have any ESG restrictions a portfolio that optimizes for multiple ESG factors will most likely experience

Question29: Corporate engagement and shareholder action is the predominant investment strategy in:

Question30: Which of the following statements about corporate governance is most accurate?

Question31: Which of the following is one of the four phases of activities contained by the LEAP assessment framework developed by the Taskforce on Nature-related Financial Disclosures (TNFD)?

Question32: When using a threshold assessment to integrate governance factors into the investment decision-making process, fund managers most likely focus on the:

Question33: Which of the following is most likely the primary driver of ESG investment for a life insurer?

Question34: Which of the following is an example of a just' transition with regards to climate change?

Question35: The Cadbury Commission proposed that:

Question36: Which of the following statements about materiality is most accurate?

Question37: Which of the following ESG screening methodologies is most likely to result in a well-diversified portfolio?
Screening on:

Question38: With respect to ESG engagement for a company that is a going concern, the interests of equity investors and debt investors are most likely.

Question39: Credit-rating agencies are most likely classified as:

Question40: Analyzing a portfolio's social impact exposure is best achieved by first understanding material social topics at:

Question41: Which of the following statements about the decoupling of economic activities from resource usage is most accurate?

Question42: Which of the following would credit rating agencies (CRAs) most likely focus on in order to test how ESG factors affect an issuer's ability to convert assets into cash?

Question43: A company's emission reduction commitments are best evaluated using:

Question44: Investors in a natural gas power plant identified a material risk that clients will switch to lower greenhouse gas (GHG) energy sources in the future. This risk is best incorporated in the financial modeling of:

Question45: As a percentage of the overall materiality threshold reported in enhanced audit reports, performance materiality is typically:

Question46: Which of the following scenarios best illustrates the concept of a 'just' transition?

Question47: According to most of the world's corporate governance codes, the expectation is that remuneration committees are populated by:

Question48: Among asset owners, which of the following is most likely a challenge to ESG integration?

Question49: EU regulators manage the independence of audits for public companies by:

Question50: A company reduces water usage and increases usage of more expensive resources after regulations become more stringent. This most likely impacts:

Question51: Which of the following engagement styles is most likely closely aligned with passive investments?

Question52: To produce a rating, an ESG rating provider will most likely apply a weighting system to

Question53: Which of the following statements is aligned with the Pensions and Lifetime Savings Association (PLSA) Stewardship checklist?
Statement 1: Investors should seek to ensure that fund managers deliver effective separation of long-term ESG factors from their investment approach.
Statement 2: Investors should work with their advisers to consider the level of resource available for stewardship activities.

Question54: Which of the following is an example of secondary data?

Question55: The correlation between ESG ratings of issuers by different ESG rating providers is:

Question56: Compared to developed markets, ESG investing in emerging markets is most likely characterized by:

Question57: The COVID-19 pandemic led to increased:

Question58: The Integrated Biodiversity Assessment Tool (IBAT) is best described as an interactive mapping tool allowing decision makers to:

Question59: Stock exchanges can contribute to the growth of ESG market by:

Question60: Which of the following scenarios best illustrates the concept of a 'just' transition?

Question61: All else equal, a higher discount rate applied to a company's discounted cash flow (DCF) analysis will lead to:

Question62: Which of the following ESG investing approaches aims to drive positive change in the way investee companies are governed and managed?

Question63: Negative screening for ESG factors in portfolios:

Question64: Which of the following is a form of individual engagement?

Question65: According to the UK Investor Forum which of the following is a key success factor for effective engagement?

Question66: With respect to exclusion policies, which of the following falls outside of the traditional spectrum of responsible investment?

Question67: Which of the following factors is most relevant to the performance outlook of a military equipment manufacturer?

Question68: According to the framework of the Task Force on Climate-Related Financial Disclosures (TCFD): the formula for carbon intensity at the portfolio level weighs emissions based upon an issuer's:

Question69: A bond issued to fund projects that provide a clear benefit to the environment best describes a:

Question70: According to the Taskforce on Nature-related Financial Disclosures (TNFD), the four realms of nature include

Question71: Companies may be excluded from the UK Modern Slavery Act on the basis of:

Question72: Excluding investment in companies with a history of labor infractions is best categorized as a(n):

Question73: Which of the following is most likely a reason for concern regarding the quality of a company's ESG disclosures?

Question74: Exclusionary screening:

Question75: Which of the following countries is most likely to use a two-tier board structure?

Question76: All else equal, which of the following companies would most likely have a lower price-to-earnings (P/E) ratio than industry average?

Question77: What type of provider of ESG-related products and services is CDP (formerly known as Carbon Disclosure Project)?

Question78: Which of the following investor types most likely prefers exclusions as an ESG approach?

Question79: Asset owners can reflect ESG considerations through corporate engagement by:

Question80: Philanthropy is most likely associated with:

Question81: Which of the following best summarizes the studies on carbon risk?

Question82: Which of the following statements about proxy voting is most accurate? The majority of asset owners:

Question83: When optimizing a portfolio for ESG factors, as constraint parameters are tightened, the deviation from an optimal portfolio most likely:

Question84: Jurisdictions are most likely to impose extraterritorial laws in relation to:

Question85: In which country is the nominations committee drawn from shareholders rather than being a committee of the board?

Question86: 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:

Question87: In contrast to engagement dialogues, monitoring dialogues most likely involve:

Question88: With respect to the current state of ESG disclosure globally, issuer reporting frameworks for ESG information are:

Question89: Under which perspective did the Freshfields Report argue that integrating ESG considerations was necessary in all jurisdictions?

Question90: A challenge to ESG integration at the asset allocation level when using mean-variance optimization is that it:

Question91: As policies on ESG issues and financial regulation across countries reach maturity, which of the following is least likely to occur?

Question92: With respect to ESG integration in private equity, which of the following is most likely a challenge an investor may face?

Question93: Which of the following is most likely categorized as an external social factor?

Question94: Which of the following subclasses is most likely to have the highest level of ESG integration using Mercer's ratings?

Question95: During the decommissioning phase of a company's mining project, the government tightens regulations on land restoration. Which of the following is most likely impacted?

Question96: What type of provider of ESG-related products and services is CDP (formerly known as Carbon Disclosure Project)?

Question97: Compared with younger people, older people are more likely to have:

Question98: The investor initiative FAIRR focuses on screening out companies

Question99: A difficulty of integrating ESG into sovereign debt analysis is most likely the:

Question100: Which of the following statements regarding optimization of portfolios for ESG criteria is most accurate?

Question101: The European Union (EU) Ecolabel:

Question102: An unfavorable corporate governance assessment would most likely be incorporated in valuation through reduced:

Question103: In the ESG rating process, an assessment of risk, policies, and preparedness is best categorized as part of a(n):

Question104: 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:

Question105: The United Nations Framework Convention on Climate Change (UNFCCC) aims to:

Question106: Which of the following is an example of a climate adaptation measure?

Question107: Corporate governance in the UK is notable for:

Question108: Human rights violations are most likely to affect workers employed

Question109: Fund labelers are most likely classified as:

Question110: 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:

Question111: Regrowing previously logged forests is most likely an example of climate:

Question112: Which of the following statements regarding ESG screening is most accurate?

Question113: Which of the following parties is most likely to help investors identify the extent and depth to which investment funds integrate ESG?

Question114: Which of the following statements about quantitative ESG analysis is most accurate?

Question115: With regard to screening, exclusions that are not supported by global consensus are best described as:

Question116: Regarding ESG issues, which of the following sets the tone for the investment value chain?

Question117: Best-in-class funds most likely:

Question118: When portfolio managers upload their portfolios onto third-party ESG data provider online platforms, most of these platforms are capable of:

Question119: In the European Union, publicly listed firms are obliged to change auditors at least every:

Question120: Which of the following is the main driver of stewardship efforts?

Question121: According to the Stockholm Resilience Centre, which of the following planetary boundaries have already been crossed as a result of human activity?

Question122: A social media company faces criticism from a consumer action group for selling user data to advertising clients. A potential lawsuit will have the greatest direct effect on the company's:

Question123: Which of the following ESG screening methodologies is most likely to result in a well-diversified portfolio?
Screening on:

Question124: Interest by retail investors in responsible investing has:

Question125: According to the Global Sustainable Investment Alliance (GSIA), as of 2020, the largest sustainable investment strategy globally is:

Question126: When undertaking an ESG assessment of a private equity deal ESG screening and due diligence will most likely take place during:

Question127: When assessing credit and ESG ratings, which of the following statements is most accurate?

Question128: Which of the following greenhouse gases (GHGs) has the longest lifetime in the atmosphere?

Question129: Which of the following emphasizes that short-term investment performance will be of limited significance in evaluating the manager?

Question130: Which element of EU Taxonomy for Sustainable Activities screening is most closely associated with social factors?

Question131: In response to policy changes, several of the world's largest automakers made pledges to halt producing cars with internal combustion engines by 2035. Which of the following would an asset manager most appropriately use to address this trend?

Question132: Under the UK listing regime, Class 1 transactions:

Question133: Which of the following is an example of collaborative engagement?

Question134: Which of the following statements is least accurate? Compared to social and environmental factors, governance has a:

Question135: Which of the following transition risks is most likely associated with increased environmental standards?

Question136: The Sustamalytics database is most likely used for: