CFA CFA-Level-I Daily Practice Exam New 2023 Updated 2200 Questions
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How to Prepare For CFA CFA-Level-I: CFA Institute CFA Level I Chartered Financial Analyst Exam
Preparation Guide for CFA CFA-Level-I: CFA Institute CFA Level I Chartered Financial Analyst Exam
Introduction
The Chartered Financial Analyst is one of the most common designations for investment professionals (CFA). However, it is not for the weak of heart or people who are not interested in being a CFA cardholder. The journey to becoming a CFA holder is long and measures not only the competence but also the strength, dedication and stamina of the topic. According to the CFA Institute, the present curriculum is ideally described as a distance learning programme at its own rate which adopts a general approach to the study, evaluation and management of portfolios which highlights the highest ethical and technical expectations. The CFA curriculum includes three examinations: CFA Level I, Level II and Level III. The CFA applicants must pass both of these exams and they must fulfil certain work requirements defined by the CFA Institute. In December 2017, the progress rate for the Level I exam was 43 percent. For each of these three stages, the curriculum is designed to assess a broad range of skills that are most appropriate for investing professions. In this post, we will focus on the Level I CFA review. CFA Level 1 exam dumps and CFA Level 1 practice exams are designed to render the entire examination environment comfortable for the students.
NEW QUESTION 516
The closing price today for a security was $20. It was $18 20 days ago.
- A. No decision can be made without considering the general trend first.
- B. This is a buy signal based on the ROC oscillator.
- C. This is a sell signal based on the ROC oscillator.
Answer: A
Explanation:
Like all technical indicator, the rate-of-change oscillator should be used in conjunction with other aspects of technical analysis.
NEW QUESTION 517
Initially the term structure is flat. Economic factors cause the required return for a cash flow to be received in 10 years to increase by 25 basis points. This change in the term structure:
- A. will have the greatest impact on coupon bonds with maturity less than 10 years.
- B. will have the greatest impact on coupon bonds with maturity greater than 10 years.
- C. will have the greatest impact on coupon bonds with maturity of 10 years.
Answer: C
Explanation:
For a standard coupon bond, the cash flow on the bond's maturity date is the largest one.
This change will cause the return of principal for a 10-year coupon bond to be discounted at the now higher rate.
NEW QUESTION 518
Which statement is false?
- A. An ADR is one form of GDR.
- B. The majority of GDRs are denominated in U.S. dollars.
- C. GDRs cannot be sold to investors based in the U.S.
Answer: C
Explanation:
GDRS are not listed on U.S. exchanges but they can be privately placed with institutional investors based in the U.S.
NEW QUESTION 519
In a large metropolitan area, past records revealed that 30 percent of all the high school graduates go to college. From 20 graduates selected at random, what is the probability that exactly 8 will go to college?
- A. 0.400
- B. 0.114
- C. 0.231
Answer: B
Explanation:
This is a binomial probability. The probability of getting r successes out of n trials where the probability of success each trial is p and probability of failure each trial is q (where q = 1-p) is given by:
r (n-r)
n!(p )[q ]/[r!(n-r)!]. Here n = 20, r = 8,p = 0.3 and q = 0.7.
8 12
Therefore we have 20!(0.3 )(0.7 )/[8!12!] = 0.114.
NEW QUESTION 520
Choose the correct statement.
- A. A portfolio with a Treynor ratio of 1 is better than the market portfolio.
- B. We can never conclude that a portfolio is better than the market portfolio or not by looking at the portfolio's Sharpe ratio or Treynor ratio only.
- C. A portfolio with a Sharpe ratio of 2 is better than the market portfolio.
Answer: B
Explanation:
We can, however, compare the ratios of the portfolio and the market portfolio to draw a conclusion.
NEW QUESTION 521
MRC produces chips with a defective rate of 15%. For an random sample of 20 chips from MRC, let
X count the number of defective chips in the sample (and assume x is a binomial random variable), P(X 2)
= ______ (to nearest 0.001)
- A. 17.6%
- B. 30%
- C. 3.9%
Answer: A
Explanation:
Binomial random variable X has N = 20 and p = 0.15. Using the calculator we find P(X 2) = p(0) + p(1) = 0.0387 + 0.1368 = 0.1755 = 17.6% (to the nearest 0.1%).
NEW QUESTION 522
A firm should cease to do business when:
- A. Price marginal cost
- B. Price average variable cost
- C. Price average total cost
Answer: B
Explanation:
A firm should cease to do business when P AVC. In this case the company is not even making incremental revenue for each additional product sold. When AVC P ATC, the firm while not profitable will be making money above its variable costs. If P MC or ATC MC, the firm may be profitable but not maximizing profit potential.
NEW QUESTION 523
A company issued 6-year, 10 percent bonds on September 1, 2000, for $91,619. The bonds have a maturity value of $100,000 and pay interest semiannually on March 1 and September 1. The market rate of interest at the date of issue was 12 percent. The company has an accounting year-end of December 31.
The amount of interest expense on March 1, 2001, is:
- A. $2,000
- B. $1,839
- C. $1,832
Answer: C
Explanation:
The interest expense for the six months from September 1, 2000, to March 1, 2001, would be $5,497 ($91,619 x .06). On December 31, 2000, four months would be recognized in the amount of
$ 3,665 ($5,497 x 4/6). The rest of the interest, two months, would be recognized on March 1, 2001. This amount would be $1,832 ($5,497 - $3,665).
NEW QUESTION 524
Suppose that events A, B, C, and D are independent, and have probabilities of 0.25, 0.50, 0.40, and
0 .30, respectively. What is P (ABCD)?
- A. 1.5%.
- B. 1.0%.
- C. 0.15.
Answer: A
Explanation:
If events are independent, then the joint probability of them occurring together is just the product of the individual probabilities. So P(ABCD) = 0.25 * 0.50 * 0.40 * 0.30 = 1.5%.
NEW QUESTION 525
To effectively diversify a portfolio an investor wants stocks with _________ correlation coefficients, the effect will be to ________ the standard deviation of the portfolio.
- A. Zero; increase
- B. Positive; increase
- C. Negative; decrease
Answer: C
Explanation:
Diversification benefits: risk reduction through a diversification of investments. Investments that are negatively correlated or that have low positive correlation provide the best diversification benefits.
Such benefits may be particularly evident in an internationally diversified portfolio.
NEW QUESTION 526
MicroBulbs manufactures light bulbs that they claim have an average life of 1000 hours. To test
MicroBulb's claim, a consumer group takes a random sample of 15 of the bulbs and obtains a sample mean of 950 hours with a sample standard deviation of 50 hours. For a hypothesis test at the 10% level of significance the critical value will be ______.
- A. -1.345
- B. -1.645
- C. -1.761
Answer: A
Explanation:
Because the sample standard deviation is used (population standard deviation is unknown) a t-distribution is used. We find t(0.1, 15 - 1). Looking under column 0.10 and down to row 14 we get 1.345.
The rejection region is to left, so the critical value is -1.345.
NEW QUESTION 527
One of the discretionary accounts managed by Bill Farnsworth, CFA, is the Jones Corporation employees' profit-sharing plan. Diane Jones, the company president, recently asked Farnsworth to vote the shares in the firm's profit-sharing plan in favor of the company-nominated slate of directors and against the directors sponsored by a dissident stockholder group. Farnsworth does not want to lose this client because he directs all the client's trades to a brokerage firm that provides Farnsworth with useful information about tax-free investments. Although this information is not of value in managing the Jones
Corporation account, it does help in managing several other accounts. The brokerage firm providing this information also offers the lowest prices for trades. Farnsworth investigates the proxy-fight issue, concludes that management's slate of directors is better for the long-run performance of the firm than those recommended by the dissident group, and votes accordingly. Farnsworth:
- A. violated the Standards in directing trades to the brokerage firm, but not in voting the shares as requested by Jones.
- B. did not violate the Standards in voting the shares in the manner requested by Jones nor in directing trades to the brokerage firm.
- C. violated the Standards in voting the shares in the manner requested by Jones, but not in directing trades to the brokerage firm.
Answer: B
NEW QUESTION 528
Determine net sales for 20x2 if the average days' sales uncollected equals 73 days and Accounts
Receivable at the end of 20x1 was $4,250 and at the end of 20x2 was $4,750.
- A. $23,750.
- B. $21,250.
- C. $22,500.
Answer: C
Explanation:
Net sales equals average accounts receivable multiplied by the receivable turnover and the receivable turnover equals 365 days divided by the average days' sales uncollected. Average accounts receivable equals $4,500 [($4,250 + $4,750)/2]. Therefore, net sales are $22,500 [($4,500 x (365/73)].
NEW QUESTION 529
You have $500 that you would like to invest. You have 2 choices: Savings Account A which earns 8% compounded annually or Savings Account B which earns 7.75% compounded semiannually. Which would you choose and why?
- A. B because it has a higher effective annual rate
- B. A because it has a higher effective annual rate
- C. B because it has the higher quoted rate
Answer: B
NEW QUESTION 530
An individual asset's relative systematic risk is calculated based on the:
- A. Efficient frontier.
- B. Security market line.
- C. Capital market line.
Answer: B
Explanation:
An individual asset's relative systematic risk is calculated based on the Security Market Line.
NEW QUESTION 531
The following table gives the stock price, dividend, and percentage return for 10 months.
Month; Stock Price; Dividend; Total Return (%)
Jan; 76.3; 1.53; 9.81
Feb; 72.5; 1.45; -3.08
Mar; 70.4; 1.41; -0.95
Apr; 69.8; 1.4; 1.14
May; 71.2; 1.42;
Jun; 73.6; 1.47; 5.44
Jul; 73.7; 1.47; 2.13
Aug; 73; 1.46; 1.03
Sep; 69.5; 1.39; -2.89
Oct; 67.9; 1.36; -0.35
If one were to construct a frequency histogram for the stock prices using 3 classes, the first interval would be which of the following?
- A. 70.7 up to 72.7
- B. 67.9 up to 72.7
- C. 67.9 up to 70.7
Answer: C
Explanation:
If 3 intervals are to used then the length of the intervals is (76.3 - 67.9)/3 = 2.8, so the first interval would be from 67.9 up to 67.9+2. 8=70.7
NEW QUESTION 532
On May 1, 1997 Bluefish Co. bought 100 bonds (face value $1,000 and stated interest 10%) of
Hawkeye Inc., interest payable semiannually on July 1, and January 1. The bond price was 920 excluding accrued interest. Due to short-term nature of the investment Bluefish put this in marketable debt securities section of its current assets. At the end of 1997 the interest revenue from this investment on income statement should be:
- A. $10,000 since it received $5,000 on July as bond interest and another $5,000 would be due tomorrow
(Jan. 1, 1998). - B. No interest revenue, since marketable securities are short-term in nature and only the difference between acquisition price and disposition price is calculated as gain or loss.
- C. $6,667.
Answer: C
Explanation:
100 x $1,000 x 0.1 x 8/12 = $6,667.
NEW QUESTION 533
B1 is a consumer budget constraint.
Now the line moves to B2. This indicates that:
- A. The price of glasses has dropped.
- B. The consumer's budget has increased.
- C. The price of wine has dropped.
Answer: C
Explanation:
The budget line rotates out because the consumer can buy more wine.
NEW QUESTION 534
A bond is currently trading at 98.5 per 100 par, thus yielding 6.21%. It is estimated that the bond price will be 99.4 if rates decreased by 25 basis points and 97.8 if rates increased by 25 basis points. What is this bond's effective duration?
- A. 6.12
- B. 1.62
- C. 3.25
Answer: C
Explanation:
DE = (P- - P+)/(2P0 *r) = (99.4 - 97.8)/(2 * 98.5 * 0.0025) = 3.25.
NEW QUESTION 535
Which of the following is true about diluted earnings per share?
I). Often referred to as pro forma calculations
II). Is computed as if convertible preferred stock has been converted
III). Is used to compute the price-earnings ratio
IV). Represents a hypothetical case
- A. all of them.
- B. I, II and IV.
- C. II only.
Answer: B
Explanation:
Diluted earnings per share are often called pro forma calculations, are computed as if convertible preferred stock has been converted, and represents a hypothetical case.
NEW QUESTION 536
Which financial statement provides information about a company's operating, investing, and financing activities?
- A. Income Statement.
- B. Statement of Cash Flows.
- C. Balance Sheet.
Answer: B
Explanation:
The statement of cash flows shows how a company's operating, financing, and investing activities have affected cash flow during a period of time.
NEW QUESTION 537
An investor wishes to diversify her portfolio by including real-estate as she has learned that real estate generally has a low correlation with equities. Which of the following vehicles is NOT a publicly traded real-estate investment opportunity?
- A. Real estate limited partnerships and real estate investment trusts
- B. Comingled funds
- C. Private equity
Answer: C
Explanation:
As implied by its name, private equity is not traded publicly. It is a vehicle for pooling funds from many investors and investing them in real estate projects in the form of equity, privately held.
NEW QUESTION 538
Which of the following is not a reason that explains why prepayment rates tend to be low for manufactured housing loans?
- A. The creditworthiness of borrowers in this market tends to be relatively low.
- B. The loan rates are already relatively low to begin with.
- C. The collateral depreciates in value rather quickly, thus hampering refinancing efforts.
Answer: B
Explanation:
The loan rates on manufactured housing loans tend to be relatively higher for two main reasons. First, the collateral itself is risky, since the value of manufactured homes almost always depreciates. And second, in general, the creditworthiness of borrowers in this market tends to be low.
NEW QUESTION 539
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