试卷详情
-
注册金融分析师一级-4
-
[单项选择]A large manufacturing company is in a competitive industry. It has above-average investment opportunities and its return on investments has been above the required rate of return. The firm retains a large portion of earnings to fund its superior investment projects. The company is best characterized as a.()
A. growth company.
B. cyclical company.
C. speculative company.
-
[单项选择]Which of the following best describes taxes payable( )
A. Total liability for current and future taxes.
B. Tax return liability resulting form current period taxable income.
C. Actual cash outflow for income taxes including payments for other years.
-
[单项选择]Using Chebyshev's inequality, what is the minimum proportion of observations from a population of 500 that lies within two standard deviations of the mean, regardless of the shape of the distribution()
A. 75%.
B. 89%.
C. 99%.
-
[单项选择]A money manager has $1000000 to invest for one year. She has identified three alternative one-year certificates of deposit (CD) shown below:()
A. 6.275%
B. 7.275%
C. 8.275%
-
[单项选择]Price discrimination is most likely an attempt by a monopoly to:()
A. resell a product.
B. capture a producer surplus.
C. capture a consumer surplus.
-
[单项选择]Regarding corporate governance, which of the following most likely would be a reason for concern when evaluating an independent board member’s qualifications The board member:()
A. has served on the board for 14 years.
B. owns 1000 shares of the corporation’s equity.
C. has formerly served on the boards of several successful companies.
-
[单项选择]Margin in the futures market is most accurately described as a:()
A. loan to the futures trader.
B. requirement set by federal regulators.
C. down payment from the futures trader.
-
[单项选择]The belief that money wage rates are sticky is least likely to be associated with:()
A. classical macroeconomics.
B. monetarist macroeconomics.
C. Keynesian macroeconomics.
-
[单项选择]The monetary policy tools available to the Federal Reserve are least likely to include:()
A. open market operations.
B. the ability to determine the required reserve ratios of its member banks.
C. adjustments to the amount of gold held as reserves against Federal Reserve notes.
-
[单项选择]Assuming efficient markets and a lack of access to superior analysts, which of the following is the least important activity in managing portfolios()
A. Minimizing total transaction costs.
B. Diversifying completely on a global basis.
C. Paying close attention to the monetary policy environment.
-
[单项选择]A consumer is shopping for a home. His budget will support a monthly payment of $1 300 on a 30-year mortgage with an annual interest rate of 7.2 percent. If the consumer puts a 30 percent down on the home, the most he can pay for his new home is closest to:()
A. $191518.
B. $210840.
C. $273597.
-
[单项选择]All else equal, a decrease in the expected rate of inflation will most likely result in a decrease in:()
A. the real risk-free rate.
B. the nominal risk-free rate.
C. both real and nominal risk-free rates.
-
[单项选择]Which of the following is most directly associated with secondary capital markets()
A. Source of liquidity.
B. Security underwriting.
C. Shelf registration of securities.
-
[单项选择]A call market is least likely characterized as a market:()
A. with bid-ask prices posted by dealers.
B. where buy-sell orders are cleared at a single equilibrium price.
C. with participation by a small number of active investors-traders.
-
[单项选择]The risk-free interest rate is 5 percent, and the return on market portfolio is 8 percent. A stock with a beta of 0. 5 that has an estimated rate of return of 7 percent is most likely:()
A. overvalued.
B. undervalued.
C. correctly valued.
-
[单项选择]A company is considering building a distribution center on developed land it acquired more than ten years ago at a cost of $400 000. The company estimates that the cost of putting in utilities, sewers, roads, and other such costs of preparing the land for the distribution center at $ 200 000. Alternatively, the undeveloped land could be sold today to another company for $600 000. If the company builds the distribution center, the cost of the land for capital budgeting purposes is closest to:()
A. $400000.
B. $600000.
C. $800000.
-
[单项选择]The long-run production decision differs from the short-run production decision in that:( )
A. variable costs can be changed in the short run but not the long run.
B. fixed costs can be changed in the short run but not the long run.
C. fixed costs can be changed in the long run but not the short run.
-
[单项选择]A mutual fund manager wants to create a fund based on a high-grade corporate bond index. She first distinguishes between utility bonds and industrial bonds; she then, for each segment, defines maturity intervals of lee than 5 years, 5 to 10 years, and greater than 10 years. For each segment and maturity level, she classifies the bonds as callable or noncallable. She then selects bonds from each of the subpopulations she has created. For the manager’s sample, which of the following best describes the sampling approach()
A. Systematic sampling.
B. Simple random sampling.
C. Stratified random sampling.
-
[单项选择]An investment strategy that seeks to grow portfolio value over time through capital gains and reinvestment of current income is most likely appropriate if the investment objective is:( )
A. total return.
B. current income.
C. capital appreciation.
-
[单项选择]After extensive research, retired portfolio manager Justin Blake, CFA, purchased 20000 shares of a small public company. He then posted messages on several Internet bulletin boards. The message read, "This stock is going up once the pending patents are released. The stock is a buy at anything below $3. I just bought 20000 shares for my personal account. I have done some close research on this company." According to the Standards of Practice Handbook, Blake most likely violated the Standard or Standards associated with:()
A. Conflicts of Interest and Integrity of Capital Markets.
B. Integrity of Capital Markets, but not Conflicts of Interest.
C. neither Conflicts of Interest nor Integrity of Capital Markets.
-
[单项选择]Which of the following is most likely to concern an investor evaluating a corporation’s shareowner rights provisions()
A. Shareowners may nominate board members.
B. Shares held by the founding family have supernormal voting rights.
C. To ensure accuracy, company executives tabulate and verify shareowner voting.
-
[单项选择]A continuous market most likely exists for a stock when:( )
A. an overnight buildup of buy and sell orders for the stock occurs.
B. new information about the company is continuously released to market participants.
C. numerous dealers are willing to make a market in the stock at any time that the market is open.
-
[单项选择]Jasper Corporation sold its receivables to another corporation, JTL, created by Jasper for that purpose. If JTL sells securities backed by the receivables, the credit rating associated with those securities will most likely be based on the:()
A. creditworthiness of JTL.
B. creditworthiness of Jasper.
C. collateral and credit enhancement mechanisms used.
-
[单项选择]According to the Standards of Practice Handbook, a member with-supervisory responsibilities violates the CFA Institute Standards of Professional Conduct if the member fails to:()
A. prevent violations of the law.
B. prevent violations of the CFA Code and Standards.
C. establish and implement written compliance procedures.
-
[单项选择]An analyst gathered the following information for a company whose common stock is currently priced at $40 per share:()
A. 26.5
B. 1.16
C. 25.6
-
[单项选择]A CFA candidate, who is an investment bank equity analyst writes a research report on an oil company recommending a buy. After reviewing the report and not seeing any disclosures a pension fund manager asks the analyst if the investment bank is currently undertaking any corporate finance activity with this oil company. The analyst does not mention or include in the research report, that he is related to the majority shareholder of the investment bank and that he owns shares in the oil company. According to the Standards of Practice Handbook, the analyst is least likely to have violated the CFA Institute Standards of Professional Conduct that relates to:()
A. disclosure of conflicts.
B. independence and objectivity.
C. additional compensation arrangements.
-
[单项选择]Suppose the CPI basket contains only two kinds of goods (services): gasoline and taxicab service. In the base period, consumers bought 15 gallons of gasoline at $6 and 4 miles of taxicab at $3 each. In the current period, consumers buy 15 gallons of gasoline at $6.2 and 4 miles of taxicab at $2.5 each. The CPI for the current period is closest to:()
A. 99.0.
B. 101.2.
C. 115.3.
-
[单项选择]Costs included in the determination of a company’s economic profit that are also most likely to be included in that company’s accounting costs are:()
A. explicit costs.
B. economic depreciation and foregone interest.
C. opportunity costs associated with labor provided by the company’s owners.
-
[单项选择]Shawn Crane, CFA, is the Chief Information Officer (CIO) for Blind Trust (BT). Dunder recently assigned one of his portfolio managers, Doug Spader, to manage several accounts that primarily invest in thinly traded micro-cap stocks. Crane soon notices that Spader places many stock trades for these accounts on the last day of the month, towards the market’s close. Crane finds this trading activity unusual and speaks to Spader, who explains that the trading activity was completed at the client’s request. Crane does not investigate further. Six months later regulatory authorities sanction BT for manipulating micro-cap stock prices at month-end in order to boost account values. According to the Standards of Practice Handbook, did Crane violate any CFA Institute Standards of Professional Conduct()
A. No.
B. Yes, because he failed to reasonably supervise Spader.
C. Yes, because he did not report his findings to regulatory authorities.
-
[单项选择]Which of the following statements about a monopolist is least accurate()
A. The monopolist faces a downward sloping demand curve.
B. Unlike an oligopolist, a monopolist will always be able to earn economic profit.
C. A profit-maximizing monopolist will expand output until marginal revenue equals marginal cost.
-
[单项选择]According to the market segmentation theory, an upward sloping yield curve is most likely due to:()
A. investor expectations that short-term interest rates will rise in the future.
B. different levels of supply and demand for short-term and long-term funds.
C. an increasing yield premium required by investor for bearing interest rate risk.
-
[单项选择]The unrealized gains and losses arising from changes in the market value of available-for-sale securities are reported under U.S. GAAP and International Financial Reporting Standards (IFRS) in the:()
A. equity section for both.
B. equity section for U. S. GAAP and the income statement for IFRS.
C. income statement for U. S. GAAP and the equity section for IFRS.
-
[单项选择]When Jefferson Damon, CFA, joined NPSI Investing, NPSI began using a quantitative stock selection model that Damon had developed on his own personal time prior to his employment with NPSI. One year later when Damon left the firm, he found the original copy of the model that he had developed in a file at his home and presented it to his new employer, who immediately began using the model. According to the Standards of Practice Handbook, did Damon violate any CFA Institute Standards of Professional Conduct( )
A. No.
B. Yes, because he misappropriated property that now belonged to NPSI.
C. Yes, because he failed to inform his new employer that the model was the same one used by his previous employer.
-
[单项选择]According to the Standard of Practice Handbook, a supervisor establishing procedures to eliminate conflicts of interest relating to personal trading would least likely recommend requiring:()
A. a ban on employee investments.
B. disclosures of beneficial ownerships.
C. duplicate confirmations of employee transactions.
-
[单项选择]Which of the following is the simplest way for a company to increase its reported operating cash flow()
A. Record sales on a bill-and-hold basis.
B. Slow down the rate of payment to suppliers.
C. use a third party financial institution to pay suppliers.
-
[单项选择]Which of the following is best classified as a forward commitment derivative()
A. A swap agreement.
B. A convertible bond.
C. An asset-backed security.
-
[单项选择]A U. S. investor has purchased a tax-exempt 5-year municipal bond at a yield of 3.86 percent which is 100 basis points less than the yield on a 5-year option-free U. S. Treasury. If the investor’s marginal tax rate is 32 percent, then the yield ratio is closest to:( )
A. 0.79.
B. 1.26.
C. 3.68.
-
[单项选择]A company, with a tax rate of 40% percent, sold a capital asset with a net book value of $500 000 for $570 000 during the year. Which of the following amounts will most likely be reported on their in their income statement for year related to the asset sale()
A. $70000.
B. $92000.
C. $105000.
-
[单项选择]An analyst collects the following set of ten returns of a firm from the past: 2.2 percent, 6.2 percent, 8.9 percent, 9.3 percent, 10.5 percent, 11.7 percent, 12.3 percent, 14.1 percent, 15.3 percent, and 18.4 percent. What value is closest to the geometric mean return of this firm( )
A. 9.62%
B. 10.80%
C. 10.89%
-
[单项选择]Richard Pantoja is enrolled as a candidate in the CFA examination program. He works as an assistant for Warren Investment (WI). Pantoja sees WI’s purchase list and purchases several of the recommended stocks. Pantoja least likely violates the CFA Institute Standard relating to:( )
A. loyalty to employer.
B. priority of transactions.
C. diligence and reasonable care.
-
[单项选择]When the financial statements materially depart from accounting standards and are not fairly presented, the audit opinion would be a(n):()
A. adverse opinion.
B. qualified opinion.
C. disclaimer of opinion.
-
[单项选择]Which of the following transactions is least likely to increase a company’s reported cash from operations()
A. Securitizing accounts receivable.
B. Delaying payments made to suppliers.
C. Using short-term debt to reduce an existing account payable.
-
[单项选择]A company reports sales of $50000000 for the year ended 31 December 2009. Accounts receivable balances were $6000000 at 1 January 2009 and $7500000 at 31 December 2009. The company's cash collections from sales for 2009 are closest to.( )
A. $42500000.
B. $48500000.
C. $51500000.
-
[单项选择]An analyst gathers the price-earnings ratios (P/E) for the firms in the S&P 500 and then ranks the firms from highest to lowest P/E. She then assigns the number 1 to the group with the lowest P/E ratios, the number 2 to the group with the second lowest P/E ratios, and so on. The measurement scale used by the analyst is best described as:()
A. ordinal.
B. interval.
C. nominal.
-
[单项选择]In a regulated industry, the introduction of a marginal cost pricing rule that maximizes total surplus is most likely to be viewed as:()
A. efficient but leaves the natural monopoly incurring an economic loss.
B. efficient and allows the natural monopoly incurring an economic gain.
C. inefficient and leaves the natural monopoly incurring an economic loss.
-
[单项选择]According to the Global Investment Performance Standards (GIPS):()
A. firms may not set minimum asset levels for portfolios to be included in a composite.
B. composites must be defined according to similar investment objectives and/or strategies.
C. terminated portfolio must be excluded in the historical returns of appropriate composites.
-
[单项选择]Which of the following will most likely lead to cost-push inflation()
A. A decrease in the cost of financing.
B. An increase in the prices of raw materials.
C. A technology change that lowers production costs.
-
[单项选择]A CFA charterholder owns an asset management firm with offices downtown. To minimize rent expenses, each year the charterholder ships the previous year’s research report to a nearby warehouse. There, the reports are digitized and stored in both electronic and hard-copy forms. After five years, all paper copies are destroyed and only electronic copies are retained. Are the charterholder’s record-retention procedures in compliance with the CFA Institute Standards of Practice()
A. No.
B. Yes, because he is only required to retain hard copies for five years.
C. Yes, because he still retains electronic copies of the original documents.
-
[单项选择]For retired 65-year-old investor, with moderate risk tolerance and adequate insurance and cash reserves, the appropriate portfolio will most likely have the following mix of bonds and stocks:
A. portfolio
B. bonds
C. stocks
D. A
E. 55%~65%
F. 35%~45%
G. B
H. 30%~40%
I. 60%~70%
J. C
K. 15%~50%
L. 50%~85%
-
[单项选择]Vincent Chase, CFA, is a portfolio manager for an investment advisory firm. Chase delegates some of his supervisory- duties to Janet Marshall, CFA, after educating Marshall on methods to prevent and detect violations of the firms of the firm’s compliance procedures. Despite these efforts, Chase discovers that an employee reporting to Marshall may have violated the procedures. According to the Standards of Practice Handbook, Chase’s least likely initial course of action must be to:()
A. suspend the employee.
B. increase supervision of Marshall.
C. initiate an investigation to determine the extent of the wrongdoing.
-
[单项选择]An energy analyst forecasts that the price per barrel of crude oil five years from now will range between $ 75 and $105. Assuming a continuous uniform distribution, the probability that the price will be less than $ 80 five years from now is closest to:()
A. 5.6%.
B. 16.7%.
C. 44.4%.
-
[单项选择]Matthew Smith, CFA, was recently promoted to senior portfolio manager. In his new position, Smith is required to supervise three portfolio managers. Smith asks for a copy of his firm’s written supervisory policies and procedures, but is advised that no such policies are required by regulatory standards in the country where Smith’s firm conducts the majority of its business. According to the Standards of Practice Handbook, Smith’s most appropriate course of action would be to:()
A. require that his firm adopted the CFA Institute Code of Ethics and Standards of Professional Conduct.
B. require that the employees he supervises adopt the CFA Institute Code of Ethics and Standards of Professional Conduct.
C. decline to accept supervisory responsibility until his firm adopts procedures to allow him to adequately exercise such responsibility.
-
[单项选择]Justin Sato, CFA, treasurer for a college, manages the Student Scholarship Trust. Sato issued a Request for Proposals (RFP) for domestic equity managers. Pamela Peters, CFA, a good friend of Sato, introduces him to representatives from Capital Investments, who submitted a proposal. Sato selected Capital as a manager based on the firm’s excellent performance record. Shortly after the selection, Peters, who had outstanding performance as an equity manager with another firm, accepted a lucrative job with Capital. Which of the CFA charterholders violated CFA Institute Standards of Professional Conduct()
A. Sato violated standards.
B. Peters violated standards.
C. Neither Sato nor Peters violated standards.
-
[单项选择]According to the Standards of Practice Handbook, which of the following statements about fair dealing is least accurate The Standard related to fair dealing:()
A. states that members should treat all clients equally.
B. imposes a duty with respect to both clients and prospective clients.
C. pertains to both investment recommendations and investment actions.
-
[单项选择]Two companies are identical except for their accounting treatment of research and development costs. One company expenses all such costs immediately, while the other company capitalizes a portion of the costs. Compared to the company that capitalizes, the company that expenses immediately will most likely report a lower:()
A. financial leverage.
B. total asset turnover.
C. cash flow from operations.
-
[单项选择]A company acquires a manufacturing facility in which it will produce toxic chemicals. The cost of the facility (exclusive of the underlying land) is $ 25 million and it is expected to provide a 10-year useful life, after which time the company will demolish the building and restore the underlying land. The cost of this restoration and cleanup is estimated to be $3 million at that time. The facility will be amortized on a straight-line basis. The company’s discount rate associated with this obligation is 6.25 percent. The total expense that will be recorded in the first year associated with the asset retirement obligation on this property is closest to:()
A. $163618.
B. $224945.
C. $265880.
-
[单项选择]For an A-rated corporate bond that has deteriorating fundamentals, but is expected to remain investment grade, the greatest risk is most likely:()
A. default risk.
B. liquidity risk.
C. credit spread risk.
-
[单项选择]Which of the following is the least likely outcome when a monopoly adopts perfect price discrimination because of the customers’ differing demand elasticities()
A. The monopolist shares the total surplus with consumers.
B. The price for marginal unit is less than the price for other units.
C. The output increases to the point at which price equals the marginal cost.
-
[单项选择]Which of the following most accurately describes the computation of nearly all bond market indexes, U.S. and global.( )
A. Model priced.
B. Trader priced.
C. Market priced.
-
[单项选择]An analyst is forecasting EPS for a company. She prepares the following common sized data from its recent annual report and estimates sales for 2010.()
A. 167.4
B. 236.2
C. 336.1
-
[单项选择]To gain insight into what portion of the company's asset is liquid, an analyst will most likely use:()
A. the cash ratio.
B. the current ratio.
C. common-size balance sheets.
-
[单项选择]Several years ago Samuel Bergen, CFA, co-founded an investment club. The club has not actively traded the account for at least a year and does not plan to resume active trading of the account. Bergen’s employer requires an annual disclosure of employee stock ownership. Bergen discloses all of his personal trading accounts, but does not disclose his holdings in the investment club. Which CFA Institute Standards of Professional Conduct has Bergen violated( )
A. fiduciary duty
B. conflicts of interest
C. selective disclosure
-
[单项选择]A reserve requirement of 20% implies a potential money deposit expansion multiplier of:( )
A. 5.
B. 8.
C. 10.
-
[单项选择]A company entered into a three-year construction project with a total contract price of $5.3 million and expected cost of $4.4 million. The following table provides cash flow information relating to the contract:()
A. 3013645
B. 2956036
C. 3616636
-
[单项选择]Two companies operating in the same industry both achieved the same return on equity with the same net sales, but the two companies were different with respect to return on total assets. Compared with the company that had the higher return on total assets, the company with the lower return on total assets most likely had a higher:()
A. total asset turnover.
B. financial leverage multiplier.
C. proportion of common equity in its capital structure.
-
[单项选择]An analyst determined that if interest rates increase 120 basis points the price of a bond would be $89.7, but if interest rate decreases 120 basic points the price that bond would he $99.3. If the initial price of the bond is $95.4, the approximate percentage price change for a 100 basis point change in yield is closest to:()
A. 2.5%.
B. 4.2%.
C. 8.4%.
-
[单项选择]A publicly listed company has a 12-person board of directors whose composition is as follows: · The chairman, who is the past president of the company and was named Chairman upon his retirement four years ago. · Five members of senior management, including the current president. · Six outside directors. Each member is elected for a two-year term and one-half of the positions stand for election every year. The three members of the audit committee are all outside directors and have relevant financial experience. The remuneration committee is composed of the chairman and two outside directors. Which of the following actions would provide the greatest improvement in the corporate governance of this company()
A. The chairman of the board should be an independent director.
B. All members of the board of directors should stand for election every year.
C. The company’s vice president of finance should be a member of the audit committee.
-
[单项选择]In the statement of cash flows, a company is allowed to classify interest paid:( )
A. in either the operating or financing section under IFRS.
B. in either the operating or financing section under U. S. GAAP.
C. only in the financing section under both IFRS and U. S. GAAP.
-
[单项选择]Ian O’Sullivan, CFA, is the owner and sole employee of two companies, a public relations firm and a financial research firm. The public relations firm entered into a contract with Mallory Enterprises to provide public relations services. According to the contract, O’Sullivan received 40 000 shares of Mallory stock in payment for his services. Over the next 10 days, the public relations firm issued several press releases that discussed Mallory’s excellent growth prospects. O’Sullivan, through his financial research firm, also published a research report recommending Mallory’s stock as a "buy". According to the Standards of Practice Handbook, O’Sullivan is required to disclose his ownership of Mallory’s stock in the:()
A. press releases only.
B. research report only.
C. both the press releases and the research report.
-
[单项选择]All else equal, an increase in expected yield volatility is most likely to result in an increase in the price of a(n):()
A. callable bond.
B. putable bond.
C. option-free bond.
-
[单项选择]A company receives a payment of $10000 on 1 December, for rent on a property for December and January. On receipt, they correctly record it as cash and unearned revenue. If at 31 December, their year-end, they failed to make an adjustment entry related to this payment, what is the effect on the financial statements for the year()
A. Assets are overstated by $5000 and liabilities are overstated by $5000.
B. Assets are overstated by $5000 and owner’s equity is overstated by $5000.
C. Liabilities are overstated by $5000 and owner’s equity is understated by $5000.
-
[单项选择]A security market with price continuity is most accurately characterized as a market in which:()
A. assets can be bought or sold quickly with minimal transaction costs.
B. prices change rapidly from one transaction to the next in response to new information.
C. prices do not change much from one transaction to the next in the absence of new information.
-
[单项选择]For the past decade, Christina Pederson, CFA, has managed the account of Susan Stefansson and in that time developed a close relationship with her client. Stefansson has a beach house in the Bahamas which she offers Pederson and her family free use of for two weeks as a reward for the excellent returns generated in her account. Pederson is so busy at work she doer not tell anyone where she is going for vacation. When accepting Stefansson’s offer, Pederson least likely violates the CFA Institute Standard relating to:()
A. loyalty to employer.
B. disclosure of conflicts.
C. Independence and objectivity.
-
[单项选择]An investor goes long an FRA that expires in 30 days for which the underlying is 90-day LIBOR for a notional of $10 million. A dealer quotes this instrument at 4.5 percent. At expiration, 60-day LIBOR is 3.5 percent and 90-day LIBOR is 4 percent. The payment made at expiration is closest to:( )
A. $12 376 from the investor to the dealer.
B. $12 376 from the dealer to the investor.
C. $16 570 from the investor to the dealer.
-
[单项选择]An important reason for constructing an investment policy statement is that it:( )
A. minimizes the costs of portfolio construction.
B. ensures that managers outperform the performance benchmark.
C. includes a performance benchmark to judge manager performance.
-
[单项选择]Venture capital investments used to provide capital for companies initiating commercial manufacturing and sales are most likely to be considered a form of:()
A. first-stage financing.
B. mezzanine financing.
C. second-stage financing.
-
[单项选择]As the quantity of labor increases, which of the following is the most likely outcome with respect to the marginal revenue (MRP) of labor()
A. MRP increases for a monopoly.
B. MRP decreases for a firm in perfect competition.
C. MRP increases for both monopoly and a firm in perfect competition.
-
[单项选择]At the beginning of the year, two companies issued debt with the same market rate, maturity date, and total face value. One company issued coupon-bearing bonds at par and the other company issued zero-coupon bonds. All other factors being equal for that year, compared with the company that issued par bonds, the company that issued zero-coupon debt will most likely report:()
A. higher cash flow from operations but not higher interest expense.
B. both higher cash flow operations and higher interest expense.
C. neither higher cash flow from operations nor higher interest expense.
-
[单项选择]Which embedded option is most beneficial to a bond issuer()
A. A conversion option.
B. A floor on a floating rate bond.
C. An accelerated sinking fund provision.
-
[单项选择]The best characterization of a firm that is operating on its long-run average cost curve is when it:( )
A. experiences constant returns to scale.
B. produces a given output at the least possible cost.
C. chooses a plant size that minimizes the average fixed cost.
-
[单项选择]Under International Financial Reporting Standards of a bank, or other financial institution, would normally use which type of balance sheet format()
A. Classified.
B. Liquidity-based.
C. Market-value based.
-
[单项选择]The manager of a pension fund determines that during the past five years 85 percent of the stocks in the portfolio have paid a dividend and 40 percent of the stocks have announced a stock split. If 95 percent of the stocks have paid a dividend or announced a stock split, the joint probability of a stock paying a dividend and announcing a stock split is closest to:()
A. 30%.
B. 45%.
C. 55%.
-
[单项选择]Which of the following statements is a key characteristic of the Global Investment Performance Standards (GIPS) The GIPS standards:()
A. rely on the integrity of input data.
B. consist of required provisions for firms to follow to achieve best practice.
C. must be applied with the goal of achieving excellence in performance presentation.
-
[单项选择]A CFA charterholder agreed in writing with his former employer not to solicit former clients for a period of one year after his termination. After he left his former employer, he consulted with a lawyer about whether the agreement was legally enforceable. The lawyer advised that it was doubtful that the agreement could be enforced, so the charterholder sent marketing brochures about his new firm to his former clients. According to the Standards of Practice Handbook, which of the following statements is most accurate with respect to the charterholder’s conduct()
A. The Standards do not apply to the charterholder’s conduct.
B. The Standards require the charterholder to comply with the agreement with his former employer.
C. Because the charterholder relied upon the opinion of legal counsel, he did not violate the Standards.
-
[单项选择]According to International Financial Reporting Standards, which of the following is one of the conditions that must be met for revenue recognition to occur()
A. Costs can be reliably measured.
B. Payments has been partially received.
C. Goods have been delivered to the customer.
-
[单项选择]A company is planning a new issue of $100 par preferred stock with a 12 percent dividend. The preferred stock can be sold for $95 per share and the company must pay flotation costs of 5 percent of the market price. Assuming a marginal tax rate of 40 percent, the after-tax rate of 40 percent, the after-tax cost of the preferred stock is closest to:()
A. 8.0%.
B. 12. 6%.
C. 13.3%.
-
[单项选择]A description least likely to explain put-call parity is:()
A. A fiduciary call option strategy and a protective put option strategy for an underlying asset are equal in value.
B. A put is equivalent to a long call, a long position in the underlying asset, and a long position in the risk-free asset.
C. A call is equivalent to a long put, a long position in the underlying asset, and a short position in the risk-free asset.
-
[单项选择]A capital lease requires rental payment of $2000 annually. Fair value of the leased equipment at inception of the lease is $10000 and the implicit interest rate is 12 percent. If the present value of the lease equals the fair value of the equipment at inception of the lease, the interest expense recorded by the lessee in the second year of the lease is closest to:()
A. $1056.
B. $1104.
C. $1200.
-
[单项选择]Is the reporting of an extraordinary item, net of tax, allowed under U. S. GAAP and International Financial Reporting Standards (IFRS)()
A. Yes, under both.
B. Yes, under IFRS, but not under U. S. GAAP.
C. Yes, under U. S. GAAP, but not under IFRS.
-
[单项选择]An investor opens a margin account with an initial deposit of $5000. He then purchases 300 shares of a stock at $30. His margin account has a maintenance margin requirement of 30 percent. Ignoring commissions and interest, the price at which the investor receives a margin call is closest to.()
A. $14.26.
B. $18.72.
C. $19.05.
-
[单项选择]An analyst gathered the following data about a company:()
A. 12.5
B. 16.8
C. 15.2
-
[单项选择]David Schmidt enrolled to take the Level Ⅱ CFA examination in the current year; however, he did not take the exam. Subsequently, he registered to take the level Ⅱ exam the next year. Schmidt informed his employer that he passed Level Ⅱ. Which CFA Institute Standard of Professional Conduct did Schmidt most likely violate()
A. Duties to employer.
B. Professional misconduct.
C. Referencing candidacy in the CFA program.
-
[单项选择]An investor holds a portfolio consisting of one share of each of the following stocks:( )
A. stock
B. price at the beginning of the year
C. price at the end of the year
D. cash dividend during the year
E.X
Y
Z
F.$20
$40
$100
G.$10
$50
$105
H.$0
$2
$4
-
[单项选择]The post-audit performed as part of the capital budgeting process is least likely to:()
A. improve a firm's operations.
B. produce concrete ideas for future investments.
C. force management to revise the original forecast to match actual results.
-
[单项选择]A CFA charterholder is asked to review her firm’s soft dollar practices. As part of the review, she notes that her firm has failed to disclose the practices to the firm’s clients in writing as required by law. She does not report the firm’s violation to the appropriate regulatory authority, has the charterholder violated any CFA Institute Standards of Professional Conduct()
A. No.
B. Yes, because she failed to act in the best interest of her employer.
C. Yes, because she is required to report legal violations to the appropriate authority.
-
[单项选择]Which of the following provides the most protection to a bondholder( )
A. call protection.
B. refunding protection.
C. sinking fund protection.
-
[单项选择]Which of the following is least likely to reduce the principal-agent problem in enterprise organizations()
A. Ownership.
B. Long-term contracts.
C. Professional management.
-
[单项选择]A price-weighted series is composed of the following three stocks:
-
[单项选择]For amortizing bonds that have the same maturity date, the reinvestment risk for an investor holding the bonds to maturity is greatest for the bonds that are selling at:()
A. a premium to par value.
B. a discount to par value as a result of the bonds being issued as zero-coupon bonds.
C. a discount to par value as a result of market yields increasing after the bond was issued.
-
[单项选择]The mean and standard deviation of the net incomes for all companies making up a stock index is $ 3.5 million and $ 4. 2 million, respectively. If a random sample of 49 companies is taken from the index, the standard error of the sample mean is closet to:()
A. $85714.
B. $500000.
C. $600000.
-
[单项选择]An investor purchases a 3-month put option on a stock with an exercise price of $35. The risk-flee rate is 4.5 percent. At expiration, the stock price is $33.50. The option's payoff is closest to:()
A. $0.
B. $1.48.
C. $1.50.
-
[单项选择]An 8 percent coupon bond with a par value of $100 matures in 6 years and is selling at $95.51 with a yield of 9 percent. One year ago this bond sold at a price of $90.26 with a yield of 10 percent. The bond pays annual interest. The change in price attributable to the change in maturity is closest to:()
A. $1.03.
B. $4.22.
C. $5.25.
-
[单项选择]Which of the following distribution is most likely a discrete distribution()
A. A normal distribution.
B. A binomial distribution.
C. A univariate distribution.
-
[单项选择]If an analyst is preparing common-size financial statements the most appropriate way of expressing the interest expense is as a percentage of:( )
A. sales.
B. total liabilities.
C. total interest-bearing debt.
-
[单项选择]Most of the differences among companies with respect to quality of earnings are addressed when companies are compared using:()
A. price to earnings ratios.
B. price to cash flow ratios.
C. both price to earnings ratios and price to cash flow ratios.
-
[单项选择]Which of the following real estate valuation approaches is most likely to use slope coefficients derived from a statistical analysis to estimate the value of a property()
A. cost approach.
B. sales comparison approach.
C. discounted after-tax cash flow model approach.
-
[单项选择]Which of the following types of unemployment is most likely to be associated with an economy in which many workers have been made obsolete by changing technology()
A. Cyclical.
B. Frictional.
C. Structural.
-
[单项选择]David Sandridge earned the right to use the CFA designation in September 1968. Sandridge recently retired from the investment management profession. As he is retired, Sandridge no longer attends CFA Institute society meetings and has stopped paying his CFA Institute dues. According to the Standards of Practice Handbook, how should Sandridge refer to his affiliation with CFA program()
A. David Sandridge, CFA.
B. David Sandridge, CFA (retired).
C. "I was awarded the CFA charter in 1968."
-
[单项选择]Which of the following is least likely to be classified as an opportunity cost( )
A. The cash savings related to adopting a new production process.
B. The cash flows generated by an old machine that is to be replaced.
C. The market value of vacant land to be used for a distribution center.
-
[单项选择]A company determines that the quantity demand of a product increased by 5 percent when price is reduced by 10 percent. The product’s price elasticity of demand is most accurately described as:()
A. elastic.
B. inelastic.
C. perfectly elastic.
-
[单项选择]An analyst has gathered the following information provided in the table below:( )
A. 758.7
B. 775.3
C. 656.3
-
[单项选择]The table below summarizes the yields and corresponding prices for a 15-year option-free bond that is initially priced to sell at 7 percent yield:()
A. 6
B. 7
C. 8
-
[单项选择]If the Capital Asset Pricing Model (CAPM) applies and transactions costs are permitted, all else equal, the most likely result is that the security market line (SML) will:()
A. plot on a flatter line.
B. plot on a steeper line.
C. no longer plot on a single line.
-
[单项选择]Portfolios located to the right of the market portfolio on the capital market line are:( )
A. lending portfolios.
B. optimal portfolios.
C. borrowing portfolios.
-
[单项选择]A company is long an interest rate swap with a current market value of $125000. The company wants to terminate this swap before the expiration date. From a credit risk perspective, which of these is the least attractive way to terminate the swap( )
A. Sell the swap to a third party.
B. Short an offsetting swap with a third party.
C. Agree to terminate the swap and receive its market value from the eounterparty.
-
[单项选择]A company’s optimal capital budget is best described as the amount of new capital required to undertake all projects with an internal rate of return greater than the:()
A. marginal cost of capital.
B. cost of new debt capital.
C. weighted average cost of capital.
-
[单项选择]What is the effect on the accounting equation when a company’s Board of Directors declares a cash dividend()
A. Assets decrease and owners’ equity decreases.
B. Liabilities increase and owners’ equity decreases.
C. There is no effect on the accounting equation until the dividend is paid.
-
[单项选择]A U. S. investor who purchases an option-free bond with a 7 percent coupon rate, maturing in 20 years, and issued by a U. S. -based company is most likely exposed to:( )
A. volatility risk and credit risk.
B. event risk and interest rate risk.
C. volatility risk and yield curve risk.
-
[单项选择]A capital project with a net present value (NPV) of $23.9 has the following cash flows:()
A. 19.25%
B. 32.6%
C. 12.5%
-
[单项选择]Challenges to implementing a discretionary fiscal stimulus in a timely manner are least likely to include the:()
A. government payments for unemployment benefits.
B. need to convince lawmakers that action must be taken.
C. inability of policymakers to forecast a recession precisely.
-
[单项选择]If a distribution exhibits positive skewness, then the mean is most likely located to the:( )
A. left of both the median and mode.
B. right of both the median and mode.
C. left of the median and right of the mode.
-
[单项选择]Which of the following is the least accurate approach used to value closely held companies Basing the value of company on the:()
A. present value of future economic income.
B. historic cost of the assets of similar companies.
C. average market price of similar companies recently sold.
-
[单项选择]Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted. An investor has gathered the following data, presented on an annual basis, for an apartment building that is being considered for purchase:( )
A. $150000
B. $180000
C. $137000
-
[单项选择]An investor currently has a portfolio valued at $700 000. The investor’s objective is long-term growth, but the investor will need $ 30 000 by the end of the year to pay his son’s college tuition and another $10 000 by year-end for his annual vacation. The investor is considering three alternative portfolios.()
A. portfolio
B. expected return
C. standard deviation of returns
D.1
2
3
E.8%
10%
14%
F.10%
13%
22%
-
[单项选择]Which of the following statements is least likely to be a tool available to central banks for implementing monetary policy()
A. Adjusting taxation.
B. Inflation targeting.
C. Managing interest rates.
-
[单项选择]Which one of the following independent situations would most likely be of the greatest concern to an investor when reviewing a potential investment’s corporate governance practices and policies()
A. Without obtaining prior management approval, the board hired external consultants to advise them about recent environmental legislative changes related to the company.
B. As part of his compensation package, one director received a bonus for identifying a potential merger candidate. The company is currently negotiating a merger with that company.
C. One of the directors is the president of a major supplier to the company, but he recuses himself from board decisions related to the products his company supplies.
-
[单项选择]The most likely motivation for a speculator to sell a security short is based on the investor’s belief that the:()
A. security is overpriced.
B. required rate of return on the security will decline.
C. short sale proceeds could be invested for extra returns.
-
[单项选择]A company borrows $15 million from a bank for 1 year at a rate of LIBOR, currently 4.75 percent, plus 50 basis points. At the same time, the company enters a 1-year interest rate swap to pay the fixed rate of 5.25 percent and receive LIBOR. Payments are made on the basis of 180 days in the settlement period. Floating payments are made on the basis of 360 days a year while fixed payments are made on the basis of 365 days a year. LIBOR is 5.00 percent on the first settlement. The company’s total interest expense for the loan and swap for the first settlement period is closest to:()
A. $388400.
B. $425900.
C. $444600.
-
[单项选择]Technically, an individual is unemployed when he or she is actively seeking employment or is:()
A. a retiree.
B. a discourage worker.
C. waiting to return to a job from which he or she was just laid off.
-
[单项选择]An analyst calculates the following ratios for a firm:()
A. 19.92%
B. 18.92%
C. 17.92%
-
[单项选择]An analyst gathered the following information ($ millions) about the performance of a portfolio:()
A. 0.926
B. 0.998
C. 0.9286
-
[单项选择]Which classification of hedge funds is least likely to use a short position in stock as a part of its strategy()
A. market-neutral funds.
B. emerging-market funds.
C. distressed securities funds.
-
[单项选择]Charlie Mancini, CFA, is the Managing Director of VES Financial (VES), a large US—based mutual fund organization. Mancini has been under pressure recently to increase revenues. In order to secure business from a large hedge fund manager based in Asia, Mancini recently approved unusual terms for the fund’s client agreement. To allow for time zone differences, the agreement allows the hedge fund to trade in all of VES’s mutual funds six hours after the close of US market. According to the Standards of Practice Handbook, did Mancini violate any CFA Institute Standards of Professional Conduct()
A. No.
B. Yes, because he failed to inform his other clients of the unusual terms under the new client agreement, thus not treating clients equally.
C. Yes, because he failed to review regulations on late-trading and did not consult with VES’s compliance director to determine if late-trading was acceptable.
-
[单项选择]An issue subject to a vote at a stockholders' meeting is presented in a(n):( )
A. interim report.
B. proxy statement.
C. management statement of responsibility.
-
[单项选择]An analyst gathers the following information ($millions) for two companies operating in the same industry during the same period:
-
[单项选择]The minimum variance zero-beta portfolio most likely has some:()
A. systematic and unsystematic risk.
B. unsystematic risk and no systematic risk.
C. systematic risk and no unsystematic risk.
-
[单项选择]The cross elasticity of demand for a complementary product would most likely be:()
A. zero.
B. positive.
C. negative.
-
[单项选择]The following end of month payments of $400, $700, and $300, (respectively) are due. Given a stated annual interest rate of 3.6 percent, the minimum amount of money needed in an account today to satisfy these future payments is closest to:()
A. $1308.
B. $1387.
C. $1391.
-
[单项选择]When preparing pro forma income statements, which one of the following items is least likely to be sales driven()
A. Current assets.
B. Interest expense.
C. Administrative expenses.
-
[单项选择]Holding all other factors constant, an increase in expected yield volatility will cause the price of:()
A. a putable bond to increase.
B. a callable bond to increase.
C. embedded put and call options to decrease.
-
[单项选择]Danny Walter, CFA, manages accounts for high net worth clients including his own family’s account. He has no beneficial ownership in his family’s account. Because Walter is concerned about the appearance of improper behavior in managing his family’s account, when his firm purchases a block of securities, Walter allocates to his family’s account only those shares that remain after allocation to his other client accounts. The fee for managing his family’s account is based on his firm’s normal fee structure. According to the Standards of Practice Handbook, Walter’s best course of action with regard to management of his family’s account would be to:()
A. continue to manage his family’s account but treat it like his other client accounts.
B. discontinue management of his family’s account and arrange for the account to be transferred to another firm.
C. discontinue management of his family’s account and arrange for the account to be transferred to another investment manager in his firm.
-
[单项选择]For markets with perfectly elastic supply, the introduction of a tax will most likely result in:()
A. a price increase and the seller pays the entire tax.
B. a price increase and the buyer pays the entire tax.
C. no change in price and the seller pays the entire tax.
-
[单项选择]The primary motivation for investing in commodity-linked bonds is that they most likely provide:()
A. an income stream.
B. capital gains returns.
C. protection against interest rate risk.
-
[单项选择]An analyst has been hired to evaluate a high-risk project. The analyst estimates the probability that the project will fail in the first year as well as the conditional probability of failure for each of the remaining four years of the project, as follows:( )
A. $2406
B. $2506
C. $1406
-
[单项选择]Compared to the normal distribution, the t-distribution most likely:()
A. has fatter tails.
B. is more peaked.
C. has greater degrees of freedom.
-
[单项选择]A company is determining the cost of debt to use in its weighted average cost of capital. It has recently issued a 10-year, 6 percent semiannual coupon bond for $ 864. The bond has a maturity value of $1 000. If the marginal tax rate is 35 percent, the cost of debt they should use in their calculation is closest to:()
A. 4.3%.
B. 5.2%.
C. 6.1%.
-
[单项选择]If a regulatory agency intervenes to reduces, a natural monopoly will most likely expend output to the level where:()
A. average cost equals price.
B. average cost equals marginal revenue.
C. marginal cost equals marginal revenue.
-
[单项选择]The infrequent trading of some assets that hedge funds invest in most likely results in hedge fund:()
A. risk being understated.
B. returns being understated.
C. correlations with other assets being overstated.
-
[单项选择]When the underlying stock price is $95, an investor pays $2 for a call option with an exercise price of $95. If the stock price moves to $96, the intrinsic value of the call option would be:()
A. -$1.
B. $0.
C. $1.
-
[单项选择]Stanley Crux, CFA, a portfolio manager at NWS Asset Management Ltd, calls a friend to join him for dinner. The friend, a financial analyst at D&M Corporation declines the invitation and explains that she is performing due diligence on Orca Electronics, a company that D&M is about to acquire. After the phone call, Crux searches the Internet for any news of the acquisition but finds nothing. Upon verifying that Orca is on NWS’s approved stock list, Crux purchases Orca’s common stock and call options for the NWS clients. Two weeks later, D&M announces its intention to acquire Orca. The next day, Crux sells all of the Orca securities, giving the fund a profit of $ 3 million. According to the Standards of Practice Handbook, did Crux violate any CFA Institute Standards of Professional Conduct()
A. No.
B. Yes, because he traded on material nonpublic information.
C. Yes, because he only purchased stock and options for selective clients, not all clients.
-
[单项选择]An analyst gathers the following information about a common stock investment:( )
A. 10.60%
B. 11.60%
C. 12.60%
-
[单项选择]An analyst gathered the following information about a company: Using the dividend discount model and the other data given, the company's stock is best described as a:( )
A. growth stock.
B. cyclical stock.
C. speculative stock.
-
[单项选择]Two mutually exclusive projects have conventional cash flows, but one project has a larger NPV while the other project has a higher IRR. Which of the following least likely explains this conflict()
A. Reinvestment rate assumption.
B. Size of the projects’ initial investments.
C. Risk of the projects as reflected in the required rate of return.
-
[单项选择]Hedge funds that contain infrequently traded assets would most likely exhibit a downward bias with respect to:()
A. measured risk but not correlations with conventional equity investments.
B. correlations with conventional equity investments but not measured risk.
C. both measure risk and correlations with conventional equity investments.
-
[单项选择]Which of the following is least likely to be a characteristic of an effective financial reporting framework()
A. consistency
B. comparability
C. comprehensiveness
-
[单项选择]The lower bound on a European call price is the greater of zero and:()
A. the underlying price minus the exercise price.
B. the present value of the exercise price minus the underlying price.
C. the underlying price minus the present value of the exercise price.
-
[单项选择]A company using the LIFO inventory method reports a LIFO reserve at year-end of $85 000, which is $20 000 lower than the prior year. If the company had used FIFO instead of LIFO in that year, the company’s financial statements would have reported:()
A. a lower cost of goods sold, but a higher inventory balance.
B. a higher cost of goods sold, but a lower inventory balance.
C. both a higher cost of goods sold and a higher inventory balance.
-
[单项选择]For the common stock of a firm that reported a small loss for the year just ended, the price multiple that is least likely to be meaningful is:()
A. price to cash flow.
B. leading price to earnings.
C. trailing price to earnings.
-
[单项选择]An entry made to record an accrual, such as bad debt expense, that is not yet reflected in the accounting system is best described as a(n):()
A. ledger entry.
B. adjusting entry.
C. trial balance entry.
-
[单项选择]A real estate investment has the following characteristics:()
A. $4000000
B. $1800000
C. $1200000
-
[单项选择]The five-component DuPont analysis of a company's ROE for 2009 is as follows:
A. operating profit margin
B. effect of nonoperating items
C. tax effect
D. total asset turnover
E. financial leverage
F. 7.5%
G. 0.95
H. 0.67
I. 2.2
J. 1.2
-
[单项选择]Darcy Grafton, CFA, purchases a large block of stock on behalf of specific accounts she managed. The stock realized a significant gain in value before the close of business; so Grafton reviewed her accounts again to determine where the block shares should be allocated. According to the Standards of Practice Handbook, Grafton’s most appropriate action is to allocate the shares to:( )
A. all accounts equally.
B. all accounts for which she has discretionary authority.
C. only those accounts for which the block shares were originally intended.
-
[单项选择]The difference between nominal spread and zero-volatility spread will most likely be the greatest for a mortgage-backed security:()
A. in an inverted yield curve environment.
B. in a steep upward-sloping yield curve environment.
C. with short maturity in a flat yield curve environment.
-
[单项选择]An analyst has recently determined that only 60 percent of all U. S. pension funds have holdings in hedge funds. In evaluating this probability, a random sample of 50 U. S. pension funds is taken. The number of U. S. pension funds in the sample of 50 that have hedge funds in their portfolio would most accurately be described as a:()
A. binomial random variable.
B. Bernoulli random variable.
C. continuous random variable.
-
[单项选择]Fundamental analysis most likely requires the analyst to engage in:( )
A. extrapolating historical data.
B. performing aggregate market analysis.
C. detecting the beginning of price movements that lead to new equilibrium prices.
-
[单项选择]Over time, the major source of investment return and risk can most likely be attribute to:()
A. stock selection.
B. asset allocation.
C. risk management.
-
[单项选择]If market interest rates rise, the price of a callable bond, compared to an otherwise identical option-free bond, will most likely decrease by:( )
A. less than the option-free bond.
B. more than the option-free bond.
C. the same amount as the option-free bond.
-
[单项选择]For a firm in perfect competition, as output increases the marginal revenue will most likely:()
A. increase.
B. decrease.
C. remain constant.
-
[单项选择]Which of the following statements is least accurate with respect to the advantages of open-end exchange traded funds (ETFs) Open-ended ETFs:()
A. provide for more immediate reinvestment of dividends than do index mutual funds.
B. provide a more cost-effective way for large institutions to invest in emerging markets.
C. provide lower exposure to capital gains distribution taxes than do traditional mutual funds.
-
[单项选择]According to the crowding out effect, which of the following statements is least likely correct The sale of government bonds used to finance excess government spending will:( )
A. raise the interest rate.
B. reduce private investment spending.
C. increase the profitability of corporate investment projects.
-
[单项选择]A company issued bonds in 2006 that mature in 2016. The measurement basis used for the bonds on the 2010 balance sheet will be:()
A. market value.
B. historical cost.
C. amortized cost.
-
[单项选择]On 1 January 2010 a company enters into a lease agreement to lease a piece of machinery as the lessor with the following terms:()
A. 82014
B. 66514
C. 82514
-
[单项选择]Which of the following statements about a normal distribution is least accurate A normal distribution:()
A. has an excess kurtosis of 3.
B. is completely described by two parameters.
C. can be the linear combination of two or more normal random variables.
-
[单项选择]Compared with the net present value (NPV) method, the internal rate of return (IRR) method of evaluating investment projects:( )
A. is the preferred method for evaluating mutually exclusive projects.
B. is not sensitive to the pattern or timing of the cash flows from the period.
C. assumes that all cash flows from the project will be reinvested at the computed IRR.
-
[单项选择]Monica Shore, CFA, is a highly regarded portfolio manager for Atlantic Investments (AI), a midsized mutual fund firm investing in domestic securities. She has watched the hedge fund boom and on numerous occasions suggested her firm create such a fund. Senior management has refused to commit resources to the area. Frustrated by the inaction, and attracted by the higher fees associated with hedge funds, Shore and several other employees use their spare time to create a hedge fund. Because AI management thinks that hedge funds are a fad, she does not inform her supervisor about the hedge fund. According to the Standards of Practice Book, Shore least likely violated the Standard relating to:()
A. Disclosure of Conflicts.
B. Priority of Transactions.
C. Additional Compensation Arrangements.
-
[单项选择]Which of the following constraints would most likely appear in the unique needs and preferences section of a trust’s investment policy statement (IPS) The portfolio is:()
A. subject to the prudent-man standard.
B. prohibited from investing in tobacoo companies.
C. prohibited from holding less than 5% in cash instruments.
-
[单项选择]If an investment of $4 000 will grow to $ 6 520 in four years with monthly compounding, the effective annual interest rate will be closest to:()
A. 11.21%
B. 12. 28%
C. 12. 99%
-
[单项选择]Which of the following steps in hypothesis testing most likely follows collecting the data and calculating the test statistic()
A. Stating the decision rule.
B. Making the statistical decision.
C. Specifying the significance level.
-
[单项选择]An analyst compared the performance of a hedge fund index with the performance of a major stock index over the past eight years. He noted that the hedge fund index (created from a database) had a higher average return, higher standard deviation, and higher Sharpe ratio than the stock index. All the successful funds that have been in the hedge fund database continued to accept new money over the eight-year period. Are the average return and the standard deviation, respectively, for the hedge fund index most likely overstated or understated()
A. Both average return and standard deviation are overstated.
B. Average return is overstated and standard deviation is understated.
C. Average return is understated and standard deviation is overstated.
-
[单项选择]Steven Brockman, CFA, is a sell-side analyst. Approximately half of Brockman’s compensation comes form his firm’s investment-banking division. Brockman is asked to write a report about Anacortes Concrete (AC) , an investment-banking client. Despite his concerns about a slowdown in concrete demand, Brockman issues a very positive report on AC. When issuing his report, Brockman least likely violates the CFA Institute Standard relating to:()
A. loyalty to employer.
B. disclosure of conflicts.
C. loyalty, prudence, and care.
-
[单项选择]An analyst is creating a new stock market index that is not affected by stock splits. The index the analyst is least likely to develop is:()
A. unweighted.
B. price-weighted.
C. value-weighted.
-
[单项选择]Fred Valley, CFA, is an analyst at a commercial bank. Valley receives compensation for referrals to the bank’s brokerage and personal financial-planning divisions. His recent referrals are long-time clients from his previous employer, and Valley does not mention the bank’s referral arrangement. Does Valley violate any CFA Institute Standards()
A. No.
B. Yes, with respect to misrepresentation.
C. Yes, with respect to conflicts of interest.
-
[单项选择]A company is considering issuing either a straight coupon bond or a coupon bond with warrants attached. The proceeds from either issue would be the same. If the firm issues the bond with warrants attached instead of the straight coupon bond, which of the following ratios will most likely be lower for the bond with warrants()
A. Return on assets.
B. Debt on equity ratio.
C. Interest coverage ratio.
-
[单项选择]An asset manager, a CFA charterholder, manages small-cap portfolios for institutional clients. The manager is convinced, given the deteriorating economic conditions, that as a group, small-cap equities will underperform during the next 12 months. To preserve her client’s wealth, the manager buys large-cap equities that he believes are better positioned to weather the expected economic downturn. The manager provides complete disclosure of these trades to his clients after the purchase. Has the manager violated any CFA Institute Standards of Professional Conduct( )
A. No.
B. Yes, relating to suitability.
C. Yes, relating to misconduct.
-
[单项选择]The following information is from a company's 2008 financial statements ($ millions):()
A. $30000000
B. $29000000
C. $35000000
-
[单项选择]An analyst gathers the following information for a company:()
A. 36.8
B. 44.8
C. 46.8
-
[单项选择]Firms claiming compliance with the GIPS Standards are least likely to be required to:( )
A. undertake a verification process.
B. provide a composite list and description to any prospective client on request.
C. document their policies and procedures used in establishing and maintaining compliance.
-
[单项选择]An analyst is estimating the cost of capital for her firm. She has estimated the before-tax costs of the current sources of capital to be 8 percent of debt and 9 percent for equity, If the firm’s marginal tax rate is 40 percent, the costs of debt and equity she could use in her calculation are closest to:( )
A. 4.8% for debt and 5.4% for equity.
B. 4.8% for debt and 9.0% for equity.
C. 8.0% for debt and 5.4% for equity.
-
[单项选择]On the cash flow statement, the payment of cash dividends during the year will most likely affect the cash flow from:()
A. operations.
B. investing activities.
C. financing activities.
-
[单项选择]The year-end balances in a company’s LIFO reserve are $ 56. 8 million in the company’s financial statements for both 2008 and 2009. For 2009, the measure that will most likely be the same regardless of whether the company uses the LIFO or FIFO inventory method is the:( )
A. inventory turnover.
B. gross profit margin.
C. amount of working capital.
-
[单项选择]A European stock index call option has a strike price of $1 160 and a time to expiration of 0.25 years. Given a risk-flee rate of 4 percent, if the underlying index is trading at $1 200 and has a multiplier of 1, the lower bound for the option price is closest to:()
A. $ 28.29.
B. $ 40.00.
C. $ 51.32.
-
[单项选择]After work each day, Shinichi Takada, CFA, runs a popular internet blog where he comments on micro-cap stocks. The blog includes a biography of Takada with his education and employment history. He receives no compensation for the blog. On the blog, Takada recommends purchases and sales of stocks based upon astrology. When blogging, Takada least likely violates CFA Institute Standards relating to.()
A. fair dealing.
B. duty to employer.
C. diligence and reasonable basis.
-
[单项选择]An analyst estimates that an initial investment of $500 000 in a venture capital project will pay $6 million at the end of five years if the project succeeds and that the probability the project survives to the end fifth year is 25 percent. The required rate of return for the project is 19 percent. The expected net present value of the venture capital investment is closest to.()
A. $128754.
B. $152632.
C. $236486.
-
[单项选择]Which of the following statements about the market portfolio and the capital market line (CML) is least accurate The market portfolio:()
A. assumes an equal amount is invested in each risky asset.
B. is perfectly positively correlated with other portfolios on the CML.
C. allows the elimination of all unsystematic risk at every point along the CML.
-
[单项选择]Capital market efficiency is desirable, but there are limitations in achieving full market efficiency. Which of the following is least likely to be a limitation in achieving full capital market efficiency( )
A. Survivorship bias.
B. Limits of arbitrage.
C. Cost of information.
-
[单项选择]Frank Jones passed the Level I CFA examination in 2008 and the Level Ⅱ examination in 2009. He is currently enrolled for the Level Ⅲ examination. According to the CFA Institute Standards of Professional Conduct, which of the following is the most appropriate way for Jones to refer to his participation in the CFA program( )
A. Frank Jones, CFA Level Ⅱ
B. Candidate in the CFA Institute CFA program.
C. Passed Level Ⅱ of the CFA examination in 2009.
-
[单项选择]Which of the following is the least accurate rationale to justify the use of price-to-book value (P/BV) ratio as a measure of relative valuation of companies or common stocks()
A. P/BV is a useful measure of value for firms that are not expected to continue as a going concern.
B. Compared to P/E, the P/BV ratio is not influenced by such accounting effects as expensing a capital investment as opposed to capitalizing it.
C. P/BV is particularly appropriate to value companies primarily composed of liquid assets, for example, those in the financial services industry.
-
[单项选择]An analyst’s examination of the performance of a company is least likely to include an assessment of a company’s:()
A. profitability.
B. cash flow generating ability.
C. assets relative to its liabilities.
-
[单项选择]A fixed income portfolio manager is evaluating investments in the mortgage market but is concerned about prepayment risk. The security that will most likely minimize prepayment risk is.()
A. mortgage passthrough security.
B. a portfolio of interest-only mortgage loans.
C. tranche B of a collateralized mortgage obligation.
-
[单项选择]For an investment portfolio, the coefficient of variation of the returns on the portfolio is best described as measuring:()
A. risk per unit of mean return.
B. mean return per unit of risk.
C. mean excess return per unit of risk.
-
[单项选择]A fixed income portfolio manager owns a $5 million par value noncallable bond. The bond’s duration is 5.6 and the current market value is $5125000. The dollar duration of the bond is closest to:()
A. $280000.
B. $287000.
C. $700000.
-
[单项选择]A company records the following two transactions: Ⅰ. $ 300 000 of rental revenue is received in advance on a two-year lease. It is taxed on a cash basis, but deferred for accounting purposes. Ⅱ. $500 000 of installment sales. No payments are required for one year after which collections will be made on an equal basis over 12 months and taxed on a cash basis. The entire sale and related profit will he recognized for financial reporting purposes in the year of sale. Which of the above transactions will most likely give rise to a deferred tax liability on the balance sheet()
A. Ⅰ only.
B. Ⅱ only.
C. Both Ⅰ and Ⅱ.
-
[单项选择]An analyst gathers the following information from a company’s accounting records ($ thousand):()
A. 3050000
B. 2050000
C. 1050000
-
[单项选择]An analyst makes the appropriate adjustments to the financial statements of retail companies that are lessees using a substantial number of operating leases. Compared to ratios computed from the unadjusted statements, the ratios computed from the adjusted statements would most likely be higher for:()
A. the debt-equity ratio but not the interest coverage ratio.
B. the interest coverage ratio but not the debt-equity ratio.
C. both the debt-equity ratio and the interest coverage ratio.
-
[单项选择]An analyst determines that an 8 percent option-free bond, maturing in 2015, would experience a 3 percent change in price if market interest rates rise by 50 basis points. If market interest rates fall by 50 basis points, the bond’s price would increase by:()
A. exactly 3%.
B. less than 3%.
C. more than 3%.
-
[单项选择]A company issued shares to acquire a large tract of undeveloped land for future development. The correct recording of this transaction in the cash flow statement is as a(n):( )
A. disclosure in a note or supplementary schedule.
B. outflow in investing activities, and an inflow in financing activities.
C. outflow in operating activities, and an inflow in financing activities.
-
[单项选择]Foreign currency translation adjustments are most likely reported in the company’s:()
A. income statement.
B. statement of cash flows.
C. statement of stockholders’ equity.
-
[单项选择]A CFA charterholder runs a small investment management firm. The firm subscribes to a service from a large investment research firm that provides research reports that can be repackaged as in-house research by smaller firms. The investment management firm distributes these reports to clients with specific references as to their source and author. According to the Standards of Practice Handbook, has the charterholder violated the Standard related to misrepresentation()
A. No.
B. Yes, because she distributed plagiarized material.
C. Yes, because she misrepresented her firm’s services.
-
[单项选择]An analyst takes a sample of yearly returns of aggressive growth funds resulting in the following data set: 25, 15, 35, 45, and 55. What are the range, mean absolute deviation (MAD), and sample variance of the data set range MAD variance()①A. 20 12 250 ②B. 25 60 1000 ③C. 40 12 250
A. ①
B. ②
C. ③
-
[单项选择]A derivative is most accurately defined as a financial instrument that provides:( )
A. an adjustment to another asset’s level of risk.
B. a return based on the return of an underlying asset.
C. an agreement between two parties to provide something for each other.
-
[单项选择]The following information relates to a futures market contract:( )
A. $103
B. $102
C. $100
-
[单项选择]An analyst is evaluating various debt securities issued by a company. The type of security that is most likely to yield the lowest recovery in a bankruptcy is a:()
A. mortgage bond.
B. debenture bond.
C. collateral trust bond.
-
[单项选择]Compared to a normal distribution, a lognormal distribution is least likely to be:()
A. skewed to the left.
B. skewed to the right.
C. useful in describing the distribution of stock prices.
-
[单项选择]During an onsite company visit, Marsha Ward, CFA, accidentally overheard the Chief Executive Officer (CEO) of Stargazer, Inc. discussing the company’s pending offer to purchase Dynamica Enterprises, a retailer of Stargazer products. According to the Standards of Practice Handbook, Ward may not use the information to take investment action because:( )
A. the information relates to an offer.
B. she does not have a reasonably and adequate basis for taking investment action.
C. acting on the information would breach a duty to both Stargazer and Dynamica.
-
[单项选择]Which of the following statements about portfolio risk and diversification is least accurate()
A. Unsystematic risk can be substantially reduced by diversification.
B. Systematic risk can be eliminated by holding securities in a well-diversified international stock portfolio.
C. Diversification results from combining securities that have less than perfect positive correlation between their returns to reduce portfolio risk.
-
[单项选择]If investors expect stable rates of inflation in the future, the pure expectations theory suggests that the yield curve now will be:()
A. flat.
B. inverted.
C. upward-sloping.
-
[单项选择]The most relevant definition for duration is:()
A. the first derivative of the security's price.
B. a security's price sensitivity to changes in yield.
C. the weighted-average time until receipt of the present value of cash flows.