CFA Institute Sustainable-Investing Question Answer
Elements of ESG integration include adjusting:
Financial forecasts only
Valuation multiples only
Both financial forecasts and valuation multiples
ESG integration requires adjustments to both:
Financial forecasts(e.g., projected cash flows for firms with environmental risks)
Valuation multiples(e.g., ESG-driven discount rate adjustments)
This holistic approach ensuressustainability risks are fully reflected in investment models.
TESTED 01 Jan 2026
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