Latest CFA Level 1 Mock Exam 2024，PDF Free

Question #1

Various countries' securities laws permit a manager to pay up for goods and services without violating the manager's fiduciary duty, so long as the requirements of the law are followed. Each of the following are typical requirements, except:

A. he manager's soft-dollar practice should be always maintained confidentially in his or her files

B. t all times, the manager must seek best price and execution

C. he commission paid must be reasonable in relation to the research and execution services received

D. he goods or services purchased must be for "research service

E. one of these answers

View answer

Correct Answer: A

Question #2

In an investment environment, an initial outlay of $1 grows to $1.23 in 3 years. If you are expecting a cash inflow of $500 in 3 years, what's the present value of the cash flow to you?

A. 431

B. 452

C. 406

D. 615

View answer

Correct Answer: C

Question #3

On November 15, 2006, the yield curve was upward sloping with yields of 3%, 4%, and 5.5% on 1-year, 5-year, and 10-year Treasuries, respectively. The following day, the Treasury yield curve experienced an upward parallel shift equal to 112 basis points. Which of the following noncallable bonds would have experienced the least percentage change in price as a result of the yield curve shift?

A. 6% coupon corporate bond maturing in ten years

B. 6% coupon corporate bond maturing in five years

C. 0% coupon U

View answer

Correct Answer: B

Question #4

Standard III includes which of the following?

A. one of these answers

B. se of Professional Designation

C. isclosure of Conflicts to Employer

D. air Dealing

E. rohibition against Plagiarism

F. ll of these answers

View answer

Correct Answer: C

Question #5

Bill Foley, CFA, manages an intermediate tax-exempt bond fund. Foley makes the following two comments about securities in his portfolio.Statement 1:Revenue bonds usually pay a higher coupon rate than general obligation bonds. Statement 2:Double barreled bonds are municipal securities that are exempt from both federal and state taxes. Which of the following best evaluates Statement 1 and Statement 2?

A. nly Statement 1 is correct

B. nly Statement 2 is correct

C. oth Statements are incorrect

View answer

Correct Answer: A

Question #6

An unfortunate consequence of ________ and monetary instability is that people spend less time producing and more time trying to protect their wealth.

A. nemployment

B. ll of these answers

C. onetary contraction

D. nflation

E. one of these answers

View answer

Correct Answer: D

Question #7

Each of the following is true regarding Standard II (A), except:

A. ou may not state that you have completed Level I, II, or III until you have received the CFA designation

B. his standard relates to oral statements

C. ll of these answers

D. his standard relates to business cards and letterheads

E. ou must be registered for the next CFA exam in order to call yourself a candidate

F. here is no designation for someone who has passed Level I, II, or III

View answer

Correct Answer: A

Question #8

Events A and B are mutually exclusive. P(A) = 0.45, P(B) = 0.27. The probability of neither A nor B occurring equals ________.

A.

B.

C.

D.

View answer

Correct Answer: A

Question #9

Cyclical unemployment is a result of

A. naccurate and/or costly information about job opportunities

B. n inadequate matching of qualified workers and available jobs

C. ot enough employees to fill available jobs

D. nsufficient employment in the building trades

E. downturn in economic activity

View answer

Correct Answer: E

Question #10

Inflation has been about 5% for the last several years. There is widespread fear that oil and natural gas prices are about to spike at the same time there is unusually high unemployment. If inflation were actually 6% next year, and this causes no change in real GDP, what can be said about the general expectation for inflation?

A. roducers were forming inflation forecasts based on rational expectations

B. he general consensus inflation forecast must have been less than 6%

C. roducers were basing their inflation views on adaptive expectations

D. onsumers must have foreseen inflation of 6% and increased savings accordingly

E. he oil scare held down GDP

F. one of these answers is correct

View answer

Correct Answer: D

Question #11

When the Percentage of Sales method is used, the estimated bad debt expense is calculated by

A. ividing total sales on account by the percentage

B. ubtracting the percentage of net sales on account from the balance of allowance for uncollectible accounts

C. ultiplying total sales on account times the percentage

D. ultiplying net sales on account times the percentage

View answer

Correct Answer: D

Question #12

A firm has net sales of $6,000 in fiscal 1998, cash expenses (including taxes) of $2,800, and depreciation of $1,000. If accounts receivable increased in the period by $800, cash flows from operations equal ________.

A. 2,400

B. 3,200

C. 3,400

D. 4,200

View answer

Correct Answer: A

Question #13

If you deposit $4,250 today into a savings account paying 6% per year, compounded semiannually, how much is in your account in 4 years?

A. 5,365

B. 6,773

C. 6,000

D. 4,783

E. 5,383

View answer

Correct Answer: E

Question #14

A firm's ROE equals 47%. Its financial leverage equals 1.8 and its asset turnover is 0.8. If the firm's total net sales equal $1.35 million, its net income equals ________.

A. ,427,625

B. 40,625

C. 52,500

D. 82,000

View answer

Correct Answer: B

Question #15

Grazelle Garbo has decided to change the recommendation on one of the firms she is following from hold to buy. She has communicated her research report to her senior manager, who is reviewing it. If the recommendation passes muster, it will be released three days from now. In the meanwhile, Grazelle has decided to follow her research and purchase the stock for several of her clients' accounts for which the stock is an appropriate investment and for which she has discretionary investment powers. In the cours

A. iolated Standard IV (B

B. and II only

C. I only

D. II only

E. only

View answer

Correct Answer: D

Question #16

When referring to foreign exchange trades, "American terms" refers to:

A. direct quote outside the U

B. rades by Americans living abroad

C. he number of foreign currency units per U

D. n indirect quote in the U

E. he number of U

View answer

Correct Answer: E

Question #17

The coefficient of determination measures:

A. he percentage change in the dependent variable caused by a 1% change in the independent variable

B. he degree of linear association between the dependent and the independent variables

C. he slope of the regression line

D. he amount of variance of the dependent variable explained by the independent variable

View answer

Correct Answer: D

Question #18

Two events, A and B, are independent if:

A. (A and B) = 1

B. (A and B) = P(A) + P(B)

C. (A and B) = 0

D. (A and B) = P(A) P(B)

View answer

Correct Answer: D

Question #19

A cola dispensing machine is set to dispense a mean of 2.02 liters into a container labeled 2 liters. Actual quantities dispensed vary and the amounts are normally distributed with a standard deviation of 0.015 liter. What is the probability a container will have less than 2 liters?

A.

B.

C.

D.

E. one of these answers

View answer

Correct Answer: B

Question #20

The main purpose of a statement of cash flows of a firm is to provide relevant information about

A. ifferences between net income and associated cash receipts and disbursements

B. he cash receipts and cash disbursements of an enterprise during a period

C. firm's ability to generate future positive net cash flows

D. firm's ability to meet cash operating needs

E. one of these answers

View answer

Correct Answer: B

Question #21

Archie Boone, CFA, is the managing director at Hoffman Advisors, an alternative investment management company. Boone is reviewing the work of a real estate analyst and finds that in calculating net operating income (NOI) for a property, the analyst has understated vacancy by $3,000, overstated depreciation expense by $4,000, overstated insurance expense by $4,000, and understated interest expense by $2,000. If Boone corrects the analyst's estimates of NOI for all these items, the updated estimate will:

A. ncrease by $1,000 as the restatement of vacancy will be partially offset by the restatement of insurance expense

B. ncrease by $1,000 as the restatement of depreciation expense will be partially offset by the restatement of vacancy

C. ecrease by $1,000 as the restatement of insurance expense will be more than offset by the restatement of vacancy and interest expense

View answer

Correct Answer: A

Question #22

According to FASB, initial franchise fees should be recognized as income when

A. he franchisee shows the ability to pay the fee

B. he franchisor has substantially performed or satisfied all material services and conditions

C. he franchisor has collected the majority of fee in cash

D. he franchisor bills the franchisee

View answer

Correct Answer: B

Question #23

If unemployment was deemed too high by policy makers, which of the following policy tools might be utilized?

A. ecrease the money supply

B. orrow to finance new military spending

C. educe government debt

D. ncrease target interest rates

E. educe both taxes and government spending

F. aise tariffs to help domestic workers

View answer

Correct Answer: B

Question #24

On Jan. 1, DataCom prepays $3,000 rent for Mar. 1, June 1, and Sept.1. Under accrual basis accounting, what is the impact on the Feb. financial statements?

A. 3,000 expense

B. 1,000 decrease in net income

C. o impact

D. n increase to current assets of $1,000

View answer

Correct Answer: B

Question #25

The performance benchmark for a currency overlay portfolio must be calculated in accordance with the portfolio's mandates, unless the benchmark is the ________ on a published benchmark.

A. ax return

B. ross hedge

C. urrency return

D. ean value

E. tandard deviation

View answer

Correct Answer: C

Question #26

The interest expense on a premium bond _______ over time.

A. ecreases

B. emains constant

C. an increase or decrease, depending on interest rate movements

D. ncreases

View answer

Correct Answer: A

Question #27

What monthly payment, beginning next month, would pay off a debt of $1,000 over 15 months, if the interest rate on the debt is 18% per year, compounded monthly?

A. 5

B. 66

C. 74

D. 68

E. 76

View answer

Correct Answer: C

Question #28

Three equity analysts at Schiler & Company are debating their supervisor's claim that significant excess return can be generated by exploiting inefficiencies in the capital markets. Analyst A states, "... the large number of profit maximizing investors researching investment opportunities creates an efficient market." Analyst B rebuts by stating, "Over the past three years, my technical analysis strategy has outperformed all the major benchmarks, which proves the markets are not efficient." Analyst C states

A. nalyst

B. nalyst B

C. nalyst C

View answer

Correct Answer: A

Question #29

What monthly deposit would you need to make, beginning one month from today, into an account paying 11% per year, compounded monthly, in order to have $500,000 in 30 years?

A. 14,555

B. 178

C. 218

D. 129

E. 314

View answer

Correct Answer: B

Question #30

Recent data reveal that the ratio of inventories to sales has risen sharply, suggesting that businesses are experiencing an unplanned build-up in inventories. According to the Keynesian model, these findings indicate that

A. he economy is operating at full-employment equilibrium, which will probably be sustained in the foreseeable future

B. ggregate expenditures exceed output and, as a result, inflation is likely to accelerate

C. ggregate expenditures exceed output and, as a result, national income will rise

D. ggregate expenditures are less than output and, as a result, national income will decline

View answer

Correct Answer: D

Question #31

Under the accrual basis of accounting, which of the following statements is true?

A. eported net income provides a measure of operating performance

B. only

C. , II and III

D. II only

E. and III

View answer

Correct Answer: D

Question #32

In 1994, Butler Inc. issued $10 par value common stock for $25 per share. No other common stock transactions occurred until March 31, 1996, when Butler acquired some of the issued shares for $20 per shareand retired them. Which of the following statements correctly states an effect of this acquisition and retirement?

A. etained earnings is increased

B. dditional paid-in capital is decreased

C. dditional paid-in capital is increased

D. 996 net income is increased

E. 996 net income is decreased

View answer

Correct Answer: B

Question #33

The ________ states that broker/dealers should be subject to strict standards because they are advertising themselves as market professionals.

A. over canon

B. anopy principle

C. osting criterion

D. hingle theory

E. arketing regulation

View answer

Correct Answer: D

Question #34

If you deposit $10,000 into an account paying 6% per year, compounded semiannually, how much do you have in the account in 10 years?

A. 15,403

B. 18,061

C. 18,938

D. 21,667

E. 17,800

View answer

Correct Answer: B

Question #35

How much must you deposit today in order to withdraw $500 in 1 year, $700 in 3 years and $500 in 4 years,assuming your money earns 6.5% per year, compounded annually?

A. 1,200

B. 1,503

C. 1,240

D. 1,421

E. 1,437

View answer

Correct Answer: E

Question #36

Brokers who knowingly or recklessly engage in excessive trading in customers' accounts are known to be ________.

A. ver-selling

B. ixing

C. hurning

D. one of these answers

E. hingling

View answer

Correct Answer: C

Question #37

Which of the following is/are true?

A. f a test always rejects the null, its significance level is zero

B. I only

C. only

D. II only

E. I & III

View answer

Correct Answer: C

Question #38

Disclosure of information about the extent, nature, and terms of financial instruments with off-balance- sheet credit or market risk and about concentrations of credit risk is required for all financial instruments. Which of the following is defined as a financial instrument?

A. erchandise inventory

B. note payable in U

C. one of these answers

D. eferred subscriptions revenue

E. warranty payable

View answer

Correct Answer: B

Question #39

The nation of Myopia is having a massive inflation problem. To stabilize prices, the Myopian Central Bank decides to acquire large numbers of Capitalian Dollars (a very stable currency) and offer to exchange five Myopian Pesos for one Capitalian Dollar on demand. How does this impact the monetary base and the effective money supply for the nation of Capitalia?

A. oth decrease

B. o change, decrease

C. ecrease, increase

D. o change, increase

E. o change for either

F. oth increase

View answer

Correct Answer: B

Question #40

Assume the least squares equation is Y' = 10 + 20X. What does the value of 20 indicate?

A. or each unit increased in Y, X increases by 20

B. intercept

C. one of these answers

D. or each unit increased in X, Y increases by 20

View answer

Correct Answer: D

Question #41

Which of the following is not true regarding the normal distribution?

A. t is symmetrical

B. t has a single peak

C. one of these answers

D. ean, median and mode are all equal

E. he points of the curve meet the X-axis at z = -3 and z = 3

View answer

Correct Answer: E

Question #42

In the Keynesian aggregate expenditure model, the larger the marginal propensity to consume,

A. ore consumption expands as the result of a decline in investment

B. reater the marginal propensity to save

C. he smaller the multiplier

D. reater the change in income derived from a given change in private investment

View answer

Correct Answer: D

Question #43

When dealing with charitable organizations, the fiduciary must consider all of the following, except:

A. eneral economic conditions

B. he charity's present and anticipated financial requirements

C. nvestigation of supervisory activities once violation is known to have occurred

D. ong and short-term institutional needs in carrying out the charitable purpose

E. xpected total return on its investments

F. rends in security price levels

View answer

Correct Answer: C

Question #44

Sal Nunn, CFA, is a portfolio manager at Walker Investments. Nunn sold 300,000 shares of a NASDAQ listed stock on an electronic crossing network in after hours trading because the company announced a significant negative earnings surprise. Indicate whether the third or fourth market best describes the Nunn trade and state whether the NASDAQ market is a call or continuous market.

A. unn's trade is in the third market and NASDAQ is a call market

B. unn's trade is in the fourth market and NASDAQ is a call market

C. unn's trade is in the fourth market and NASDAQ is a continuous market

View answer

Correct Answer: C

Question #45

Julius Christus is an AIMR member and a vice president in the Risk Control department of a major commercial bank. Julius recently discovered that Jill Chapman had been grossly negligent in her duties involving monitoring of trading limits and violations by the trading desk. This is the first time Jill has been found to be remiss in her duties. Which of the following actions is the minimum necessary for Julius to be in compliance with Standard III (E) - Responsibilities of Supervisors?

A. nitiate an inquiry and take steps, such as placing limits on Jill's activities and increasing the monitoring of her activities to ensure that future violations do not occur

B. etermine the extent of the violations and warn Jill in no uncertain terms that a repeat incidence would lead to her losing the job

C. erminate Jill's employment

D. eport the misconduct to his superiors and warn Jill in writing that future misconduct would lead to immediate termination of employment

View answer

Correct Answer: A

Question #46

Under an inflationary environment with stable inventories, a firm may change to LIFO from FIFO due to which of the following reason(s)?

A. o allow earnings manipulation

B. , II, III & IV

C. & II

D. & III

E. , III & IV

View answer

Correct Answer: C

Question #47

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

A. ash

B. erchandise Inventory

C. ccounts Payable

D. urchases

View answer

Correct Answer: B

Question #48

Which of the following would be the most likely reason to use ETFs instead of similar index funds?

A. ower market risk

B. ntraday valuation and trading

C. TFs do not experience tracking error

View answer

Correct Answer: B

Question #49

Which of the following can be found in Standard I?

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

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

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

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

E. embers shall not misrepresent investment performance

View answer

Correct Answer: C

Question #50

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 discount2,000Dividends 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 used in investing activities?

A. 194,000

B. 188,000

C. 170,000

D. 174,000

E. 176,000

View answer

Correct Answer: C

Question #51

The following data have been extracted from the financial statements of a firm for two years, 1985 and 1986:1985 1986Assets 4,376 5,214Sales 8,312 7,845Receivables 985 756Inventory 1,108 1,243COGS 5,494 4,971The inventory turnover ratio and the average inventory processing period for 1986 equal ________.

A.

B.

C.

D.

View answer

Correct Answer: A

Question #52

Accounting rules specify that interest must be capitalized for assets that are

A. ot being used in the earning activities of the enterprise and not undergoing the activities necessary to get them ready for use

B. outinely produced

C. eing constructed or otherwise being produced as discrete projects for an enterprise's own use

D. one of these answers

E. n use or ready for their intended use in the earning activities of the enterprise

View answer

Correct Answer: C

Question #53

Liliana works for Bear Funds, a brokerage firm. Bear has a policy of not allowing its employees to trade in securities in which it has large holdings. A list of such securities is circulated on a daily basis to the employees. Liliana knows of this restriction. However, a few days ago, she happened to purchase a few shares of a firm that are on Bear's restricted list. The total value of the purchase was less than $500. Liliana should

A. one of these answers

B. eport the transaction to the compliance department and see how best to unwind the transaction

C. nform her immediate supervisor about it and accept any sanctions

D. ot do anything, because the activity is of negligible size

View answer

Correct Answer: B

Question #54

Which is true for a binomial distribution?

A. ll of these answers are correct

B. alue of p is equal to 1

C. robability of success remains the same from trial to trial

D. here are three or more possible outcomes

E. one of these answers are correct

View answer

Correct Answer: C

Question #55

For a negatively skewed, unimodal distribution, which of the following relationships holds?

A. ode < median

B. ean > median

C. ean < median

D. ean > mode

View answer

Correct Answer: C

Question #56

What simple annual interest rate would cause a $200 deposit to earn $15 interest in one year?

A.

B. 2

C. 0

D.

E.

View answer

Correct Answer: D

Question #57

Under the indirect method, cash flow from operating activities is computed by adjusting net income for all of the following, except

A. oncash changes in fixed assets

B. onoperating items included in net income

C. oncash revenues and expenses

D. oncash changes in operating assets

E. oncash changes in operating liabilities

View answer

Correct Answer: A

Question #58

Countries A and B have the same monetary base and reserve requirement. People in A tend to hold more currency than people in B. The money supply will be:

A. igher in B

B. ame in the two countries

C. nsufficient information

D. igher in A

View answer

Correct Answer: A

Question #59

In a statement of cash flows done using the indirect method all of the following would be included as cash flows from investing activities except for:

A. urchase of fixed assets

B. ale of fixed assets

C. ll would be included as cash flows from investing activities

D. ain on sale of equipment

View answer

Correct Answer: D

Question #60

A(n) ________ in a nation's currency in the foreign exchange market compensates for the nation's high ________ rate.

A. epreciation; exchange

B. ppreciation; exchange

C. epreciation; inflation

D. ppreciation; inflation

E. one of these answers

View answer

Correct Answer: C

Question #61

If you are about to go to Brazil and would like to obtain Brazilian currency, this acquisition would be accomplished in the

A. nternal affairs office

B. ffice of the U

C. ederal Reserve market

D. xport/import market

E. oreign exchange market

View answer

Correct Answer: E

Question #62

Which of the following is/are forms of plagiarism as defined by AIMR code of conduct?

A. sing material from a seminar in research reports without proper acknowledgment

B. , II and IV only

C. , II and III only

D. I, III and IV only

E. I and III only

View answer

Correct Answer: B

Question #63

You are given a portfolio mean return of 15%, and a standard deviation of portfolio return is 20%, and a Sharpe ratio of 0.51. What is the risk-free rate?

A. one of these answers is correct

B.

C.

D.

View answer

Correct Answer: A

Question #64

The Standards state that when presenting material to others, members shall not "copy or use, in substantially the same form as the original, material prepared by another without acknowledging and identifying the name of the author, publisher, or source of such material." The analyst may use information from other sources without acknowledgment, however, if the information:

A. s factual information published in recognized financial and statistical reporting services

B. oes not include a buy or sell recommendation

C. as originally communicated verbally

D. s being reported only to the member's employer or associates

View answer

Correct Answer: A

Question #65

When a marketable security's classification is changed, which of the following apply?

A. he transfer is accounted for at the amortized historical cost of the security

B. & II

C. , II & III

D. II only

E. & III

View answer

Correct Answer: C

Question #66

Under Standard III (E) - Responsibilities of Supervisors - which of the following are NOT responsible for maintaining appropriate supervision when they are in a supervisory role?

A. IMR members

B. FA charterholders

C. one of these answers

D. evel I CFA candidates

E. FA candidates

View answer

Correct Answer: C

Question #67

The mean of a normal distribution is 400 pounds. The standard deviation is 10 pounds. What is the area between 415 pounds and the mean of 400 pounds?

A. one of these answers

B.

C.

D.

E.

View answer

Correct Answer: B

Question #68

Which of the following AIMR Standards maintains that the financial analyst must preserve the confidentiality of information communicated to him by the client?

A. V (A)

B. one of these answers

C. I (B)

D. II (C)

View answer

Correct Answer: B

Question #69

Given the academic research supporting the efficiency of the stock market, which of the following is the least accurate description of a portfolio manager's role in an efficient market?

A. dentifying and specifying a client's objectives and constraints

B. pecifying an explicit investment strategy to meet the client's needs

C. iversifying the client's portfolio across all asset classes to eliminate systematic risk

View answer

Correct Answer: C

Question #70

Which of the following groups will have seniority in the event of bankruptcy of a company?

A. ll have same seniority

B. referred stockholders

C. ommon stockholders

D. ebt holders

View answer

Correct Answer: D

Question #71

The current economic environment is one of steady inflation. A firm uses historical cost accounting. Which of the following is/are true?

A. he firm's book value is overstated

B. I & III

C. & IV

D. & III

E. , II & IV

View answer

Correct Answer: A

Question #72

Tomonaga Olawando is a research analyst currently doing research on Cleebok Shoes, a footwear manufacturer infamous for its exorbitantly priced shoes. Tomonoga has been interviewing Pollyanna Givens, a senior vice president with the public relations division. Pollyanna has told him that the investment community has underestimated the payoffs from Cleebok's plan to outsource shoe production to Mexico, thus cutting productions costs significantly. She told him her estimate puts thecost savings close to $600 m

A. ot violated any code of ethics

B. II only

C. I and III only

D. I, III and IV only

E. only

View answer

Correct Answer: B

Question #73

Which of the following best describes a statement of cash flows?

A. statement of cash flows details the cash inflows and outflows that are related to a company's operating, investing, and financing activities over a period of time

B. statement of cash flows summarizes the financial position of a company at a given point in time

C. statement of cash flows measures a company's financial performance over a specified period of time

D. statement of cash flows reports changes over a period of time in component accounts that comprise the ownership of a firm

E. one of these answers

View answer

Correct Answer: A

Question #74

You recently purchased a twin-engine plane after landing an ultra-lucrative job on Wall Street. The annual payments on the plane are $8,000 per year and the installment plan extends over 5 years. The payments start today. If your discount rate is 8.5% per year, how much would it have cost you to purchase the plane on an all- cash basis?

A. 34,205

B. 40,611

C. 41,232

D. 36,429

View answer

Correct Answer: A

Question #75

Giorgio offers the person who purchases an 8 ounce bottle of Allure two free gifts, either an umbrella, a 1 ounce bottle of Midnight, a feminine shaving kit, a raincoat or a pair of rain boots. If you purchased Allure what is the probability you selected at random an umbrella and a shaving kit in that order?

A. one of these answers

B.

C.

D.

E.

View answer

Correct Answer: D

Question #76

If you buy an item and pay for it with 60 monthly payments of $75 that begin next month, what was the cash price today, if interest accrues at 11% per year, compounded monthly?

A. 4,598

B. 3,544

C. 2,545

D. 3,904

E. 3,449

View answer

Correct Answer: E

Question #77

A long-term asset currently has a book value of $45,000 and a salvage value of $5,000. It was acquired 3 years ago at a cost of $75,000. If the firm uses straight-line depreciation, how many years is the asset expected to be in service?

A. years

B. years

C. years

D. years

View answer

Correct Answer: B

Question #78

The weekly mean income of a group of executives is $1,000 and the standard deviation of this group is $100. The distribution is normal. What percent of the executive have an income of $925 or less?

A. bout 23%

B. bout 15%

C. bout 85%

D. bout 50%

E. one of these answers

View answer

Correct Answer: A

Question #79

If the Fed conducts a demand stimulus policy, the rational expectations theory implies that

A. he slope of the Phillips curve will increase

B. nemployment will temporarily fall below the natural rate

C. he Phillips curve immediately shifts upward

D. he natural unemployment will rise

View answer

Correct Answer: C

Question #80

An individual who is employed part time but who is looking for a full-time job is classified as

A. rictionally unemployed

B. mployed

C. tructurally unemployed

D. yclically unemployed

View answer

Correct Answer: B

Question #81

Which of the following will most likely result in an increase in the per capita GDP of a country?

A. n increase in population

B. mprovement in the average skill level of the labor force

C. n increase in youthful workers as a proportion of the labor force

D. n increase in the number of retired workers

E. n increase in the GDP deflator

View answer

Correct Answer: B

Question #82

The coefficient of variation (CV) for a set of annual incomes is 18%; the coefficient of variation for the length of service with the company is 29%. What does this indicate?

A. ore dispersion in the distribution of the incomes compared with the dispersion of their length of service

B. ispersions are equal

C. ispersions in the two distributions (income and service) cannot be compared using percents

D. one of these answers

E. ore dispersion in the lengths of service compared with incomes

View answer

Correct Answer: E

Question #83

If a company fails to record a material amount of depreciation in a previous year, this is considered

A. n accounting error

B. change in estimate

C. n unusual item

D. change in accounting principle

View answer

Correct Answer: A

Question #84

A large silver mining corporation in Australia is expecting to have three large inflows of raw silver resulting from a discovery of three silver seams that were previously undetectable. The firm expects the first silver inflow to be ready for sale in nine months, followed by the second inflow three months later and the final inflow six months later. The mining company is expecting the price of silver to begin a downward trend for the next 18 monthsand wants to hedge the expected inflows without exposing the

A. eries of futures contracts expiring in 9, 12, and 15 months

B. eries of forward contracts expiring in 9, 12, and 15 months

C. wap contract with payments in 9, 12, and 15 months

View answer

Correct Answer: A

Question #85

According to the AIMR-PPS, assets assigned to subadvisors that are not part of the firm

A. re not to be included in total firm assets and their performance record is, therefore, not part of the firm's performance record

B. re included in total firm assets at the investment manager's discretion and information regarding their inclusion should be included in the disclosures

C. re to be included in total firm assets, however, because they are subadvisors, their performance record is not part of the firm's performance record

D. re to be included in total firm assets, hence, their performance record is part of the firm's performance record

View answer

Correct Answer: A

Question #86

Four of your firm's analysts have been chosen as finalists for the Wealth Magazine All-Star Analysts team. They will get different bonuses depending on the order in which they finish among themselves. How many different ways could they finish?

A. 0

B. 4

C. 6

D. 6

View answer

Correct Answer: B

Question #87

When complying with Standard IV (B.3) - Fair Dealing, a change of recommendation from "sell" to "buy" is considered:

A. one of these answers

B. aterial only if so specified prior to the recommendation by the client

C. ot material

D. aterial only if so specified prior to the recommendation by the investment manager

E. enerally material

View answer

Correct Answer: E

Question #88

John was offered a salary of $25,000 when he graduated from school 15 years ago. He was somewhat depressed to read that the average starting salary for someone with his degree today was $45,000. He then decided to determine the annual, compound rate of increase implied in the increase of the starting salary from $25,000 to $45,000 in 15 years. What is this annually compounded growth rate?

A.

B.

C.

D.

E. 2

View answer

Correct Answer: A

Question #89

Roger Templeton, an analyst for Bridgetown Capital Management, is studying past market data to identify risk factors that produce anomalous returns. He tests monthly data on each of 60 financial and economic variables over a 15-year period to find which ones are related to stock index returns. Based on this research, Templeton identifies three variables that show statistically significant relationships with equity returns. He presents his results to Bridgetown's managers and recommends implementing a tradin

A. ata mining bias

B. urvivorship bias

C. mall sample bias

View answer

Correct Answer: A

Question #90

The following information was obtained from the financial statements of Firm A:Current assets = $4,500Current liabilities = $3,000Long-range assets = $150,000Long-term liabilities = $42,000Contributed capital = $31,000Then, the retained earnings of the firm equal ________.

A. 39,000

B. 31,000

C. 78,500

D. 123,500

View answer

Correct Answer: C

Question #91

According to U.S. GAAP, the format of the income statement

A. ust include footnotes which detail particular income statement sections

B. ust not vary across different industries

C. ust include an "operating expenses" section

D. ust be identical in the reporting of equity in earnings of affiliates

E. s not specified

View answer

Correct Answer: E

Question #92

Gregory Johansson has collected the following data on Trilby & Tribble, Ltd:The sustainable growth rate of the firm is closest to:

A.

B.

C.

View answer

Correct Answer: C

Question #93

Sterling Drachma is a senior investment consultant currently researching a few high-risk internet stock companies which recently started trading on NASDAQ. Sterling manages 5 large and private investment accounts for which he has discretionary investment authority. Sterling is about 3 years away from retirement and his retirement portfolio is managed by Franc Escudo. Sterling has concluded from his research that two of the internet stocks he has been following are great buys and instructs Franc to divert pa

A. ranc has violated Standard IV (B

B. , II and III

C. and III only

D. I and III only

E. II only

View answer

Correct Answer: D

Question #94

If you want $1,000,000 when you retire in 25 years, how much must you deposit each month, beginning one month from today, if your funds will earn 9% per year, compounded monthly?

A. 7,336

B. 903

C. $29,848

D. 891

E. 29,848

View answer

Correct Answer: D

Question #95

An investor takes a long position in a corn futures contract. Initial margin on the contract is 10% of the contract value and maintenance margin is half of the initial margin. If, at the beginning of the second trading day for the contract, the investor receives a margin call, it is least likely that:

A. ariation margin is greater than maintenance margin

B. he final trade from the previous day is greater than the contract price

C. he average of the last few trades from the previous day is less than the contract price

View answer

Correct Answer: B

Question #96

Which of the following determine(s) the supply curve?

A. upply curves of factor resources

B. & III

C. II & IV

D. , II, III & IV

E. , II & III

View answer

Correct Answer: D

Question #97

What annual simple interest rate would cause a $105 deposit to grow to $125 in 15 months?

A.

B. 5

C. 0%

D. 3

E. 4

View answer

Correct Answer: B

Question #98

Which of the following would be considered a liability that arises from financing activities?

A. ccounts payable

B. ccrued wages

C. otes payable

D. axes payable

E. one of these answers

View answer

Correct Answer: C

Question #99

Which of the following is correct about a probability distribution?

A. one of these answers

B. um of the probabilities of all possible outcomes must equal 1

C. robability of each outcome must be between 0 and 1 inclusive

D. utcomes must be mutually exclusive

E. ll of these answers

View answer

Correct Answer: E

Question #100

A ratio that measures the average portion of each dollar of revenue that results in profit is

A. rofit margin

B. oth of these answers are correct

C. either of these answers is correct

D. eturn on sales

View answer

Correct Answer: B

Question #101

In a classified balance sheet the following is always true:

A. urrent assets include only items that will be converted into cash within 1 year

B. ssets and liabilities are broken down as current and non-current

C. urrent assets divided by current liabilities will equal working capital

D. ll of these answers are true

View answer

Correct Answer: B

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