CFA Level 1 Exam Question Bank 2024, Sample Questions With Answers

Question #1

Which economic model supports the theory that budget deficits cause inflation?

A. he supply-side model

B. he crowding-out model

C. one of these models support the theory

D. he new classical model

E. he Keynesian model

View answer

Correct Answer: B

Question #2

A firm wants to decrease its debt-to-asset ratio without affecting its current ratio. Which of the following actions can it undertake?

A. etire some of its outstanding bonds by using proceeds from the sale of old assets

B. , II & III

C. & IV

D. V only

E. I & III

View answer

Correct Answer: C

Question #3

An analyst is using the following information to value AGF Company's common shares. AGF paid a dividend of $1.90 per share last year. Dividends are expected to grow at 6% forever. The risk-free rate is 5%, the market risk premium is 7%, and the beta of the common shares is 1.3. The value of the AGF Company's common shares is closest to:

A. 23

B. 24

C. 33

View answer

Correct Answer: B

Question #4

What incentives does inflation create in consumers and producers?

A. onsumers will save less and producers will invest more

B. onsumers will spend more and producers will produce more

C. onsumers will save more and producers will produce more

D. onsumers will spend more and producers will sell off inventories

E. onsumers will spend less and producers will lay off workers

View answer

Correct Answer: B

Question #5

Suppose we select every fifth invoice in a file. What type of sampling is this?

A. andom

B. one of these answers

C. luster

D. ystematic

E. tratified

View answer

Correct Answer: D

Question #6

Delroy McWilliams, a quantitative analyst with Churn Brothers Brokerage, is examining a data sample and has amassed the following information:Standard deviation of the sample: 70Number of observations: 600Sample mean: 812Assume that Mr. McWilliams formulates a null hypothesis that states that the value of the population mean is equal to 800. Additionally, assume that the population standard deviation is unknown. Given this information, what is the standard error of the estimate? Further, what is the test st

A.

B.

C. one of these answers is completely correct

D.

E.

F.

View answer

Correct Answer: C

Question #7

The consistency principle

A. equires that the company use a selected accounting method period after period

B. ll of these answers are correct

C. s limited to inventory pricing methods

D. equires that a company use one inventory method exclusively

View answer

Correct Answer: A

Question #8

A statistician is working with the following dataset:129, 162, 159, 192, 142, 195, 203, 177, 138, 187, 149, 123, 146, 169, 162, 191, 155, 146, 176, 182, 174, 190, 168.The relative frequency in the frequency class 150-175 equals ________.

A.

B.

C.

D.

View answer

Correct Answer: A

Question #9

Which of the following is/are required by AIMR-PPS with regards to calculation of returns?

A. otal return - realized and unrealized gains plus income - should be used

B. , II and III

C. only

D. and III only

E. I and III only

View answer

Correct Answer: C

Question #10

A new payroll tax on businesses results in an increase in cost for each unit of production. Assuming no change in income or in the production mix, would this cause inflation?

A. es, because producers would pass new costs onto consumers

B. o, because firms would choose to use more capital and less labor

C. es, because government spending would increase aggregate demand

D. es, because higher costs result in less production and lead to higher prices

E. o, because firms are "price takers" and will be unable to increase prices

View answer

Correct Answer: D

Question #11

Sanctions that AIMR may impose on its members include:

A. evocation of the member's registration as an investment advisor

B. I and IV only

C. and III only

D. I, III and IV only

E. , II, III and IV

View answer

Correct Answer: A

Question #12

If you make an initial deposit $500 now into an account, an additional deposit of $800 in 2 years, and a final deposit of $300 in 4 years, how much is in your account in 5 years? Assume the account earns interest at 8% per year, compounded annually.

A. 2,120

B. 2,408

C. 2,066

D. 1,905

E. 2,331

View answer

Correct Answer: C

Question #13

Which of the following statements is correct regarding Standard II (A) Use of Professional Designation?

A. oe Martin passed Level I and Level II of the CFA exams and is scheduled for the next Level III exam

B. ll of these answers are correct

C. oe Martin passed Level I and Level II of the CFA exams and is scheduled for the next Level III exam

D. oe Martin passed Level I and Level II of the CFA exams, but is not scheduled for the next Level III exam

View answer

Correct Answer: C

Question #14

The Income Statement:

A. eflects the current operating performance of the firm

B. , II & IV

C. I & III

D. , II, III & IV

E. only

View answer

Correct Answer: D

Question #15

Under an inflationary environment with a constant inventory quantity, the LIFO Reserve tends to ________.

A. ncrease over time

B. ecrease over time

C. tays constant over time

D. luctuate with COGS

View answer

Correct Answer: A

Question #16

The classification guidelines of SFAS 95 have not created problems for analysts of the cash flow statement in the following area

A. ifferences due to some accounting methods

B. oncash transactions

C. ong-term borrowings

D. nterest and dividends received

E. nterest paid

View answer

Correct Answer: C

Question #17

Standard V (A), Prohibition against Use of Material Nonpublic Information applies to

A. ll members of the investment community

B. ecipients of information who are not directly or indirectly associated with the firm the material nonpublic information is about

C. ecipients of information who are directly or indirectly associated with the firm the material nonpublic information is about

D. one of these answers

View answer

Correct Answer: B

Question #18

A study of the opinion of designers with respect to the primary color most desirable for use in executive offices showed that:Primary Color Number of OpinionsRed 92Orange 86Yellow 46Green 91Blue 37Indigo 46Violet 2What is the probability that a designer does not prefer blue?

A. one of these answers

B.

C.

D.

E.

View answer

Correct Answer: B

Question #19

A firm has a high debt-to-asset ratio. In an inflationary environment, in order to improve this ratio in earlier years, it will prefer:

A. IFO inventory valuation and accelerated depreciation

B. IFO inventory valuation and straight-line depreciation

C. IFO inventory valuation and straight-line depreciation

D. IFO inventory valuation and accelerated depreciation

View answer

Correct Answer: B

Question #20

The primary determinant of a fiduciary's powers and duties are to be found in the ________.

A. oard of director's meeting minutes

B. overning documents (trust documents & investment management agreements)

C. DIC General Rules

D. RISA Statement of Procedures

E. one of these answers

F. RISA Funding Guidelines

View answer

Correct Answer: B

Question #21

Within the Keynesian aggregate expenditure model, the central catalyst that leads to changes in output and employment is changes in

A. rices

B. ggregate supply

C. age rates

D. ggregate expenditures

View answer

Correct Answer: D

Question #22

Stock dividends and stock splits differ in that

A. tock splits are paid in additional shares of common stock, whereas a stock dividend results in replacement of all outstanding shares with a new issue of shares

B. stock dividend results in a decline in the par value per share

C. n a stock split a larger number of new shares replaces the outstanding shares

D. tock splits involve a bookkeeping transfer from retained earnings to the capital stock account

E. one of these answers

View answer

Correct Answer: C

Question #23

An analyst is evaluating an annual-pay bond with a yield to maturity of 7.0%. The bond-equivalent yield of this bond is:

A. qual to 7

B. ess than 7

C. reater than 7

View answer

Correct Answer: B

Question #24

A ________, which is between a bank and a customer (or another bank), specifies delivery at a fixed future date, of a fixed amount of one currency against dollar payment.

A. oreign exchange contract

B. orward contract

C. utures contract

D. urrency arbitrage

E. ross rate

View answer

Correct Answer: B

Question #25

Which of the following AIMR Standards states that referral fees must be disclosed in writing to clients or customers?

A.

B. I (A)

C. V (B

D. V

View answer

Correct Answer: C

Question #26

The balance sheet of firm A shows the following:Cash & Cash equivalents 386Receivables 119Inventories 204Marketable securities 143Short-term loans 649Current portion of long-term debt 312The cash ratio of the firm equals ________.

A.

B.

C.

D.

View answer

Correct Answer: A

Question #27

The p-value in hypothesis testing:

A. quals the significance level

B. s less than the probability of type I error

C. quals the probability of type II error

D. one of these answers

View answer

Correct Answer: D

Question #28

Which of the following relationship is true about the liquidity ratios?

A. ash ratio > Quick ratio > Current ratio

B. uick ratio > Cash ratio > Current ratio

C. ash ratio < Quick ratio < Current ratio

D. ash ratio < Current ratio < Quick ratio

View answer

Correct Answer: C

Question #29

John's great-grandfather left him $50 when he died 80 years ago in an account paying 8% per year, compounded annually. How much would the account hold for John now?

A. 407

B. 24,229

C. 24,113

D. 22,504

E. 23,597

View answer

Correct Answer: E

Question #30

What is the effective date for compliance with the AIMR-Performance Presentation Standards for including accrued income in market value performance calculations?

A. anuary 1, 1997

B. anuary 1, 1993

C. uly 1, 1995

D. anuary 1, 1992

View answer

Correct Answer: A

Question #31

You have set up a test of a suitably phrased null hypothesis. After analyzing the statistical underpinnings of the test and the stringency requirements you have imposed, you have determined that the probability of rejecting the null hypothesis equals 30%. The probability that you will reject the null hypothesis when it is true is equal to 13% and the probability that you will reject the null hypothesis when it is false is equal to 17%. The significance level of your test equals ________.

A. 7%

B. %

C. 0%

D. 3%

View answer

Correct Answer: D

Question #32

If the alternative hypothesis states that u(Mu) > 6,700, what is the rejection region for the hypothesis test?

A. enter

B. one of these answers

C. ower tails

D. pper tail

E. oth tails

View answer

Correct Answer: D

Question #33

For an upcoming sight-seeing visit to India, a U.S. resident recently purchased a hundred thousand Indian Rupees. His action

A. reated a credit balance in the U

B. reated a debit balance in the U

C. reated a deficit in the U

D. one of these answers

View answer

Correct Answer: B

Question #34

Black Oil is an oil and gas exploration and production company. Black's management hedges its crude oil production using futures contracts. Which of the following would be the least likely method Black would use to close out the futures position?

A. olding the cash settled future until expiration

B. hysically settling according to exchange rules

C. ffsetting the transaction by shorting the oil futures contract on the same exchange

View answer

Correct Answer: C

Question #35

Which of the following is/are true under GAAP?

A. nventories can only be "written down" but not "written up

B. I only

C. , II & III

D. II only

E. & III

View answer

Correct Answer: C

Question #36

A study of the opinion of designers with respect to the primary color most desirable for us in executive offices showed that:Primary Color Number of OpinionsRed 92Orange 86Yellow 46Green 91Blue 37Indigo 46Violet 2What is the probability that a designer does not prefer red?

A.

B.

C.

D.

E. one of these answers

View answer

Correct Answer: C

Question #37

________ risk is the risk that a bank will deliver currency on one side of a foreign exchange deal while the counterparty does not send any money in return.

A. rading

B. ettlement (Herstatt)

C. oreign Exchange

D. xchange

E. redit

View answer

Correct Answer: B

Question #38

The basic asset-liability equation, assets = liabilities + shareholder equity implies:

A. perating activities = financing activities

B. nvesting activities = financing activities

C. nvesting activities = operating activities

D. one of these answers

View answer

Correct Answer: B

Question #39

When merchandise inventory is purchased under a periodic system, which account is debited?

A. ccounts Payable

B. ash

C. erchandise Inventory

D. urchases

View answer

Correct Answer: D

Question #40

Standard II (B) deals with ________.

A. one of these answers

B. lagiarism

C. se of Professional Designation

D. undamental Responsibilities

E. rofessional Misconduct

F. bligation to Inform Employer of Code and Standards

View answer

Correct Answer: E

Question #41

A commodity market is in contango if:

A. he spot price is higher than the futures price

B. he spot price is equal to the futures price

C. he spot price is lower than the futures price

View answer

Correct Answer: C

Question #42

What sample statistic is used to estimate a population value?

A. one of these answers

B. oint estimate

C. arameter

D. nterval estimate

E. ampling error

View answer

Correct Answer: B

Question #43

Use the table below to choose the correct answer.Time Period Actual Inflation14 percent24 percent36 percent48 percentAccording to the adaptive expectations hypothesis, at the beginning of period 3, decision makers would expect inflation during period 3 to be ________.

A. percent

B. percent

C. percent

D. percent

View answer

Correct Answer: D

Question #44

What is the relationship between the variance and the standard deviation?

A. ariance is the square root of the standard deviation

B. one of these answers

C. o constant relationship between the variance and the standard deviation

D. ariance is twice the standard deviation

E. ariance is the square of the standard deviation

View answer

Correct Answer: E

Question #45

If the French franc moves from 8.00 to 7.10 francs to the dollar:

A. he dollar now trades for 0

B. he French franc has depreciated

C. he franc now trades for 7

D. he French franc has appreciated

E. he U

View answer

Correct Answer: D

Question #46

A dividend that distributes more than 25% of the outstanding shares before the dividend is called:

A. liquidating dividend

B. llegal

C. large stock dividend

D. capitalizing dividend

View answer

Correct Answer: C

Question #47

An investor holds a long position in a futures contract on the S&P 500 Index. The futures contract has a term of three months, requires 10% margin, and has a futures price of 1,574. The investor posted $37,500 into the margin account at contract initiation. After the contract initiation, the futures price on the index experienced infrequent but dramatic drops. Two days ago, the investor received a margin call and was required to post an additional $17,500 to the margin account. Which of the following is mos

A. 17,500

B. 18,750

C. 22,500

View answer

Correct Answer: C

Question #48

Which of the following is/are advantages of accelerated methods of depreciation?

A. hey implicitly recognize the loss of productivity and increased maintenance costs over time

B. & III

C. I only

D. , II & III

E. & II

View answer

Correct Answer: C

Question #49

A piece of equipment costs $200,000, has a useful life of 5 years and an estimated salvage value of $50,000. How much depreciation expense should the company recognize in year 4 if it is using the sum-of-the- years' digits method of depreciation?

A. 30,000

B. 80,000

C. 26,666

D. 20,000

View answer

Correct Answer: D

Question #50

How many years would it take for a deposit of $10,000 to become $200,000, if interest of 9% per year is compounded annually?

A. 00

B. 8

C. 34

D. 4

E.

View answer

Correct Answer: D

Question #51

In a given year, Gondolpha had total imports of 976 and total exports of 734. It also made direct foreign investments of 297. There were no other transactions on the BOP account. The Official Reserves account:

A. ecreases by 1,413

B. ncreases by 539

C. ecreases by 539

D. ecreases by 55

View answer

Correct Answer: C

Question #52

Which of the following is not a common tool used in financial statement analysis?

A. rend series analysis

B. andom walk analysis

C. ommon size statement analysis

D. atio analysis

View answer

Correct Answer: B

Question #53

Sweetwater & Associates write weekend trip insurance at a very nominal charge. Records show that the probability that a motorist will have an accident during the weekend and file a claim is 0.0005. Suppose they wrote 400 policies for the coming weekend, what is the probability that exactly two claims will be filed?

A.

B.

C.

D.

E. one of these answers

View answer

Correct Answer: A

Question #54

Which of the following are true regarding correlation?

A. orrelation is a number between 0 and 1

B. ll but I

C. ll are true

D. ll but III

E. ll but II

View answer

Correct Answer: A

Question #55

When an analyst reaches conclusions about a firm's impending announcements before the actual release of information, using non-material, non-public information in conjunction with public information, insider trading charges cannot be leveled against her. This arises from a legal defense against insider trading charges knownas:

A. he Shingles Theory

B. he question is based on false premise

C. he Insider Legal Statute

D. he Mosaic Theory

View answer

Correct Answer: D

Question #56

How many deposits of $250 a month, beginning next month, are needed before an account has $200,000 in it, assuming it had a balance of $0 at the beginning and that interest is 6% per year, compounded monthly?

A. 19

B. o solution/Error

C. 22

D. 00

E. 6

View answer

Correct Answer: C

Question #57

IRK Investments is actively engaged in various risk management strategies involving swaps. The company currently has a position as the fixed rate payer in a quarterly fixed for equity swap with an interest rate of 6.8%, a tenor of five years and notional principal of $10 million. Payments on the swap are netted. The underlying equity return is based on the S&P 500 Index. IRK currently owes a payment of $400,000. Which of the following is most likely correct?

A. he underlying equity index experienced a loss greater than 1

B. he underlying equity index experienced a loss less than 1

C. he underlying equity index experienced a loss equal to 1

View answer

Correct Answer: A

Question #58

The balance sheet of Firm A shows the following:Cash & Cash equivalents 432Receivables 98Inventories 143Marketable securities 329Short-term loans 732Current portion of long-term debt 210The quick ratio of the firm equals ________.

A.

B.

C.

D.

View answer

Correct Answer: A

Question #59

If consumption equals 1,100 when disposable income is 1,200 and increases to 1,400 when disposable income goes to 1,600, what are the marginal propensities to consume and to save?

A. PC = 1/5; MPS = 4/5

B. PC = 2/3; MPS = 1/3

C. PC = 3/4; MPS = 1/4

D. PC = 1/3; MPS = 2/3

View answer

Correct Answer: C

Question #60

The "Management Discussion and Analysis" section of the stockholder's report need not contain which of the following?

A. nalysis of cash flows and liquidity

B. II & IV

C. II only

D. & II

E. V only

View answer

Correct Answer: A

Question #61

You are examining a special group of 5 stock market indices. Of these 5, the returns were 4%, 8%, 12%, 16%, and 10%. What is the population variance of this group of stock market indices?

A. 0%

B. 6%%

C. 0%%

D. 6%

View answer

Correct Answer: B

Question #62

Standard IV (B.5), Preservation of Confidentiality states:

A. ll of these answers

B. one of these answers

C. embers must release information to AIMR when the Professional Conduct Program is holding an investigation, unless there is a settlement agreement between the parties that stipulates confidentiality

D. f the information is confidential, even illegal activity may not be reported, because there is the issue of trust between parties

E. embers should avoid disclosing any information received from a client except to authorized fellow employees who are also working for the client

View answer

Correct Answer: E

Question #63

In preparing its cash flow statement for the year ended December 31, 1998, Roman Co. collected the following data:Gain on sale of equipment $6,000Proceeds from sale of equipment 10,000Purchase of A.S. Inc. bonds (par value $200,000) 180,000Amortization of bond discount 2,000Dividends declared 45,000Dividends paid 38,000Proceeds from sale of treasury stock(carrying amount of $65,000) 75,000In its December 31, 1998 statement of cash flows, what amount should Roman report as net cash provided by financing acti

A. 20,000

B. 37,000

C. 75,000

D. 30,000

E. 27,000

View answer

Correct Answer: B

Question #64

Under GAAP, when interest rates rise, the carrying value of a long-term bond ________.

A. emains unchanged

B. ncreases

C. epends on the characteristics of the bond

D. ecreases

View answer

Correct Answer: A

Question #65

If the cost of a hamburger is $1.99 today, what would it cost in 30 years, assuming the price increases at a rate of 8% per year, compounded annually?

A. 2

B. 17

C. 6

D. 20

E. 31

View answer

Correct Answer: D

Question #66

Although trade-date accounting is recommended, ________ accounting that is disclosed is acceptable for calculating performance.

A. ettlement-date

B. aintenance

C. ccrual

D. omposite

E. erformance

View answer

Correct Answer: A

Question #67

Emmy Noether is a senior division manager at Harding & Harding, a money management firm. Emmy is quite fastidious about following the rules of the investment industry and has established specific procedures and guidelines designed to prevent any violations. Recently, it surfaced that one of the employees reporting to Emmy, William Bathwater, had been secretly using inside information on a computer maker to generate profits in his portfolio. William had been extremely clever at hiding these profits and only

A. as not violated any standard in the AIMR code of ethics

B. one of these answers

C. iolated Standard III (E) - Responsibilities of Supervisors - by failing to check William's behavior

D. iolated Standard III (B) - Duty to the Employer - by failing to check William's behavior

View answer

Correct Answer: A

Question #68

Which of the following best describes a type II error?

A. he probability of incorrectly failing to reject the null hypothesis

B. 1 - the significance level)

C. he probability of incorrectly rejecting the null hypothesis

D. he power of a test

E. ore than one of these answers is correct

View answer

Correct Answer: A

Question #69

You are given a risk-free rate of 3% per year, a portfolio return of -11% per year, and a standard deviation of portfolio return is 20% per year. What is the Sharpe measure of risk-adjusted performance?

A. 0

B. 0

C. 0

D. 0

View answer

Correct Answer: A

Question #70

Marine Corp. uses the direct method to prepare its statement of cash flows. Marine's trial balance at December 31, 1996 and 1995 are as follows:Dec. 31, 1996 Dec. 31, 1995Debits:Cash $35,000 $32,000Accounts receivable 33,000 30,000Inventory 31,000 47,000Property, plant & equipment1 00,000 95,000Unamortized bond discount 4,500 5,000Cost of goods sold250,000 380,000Selling expenses 141,500172,000General and administrative expenses 137,000 151,300Interest expense 4,300 2,600Income tax expense 20,400 61,200Tota

A. 1,700

B. 3,800

C. 3,600

D. 4,300

E. 4,800

View answer

Correct Answer: B

Question #71

Birch Ltd. had net income for the year of $101,504 and a simple capital structure consisting of the followingcommon shares outstanding:Months OutstandingNumber of SharesJanuary February 24,000March June 29,400July November 36,000December 35,040Assume Birch issued a 20% stock dividend on August 1st. In this case, earnings per share (rounded to the nearest cent) were

A. 2

B. 2

C. 2

D. 4

E. 2

View answer

Correct Answer: B

Question #72

Below is an example of an incorrectly prepared statement of cash flows. The descriptions of activities are correct.Cash from operating activities $60,000Net Income (4,000)Depreciation (2,000)Increase in accounts receivable (1,000)Increase in deferred tax liability $53,000Cash from investing activities ($48,000)Purchase of marketable securities 2,500Dividends received 1,500Dividends paid ($44,000)Cash from financing activities (500)Increase in Short-term debt (2,500)Increase in Long-term debt ($3,000)Increas

A. $45,500)

B. $41,000)

C. one of these answers

D. $48,000)

View answer

Correct Answer: D

Question #73

The allocation of shares in oversubscribed IPOs to investment managers for their personal account is a perk that is most clearly a violation of Standard ________.

A. I (B) - Professional Misconduct

B. V (A

C. one of these answers

D. V (B

E. V (B

View answer

Correct Answer: B

Question #74

Stock dividends have the greatest impact on which section of the balance sheet?

A. he components of stockholders' equity

B. otal stockholders' equity

C. otal assets

D. otal assets and total stockholders' equity

E. etained earnings

View answer

Correct Answer: A

Question #75

Which of the following can be found in Standard II?

A. embers shall not knowingly participate or assist in any violation of laws, rules, or regulations

B. embers shall not participate in any professional conduct involving dishonesty, fraud, deceit, etc

C. embers shall deliver a copy of the Code to their employer

D. embers shall not misrepresent investment performance

E. embers shall exercise diligence and thoroughness in making investment recommendations or in taking investment actions

View answer

Correct Answer: B

Question #76

Which measure of central tendency is found by arranging the data from low to high and selecting the middle value?

A. eometric mean

B. edian

C. one of these answers

D. ean

E. ode

View answer

Correct Answer: B

Question #77

What does a regression equation do?

A. redicts the value of the independent variable based on the dependent variable

B. ll of these answers

C. one of these answers

D. easures the association between two variables

E. redicts the value of the dependent variable based on the independent variable

View answer

Correct Answer: E

Question #78

Which of the following is a current liability?

A. onds

B. epreciation

C. referred stock

D. ccounts payable

E. one of these answers

View answer

Correct Answer: D

Question #79

With regard to calculation of returns for international portfolios, a consistent source of ________ should be used.

A. xchange rates

B. rades

C. ettlements

D. isclosures

E. axes

View answer

Correct Answer: A

Question #80

What annual interest rate, compounded annually, is equivalent to 7% per year, compounded quarterly?

A.

B.

C. %

D.

E.

View answer

Correct Answer: B

Question #81

Which of the following is/are true about corporate pension plans?

A. he plan manager owes a fiduciary duty to the plan sponsor

B. I and III only

C. I only

D. one of them

E. and II only

View answer

Correct Answer: C

Question #82

Given the following distribution regarding the cost of textbooks:Cost of Textbooks Number$25 - $342$35 - $445$45 - $547$55 - $6420$65 - $7416What is the relative class frequency for the $25 - $34 class?

A. 0%

B. %

C. %

D. one of these answers

E. %

View answer

Correct Answer: E

Question #83

Assume that Polaroid decides to build a camera-research facility in Twin Falls, Idaho. The plant will employ 1,000 workers who will be guaranteed full-time jobs at annual earnings of $25,000. If the marginal propensity to consume in Twin Falls is 3/4, what change in income will result from operation of the plant for one year?

A. 75 million

B. 50 million

C. 25 million

D. 100 million

View answer

Correct Answer: D

Question #84

Jerry Paris, CFA, manages a high yield bond fund. 20% of Paris' portfolio is invested in distressed securities. A colleague commented that investing in distressed securities is analogous to venture capital investing. Which of the following statements concerning distressed securities and venture capital is least likely to be true? An investment in distressed securities is similar to an investment in venture capital because both:

A. re illiquid,

B. re normally priced efficiently

C. equire a long time horizon

View answer

Correct Answer: B

Question #85

Which of the following relating to compliance procedures for complying with Standard III (E) is false? The compliance procedures should:

A. one of these answers

B. utline permissible conduct

C. elineate procedures for reporting violations and sanctions

D. esignate a team of outside colleagues to form a review board

E. utline the scope of the procedures

F. e easy to understand

View answer

Correct Answer: D

Question #86

Which of the following will most likely occur in the short-run if there is an unanticipated increase in aggregate demand?

A. n increase in output and a higher price level

B. decrease in prices, while output remains unchanged

C. decrease in output and a higher price level

D. decrease in output and a lower price level

E. n increase in output, while prices remain unchanged

View answer

Correct Answer: A

Question #87

An entity desiring to issue a fixed-income security has placed $10 million worth of loan receivables in a special purpose vehicle (SPV) that is completely independent of the company. Additionally, the credit rating agencies have suggested the entity secure a third-party guarantee in order to have the security rated AAA. After completing the transfer of assets to the SPV and obtaining a letter of credit from a national bank, the entity issued the AAA-rated security. Which of the following securities did the

A. ommercial paper

B. nternational bonds

C. sset-backed securities

View answer

Correct Answer: C

Question #88

Which of the following is/are true about depreciation?

A. epreciation allocates non-cash expenses to period in which long-lived assets are used

B. only

C. II only

D. & III

E. , II & III

View answer

Correct Answer: C

Question #89

The accounting equation reads:

A. evenue minus expenses equals profit

B. ssets equal Liabilities plus Stockholders' Equity

C. ssets plus Liabilities is equal to Stockholders' Equity

D. one of these answers is correct

View answer

Correct Answer: B

Question #90

The formula for joint probability is given by:

A. (AB) = P(A | B) * P(A)

B. (AB) = P(A | B) / P(B)

C. (AB) = P(A | B) * P(B)

D. (AB) = P(A | B) / [P(B) * P(A)]

View answer

Correct Answer: C

Question #91

Andy Pilling is a bond trading specialist who recently started a special fund, the "Structured Bond Fund." The strategy behind this fund is quite complex, involving a mix of highly speculative, high-yield bonds and various tax-free municipal bonds for some stability. Andy has a strong view that the economy will remain vibrant and bullish over the next two years and hence, is not worried about the risky bonds. Assuming a falling rate scenario in this case allows the fund to project an expected return 130 bas

A. ot violated any standards in the AIMR Code of Ethics

B. iolated Standard IV (6) - Prohibition Against Misrepresentation

C. iolated Standard IV (A

D. iolated Standard IV (B

View answer

Correct Answer: C

Question #92

An economist has forecast that the term structure of interest rates will remain perfectly flat. According to the liquidity preference theory, the economist's forecast implies that future short-term interest rates will:

A. ecrease over time

B. ncrease over time

C. qual current short-term interest rates

View answer

Correct Answer: A

Question #93

What is the present value of $50 per year for 10 years, with the first cash flow occurring today, rather than 1 year from now? Assume interest is 6% per year, compounded annually.

A. 368

B. 402

C. 390

D. 357

E. 398

View answer

Correct Answer: C

Question #94

Given the following points: (-2, 0), (-1,0), (0,1), (1, 1) and (2, 3)What is the critical value necessary to determine a confidence interval for a 90% level of confidence?

A.

B.

C. one of these answers

D.

E.

View answer

Correct Answer: E

Question #95

According to the AIMR-PPS, ________ are defined to include all discretionary and nondiscretionary assets.

A. ndividually managed assets

B. ndividual investor's assets

C. otal firm assets

D. lobal assets

View answer

Correct Answer: C

Question #96

What is the level of significance?

A. one of these answers

B. robability of a Type II error

C. eta error

D. -vale of 1

E. robability of a Type I error

View answer

Correct Answer: E

Question #97

Three defective electric toothbrushes were accidentally shipped to a drugstore by the manufacturer along with 17 nondefective ones. What is the probability that the first two electric toothbrushes sold will be returned to the drugstore because they are defective?

A. /4 or 0

B. /20 or 0

C. one of these answers

D. /17 or 0

E. /190 or 0

View answer

Correct Answer: E

Question #98

You are examining a portfolio composed of 33% money-market investments, 9.5% bonds, and 57.5% stocks. Last year, the return on the money-market investments was 4%; the return on bonds was 9%, and the return on stocks was -11%. What is the portfolio weighted average return?

A. 4

B. 4

C. one of these answers is correct

D. 3

View answer

Correct Answer: B

Question #99

Distributions X and Y have the same coefficients of variation. If the mean of X is twice the mean of Y and the standard deviation of X is 5, the standard deviation of Y is ________.

A.

B. 0

C.

D.

View answer

Correct Answer: C

DON'T WANT TO MISS A THING?

100% Pass Cisco, PMP, CISA, CISM, AWS Practice test on SALE!
Get Now

CFA Level 1 Exam Question Bank 2024, Sample Questions With Answers | SPOTO

View The Updated CFA Level 1 Exam Questions

View The Updated CFA Exam Questions

View Answers after Submission

DON'T WANT TO MISS A THING?

100% Pass Cisco, PMP, CISA, CISM, AWS Practice test on SALE! Get Now

CFA Level 1 Exam Question Bank​ 2024, Sample Questions With Answers​ | SPOTO

View The Updated CFA Level 1 Exam Questions

View The Updated CFA Exam Questions

View Answers after Submission

100% Pass Cisco, PMP, CISA, CISM, AWS Practice test on SALE!
Get Now

CFA Level 1 Exam Question Bank 2024, Sample Questions With Answers | SPOTO