Professional Documents
Culture Documents
1. Why do traditional valuation models, like discounted cash flow, fail at capturing the full range of risks
companies face today? Choose one.
A. They do not consider compliance risk.
B. They offer limited, deterministic and potentially misleading insights.
C. They are outdated.
D. They do not consider reputational risk.
D. Externality. Ans
Explanation : Externality refers to the positive or negative effects on third parties arising from
manufacturing and consuming goods and services. Ideally, the negative effects of economic transitions
on third parties should be reduced.
6. Refers to investment decisions that take into account the environmental, social, and governance
(ESG) factors of an economic activity or project. It is the intersection between the economy, social
realities, and environmental health.
A. Sustainability Reporting
B. Corporate Social Responsibility
C. Sustainability
D. Triple Bottom Line
E. Externality
C. Sustainability. Ans
Explanation : Sustainability refers to investment decisions that take into
account the environmental, social, and governance (ESG)
factors of an economic activity or project. It is the intersection
between the economy, social realities, and
environmental health
B. Amazon. Ans
Although Microsoft had the highest disclosure
score in 2020. Amazon has had the greatest
increase in ESG data disclosure. Since 2012
their data disclosure has increased by 80%.
8. Based on the underlying input data for the environmental and social pillars, what can you infer about
materiality for the packaged food industry?
A. Energy, sustainable packaging, and customer welfare are most material for this industry
B. Energy, occupational health & safety, and marketing and labeling are most material for this industry
C. Supply chain management and customer welfare are most material for this industry
D. Energy, sustainable packing, and water management are most material for this industry
A. Energy, sustainable packaging, and customer welfare are most material for this industry. Ans
Explanation : Energy, packaging, and customer welfare drive
ESG scores for packaged food companies. In
the ESG materiality framework document, these
issues have 1 under the column labeled 'Bl
Issue Prioritv'. This indicates these issues are
most material for the packaged food industry.
10. How does the Volkswagen scandal highlight the need for integrating ESG factors into an investor's
decision-making?
A. Volkswagen's actions led to a 37% drop in share price and billions of dollars in penalties.
B. Volkswagen's actions destroyed the environment by using cars that were designed to be
environmentally- friendlv.
C. Owners of Volkswagen vehicles were unable to sell
D. Environmentally-conscious consumers lost faith in the Volkswagen brand and took their business
elsewhere.
A. Volkswagen's actions led to a 37% drop in share price and billions of dollars in penalties. Ans
Explanation : While all of these choices are true statements,
the financial hit that Volkwagen and its investors
took most highlight the need for using ESG
factors when making investment decisions.
11. Open and review Bloomberg's FA ESG<GO> screen for ICICI Bank. What can we learn from the bank's
ESG disclosures?
A. ICICI Bank does not consistently disclose data on
energy consumption.
B. The average age of ICICI Bank's Board of Directors is
decreasing.
C. ICICI Bank discloses more Environmental data points
than Governance data points.
D. ICIC Bank does not have manv policies in place to
protect its emplovees.
12. Review the ESG Materiality Frameworks for food retailer Tesco and aircraft producer Boeing. Which
of the following statements is true?
A. Boeing consumed more total energy than Tesco in 2020.
B. The Framework considers a greater number of Social factors to be relevant to the Retail & Wholesale
industry compared to the Aerospace & Defense industry.
C. In 2020, Boeing had a greater percentage of board members that are women than Tesco.
D. For the Aerospace & Defense industry, the Environmental section of the Framework focuses more on
sustainably-sourced products; for the Retail & Wholesale industry, it focuses more on waste and
emissions.
B. The Framework considers a greater number of Social factors to be relevant to the Retail & Wholesale
industry compared to the Aerospace & Defense industry.Ans
Explanation : Tesco, in the Retail & Wholesale industry, has
64 Social factors that are rated as material.
Boeing, in the Aerospace & Defense industry,
has 27. Tesco had 30% board members that
are women, while Boeing had 25%. Tesco's
Total Energy Consumption was 6839.91
thousand megawatt hours, whereas Boeing's
was 4499.00. The Aerospace & Defense
industry's Environmental framework features
more line items for waste and emissions. The
Retail & Wholesale industry's Environmental
framework focuses more on sustainably-
sourced products like eggs and meat.
A. An American company, in support of its employees protesting apartheid, divesting from companies
doing business in South Africa. Ans
Explanation : Social responsible investing, or SRI, excludes
investments in firms that conflict with social.
moral, personal, or ethical values. A company
that invests in the moral direction of its
employees, like one divesting from investments
linked to South Africa, is a prime example. A
company following Islamic Finance principles
would not invest in alcohol. A university would
not invest in a military defense company to
support students protesting war.
15. Andrew also works on the ESG Investment Team at Worthing Capital Management. He is responsible
for managing portfolios in accordance with sustainable policies. Andrew is
A. a Portfolio Manager.
B. a Market Data/IT Representative.
C. an ESG Analyst.
D. a Risk Officer.
16. Why is Bloomberg's GHG Estimate model intensity on the high side for companies like Cronos?
A. Partly due to stil-low sales and having fewer growing facilities
B. Partly due to still-high sales and having fewer growing facilities
C. Partlv due to still-low sales and having more growing facilities
D. Partly due to still-high sales and having more growing facilities
A. Partly due to stil-low sales and having fewer growing facilities. Ans
In 2019. Ans
C. The ESG movement in capital markets is showing no signs of slowing down. Ans
Explanation : It is most likely that Akshay would think the ESG movement in capital markets is showing
no signs of slowing down.
This does not mean, however, that ESG is well integrated into mainstream investment management.
According to the Global Sustainable
Investment Alliance, the global sustainability market represented around $35.3 trillion at the start of
2020, roughly 35% of the global
$103.1 trillion managed by UNPRI signatories.
B. Asia. Ans
Based solelv on the data in the chart. Asia is performing worst on average in sustainability- data
reporting and ranking.
2 Proposals. Ans
23. Of the following options, which is the most likely reason that U.S. ESG funds do well when the
market is doing pporly?
A. Large U.S. ESG funds tend to have more high-volatility stocks that are highly profitable and have a lot
of debt.
B. Large U.S. ESG funds are overweight in Utilities and Energy, which are the most successful during a
downtum.
C. Large U.S. ESG funds tend to have more low-volatility stocks that are highly profitable and do not
have a lot of debt.
D. Large U.S. ESG funds are underweight in Utilities and Energy, which struggle the most during a
downturn.
C. Large U.S. ESG funds tend to have more low-volatility stocks that are highly profitable and do not
have a lot of debt. Ans
A. People from all demographics want their investments to align with their values, and regulations have
increased to support these investors. Ans
C. Pension funds hold a vast amount of assets and their investments have long-term horizons. Ans
Explanation : Pension funds hold tens of trillions of dollars in assets globally, which gives them a lot of
power. Additionally, their clients are future
retirees, investing for the long-term, often for decades. With power, money, and a clientele interested in
sustainable investing, pension funds can push for companies to become more sustainable and for
regulations to be
enacted. In order to further represent their clients' wishes, pension funds often advocate for and do
research on sustainable investment initiatives.
A. Reckitt Benckiser and Diageo PLC because a high ESG disclosure score is better.Ans
Explanation : Worthing Capital is looking for investments that have the main criteria of high ESG scores.
ESG Disclosure Scores on the Terminal are on a scale of 0-100, with higher being better. Reckitt
Benckiser and Diageo
PLC are the British companies with the highest ESG Disclosure Scores on this list.
C. Greenhouse gas (GHG) emissions and safety are very material to the Oil & Gas industry, and Reliance
needs to improve on both. Ans
Explanation : Since Reliance is the Oil & Gas industry, emissions and safety are very material and the
hardest to accomplish. In the Weight column, we can see just how important they are: GHG Emissions
Management has the highest weight in the Environmental category and Occupational Health & Safety
Management has the highest weight in the Social category. Reliance is ranked below the median on
emissions and lagging on safety. They need to improve their performance on both to outrank their
peers.
32. An analyst created the provided image on SRCH, Bloomberg's fixed income search function. What
can be deduced from the analyst's search?
A. The analyst is searching for bonds in the Energy industry from companies in Africa that mature in less
than 5 years.
B. The analyst is searching for bonds in the Health Care sector from Western Europe that are not
investment grade.
C. There are so few results because not many investment grade Utilities bonds mature in 5 or more
years.
D. The net proceeds of the single bond in the result will be applied towards an environmental
sustainabilitv purpose.
In this search, the analyst is looking for active bonds in the Health Care sector that have a Green
Instrument indicator.
which means that the net proceeds will be applied towards green projects or purposes. Additionally, the
analyst searches for bonds that have Western Europe as the region of risk, that are investment grade,
and that mature 5 or more vears from the given date
33. A credit analyst has been tasked with adding more green bonds to his firm's portfolio
without sacrificing yield, or spread value. He created this Fixed Income Worksheet on
the Terminal function FIW that shows U.S. Electric bonds with a BBB+ to BBB- rating
Then he used the Group By field to sort the data into green bonds (the green bubbles)
and non-green bonds (blue bubbles). He also added a regression curve for the
displayed bonds: the ones above the curve have a higher yield and the ones below it
have a lower yield. In which pink lettered section is the analyst most likely to start his
deeper credit research?
A. Choice A. because CMS 4.75 is a green bond with the highest spread above the
regression curve
B. Choice C. because WEC 2.2 is a green bond with a spread below the regression curve
C. Choice B, because AES 1.375 is a green bond with a spread above the regression curve
D. Choice D, because these bonds have a l
C. Choice B, because AES 1.375 is a green bond with a spread above the regression curve. Ans
Explanation : On this screen, analysts typically focus on bonds that are in the top left as a starting point.
Higher bubbles with a greater spread and a shorter maturity translate as more money faster. Choice A
would be worthy of further investigation if it were a green bond, which the analyst has been tasked with
finding. However, the key tells us it is not. Choice B is a green bond and, of the provided choices, it has a
higher yield than many of the non-green bonds - it is certainly above the regression curve Choice C
features green bonds as well; however, these are below the regression curve, which means they are not
performing as well. Choice D shows bonds that are not performing as well and also have a longer
duration. Choice B is the best
choice for more research because it is a green bond that is performing better than most of the other
non-green bon