CPM Study Guide 2026
Everything you need to pass the CPM exam in one place: the exam format, every topic to study, real practice questions with explanations, flashcards, and full-length practice tests. Free, no sign-up needed.
📋 CPM Exam Format at a Glance
📚 CPM Topics to Study (22)
✍️ Sample CPM Questions & Answers
1. A portfolio manager benchmarked to the Bloomberg U.S. Aggregate Bond Index takes a significant underweight in government bonds and overweight in corporate bonds. This represents:
Deviating meaningfully from benchmark sector weights (underweighting governments, overweighting corporates) is an active sector rotation strategy driven by a view on relative value.
2. Which of the following is the primary benefit of international diversification?
International diversification reduces total portfolio risk when foreign assets have low correlations with domestic assets, though it does introduce currency and geopolitical risks.
3. A portfolio manager uses stress testing to assess portfolio risk. Stress testing differs from standard VaR because it:
Stress testing examines how a portfolio performs under severe, often hypothetical scenarios (e.g., a 2008-style crisis) that may not be captured by historical VaR calculations.
4. Which document should clearly outline client rights and manager responsibilities?
The Investment Management Agreement (IMA) is a legally binding document that formally establishes the relationship between a client and a portfolio manager. It clearly outlines the scope of services, investment objectives, fees, client rights, and the manager's responsibilities, ensuring transparency and mutual understanding.
5. A portfolio manager notices that a fund's returns correlate strongly with a broad market index during downturns but diverge during upturns. This best describes which type of risk?
Downside correlation risk refers to the tendency of assets to become more correlated during market downturns, reducing diversification benefits precisely when they are most needed.
6. Rebalancing a portfolio to its strategic asset allocation targets serves to:
Rebalancing restores the original risk/return profile and has the side effect of systematically trimming outperformers (selling high) and adding to underperformers (buying low).