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CFA CFA-Level-I: CFA Institute CFA Level I Chartered Financial Analyst Certified Professional Salary
Salaries for CFA level 1 Certified Professionals may vary by country. The estimated salaries of a CFA level 1 exam test given below:
United States: 15,000 USD
England: 78,000 Pounds
Europe: 92,000 Euro
India: 7,15,437 INR
CFA Level I Exam is the first of three exams in the CFA designation program, administered by the CFA Institute. CFA-Level-I exam is designed to test the candidate's knowledge and understanding of the fundamental concepts and tools used in the investment industry. It covers a wide range of topics, including economics, financial reporting and analysis, ethics, quantitative methods, corporate finance, equity investments, fixed income, derivatives, and alternative investments.
NEW QUESTION # 823
Of letters sent through a certain post office, 20% have insufficient postage, 48% have the wrong zip code, and 58% have one or both of these problems. What is the probability that a letter has both insufficient postage and the wrong zip code?
- A. 0.10
- B. 0.68
- C. 0.30
Answer: A
Explanation:
Let A denote the event that the letter has insufficient postage and B denote the event that it has the wrong zip code. From the problem we know that P(A) = 0.20, P(B) = 0.48 and P(A or B) = 0.58, so solving by the general rule of addition for P(A and B), one obtains P(A and B) = P(A) + P(B) - P(A or B).
Thus the probability of a letter having both problems is P(A and B) = 0.20 + 0.48 - 0.58 = 0.10.
NEW QUESTION # 824
You are studying the finances of a life insurance company. You believe that if Company X generates at least $150 million in earnings this year, they will pay a large amount of stock into a company bonus pool.
If the earnings can fall anywhere from $110 million to $165 million with equal probability, what is the likelihood they will hit the bonus pool target?
- A. 27.3%.
- B. 27.5%.
- C. 26.5%.
Answer: A
Explanation:
This is a continuous uniform distribution, where b = $165 million and a = $110 million. F(x) =
(x - a)/ (b - a) for a x b; F(x) = 0 for x = a, and F(x) = 1 for x >= b. We are solving for 1 - F(150) = 1 - (150 -
1 10)/(165 - 110) = 1 - 40/55 = 27.3%.
NEW QUESTION # 825
If you want to find information about management and director compensation, you should look
- A. in the MD&A or foot notes.
- B. in the proxy statement.
- C. in the auditor's report.
Answer: B
Explanation:
The proxy statement provides such information and discloses any potential conflicts of interest that may exist between the management and shareholders.
NEW QUESTION # 826
If ending inventory is understated by $2,000 and beginning inventory is overstated by $3,000, the net income will be
- A. understated by $5,000.
- B. overstated by $1,000.
- C. overstated by $5,000.
Answer: A
Explanation:
COGS = BI + Purchase - EI). If BI is higher, the COGS is higher. If EI is lower, the COGS is higher. Based on the relationship, the COGS is overstated by $2,000 + $3,000. The net income is understated by $5,000.
NEW QUESTION # 827
A stock is expected to pay dividends of 1.75 and 2.00 over the next two years, after which its price is projected at $37.50. If the market's discount rate is 11.5%, what should be the current value of this stock?
- A. $30.23
- B. $33.70
- C. $33.34
Answer: C
Explanation:
The holding period approach requires that cash flows over the next two years be discounted to the present. Cash flows are:
CF1 = 1.75; CF2 = 2.00 + 37.50 = 39.50; Using a financial calculator, PV @ 11.5% = 33.34
NEW QUESTION # 828
Which of these ratios is/are always negative?
I). The price elasticity of demand.
II The cross elasticity of demand for a complement
II). The cross elasticity of demand for a complement.
III). The income elasticity of demand for an inferior good.
IV). The price elasticity of supply.
- A. I, II and III.
- B. I only.
- C. I and II.
Answer: A
Explanation:
The price elasticity of supply is always positive.
NEW QUESTION # 829
The best way to study the composition of financial statements is to prepare
- A. common-size statements.
- B. a cross-sectional analysis
- C. a ratio analysis.
Answer: A
Explanation:
Common-size statements show the relationship of the component parts to a total in a single statement.
NEW QUESTION # 830
Beresford Company leased equipment from Fisher Company on July 1, 2010, for an eight-year period expiring June 30, 2018. Equal annual payments under the lease are $100,000 and are due on July
1 of each year. The first payment was made on July 1, 2010. The rate of interest contemplated by
Beresford and Fisher is 8%. The cash-selling price of the equipment is $620,625 and the cost of the equipment on Fisher's accounting records was $550,000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Fisher, what is the amount of profit on the sale and the interest income that Fisher would record for the year ended December 31, 2010?
- A. $0 and $20,825.
- B. $70,625 and $20,825.
- C. $70,625 and $24,825.
Answer: B
Explanation:
The profit is the selling price less the cost: $620,625 - $550,000 = $70,625 The interest income is sales price less the payment received times the interest rate. 4% is used since it is half a year.
($620,625 - $100,000) x .04 = $20,825
NEW QUESTION # 831
Which of these characteristics does not apply to the CML?
- A. It is a straight line AND tangent to the efficient frontier.
- B. It is dependent on beta.
- C. The portfolios on the CML are positively correlated.
Answer: B
Explanation:
The CML measures risk with total variability (variance or standard deviation). It is not dependent on beta, which is relevant in the Capital Asset Pricing Model.
NEW QUESTION # 832
Which of the following is a problem that an effective corporate governance system would mitigate or eliminate?
- A. To maintain a certain level of continuity and skill of the board, no board member should be removed from the board under any circumstances.
- B. The Board reports on their activities to Shareowners once a year.
- C. A majority of the board is independent.
Answer: A
Explanation:
Shareowners should be able to vote to remove a Board Member under certain circumstances. Besides, corporate governance best practice generally supports the annual election of
Board Members as being in the best interest of investors.
NEW QUESTION # 833
Which statement is false?
- A. Most of the salary earned by a superstar baseball pitcher may be economic rent.
- B. Most of a wages of a fast-food restaurant worker is opportunity cost.
- C. If the supply is perfectly inelastic, the supplier's entire income would be comprised of opportunity cost.
Answer: C
Explanation:
B is true. This is because the job pays minimum wage.
If the supply is perfectly elastic (NOT inelastic), the supply curve would be perfectly horizontal, and the supplier's entire income would be comprised of opportunity cost. If the supply is neither elastic nor inelastic, the supply curve will slope upward and the supplier's income would be split between economic rent and opportunity cost.
NEW QUESTION # 834
An inverse-floater has coupon rate = Maximum [(18% - 2.5r) or 0], where r is the 6-month LIBOR rate.
- A. The floor coupon rate of 0% occurs when r = 7.2%
- B. The cap coupon rate of 15.5% occurs when r = 1%
- C. The cap coupon rate of 18% occurs when r = 5.5%
Answer: A
Explanation:
The coupon rate specification indicates that for all values of 6-month LIBOR greater than
7 .2%, the coupon rate = Maximum [18% - 2.5*r or 0] = 0. The cap coupon rate is 18% when r = 0%.
NEW QUESTION # 835
Positive convexity means that:
- A. price changes resulting from equal required yield increases and decreases are of equal magnitude.
- B. the bond price function is curved, opening away from the origin.
- C. bonds prices move inversely with interest rates.
Answer: B
Explanation:
Positive convexity means that the bond price function is curved, opening away from the origin.
NEW QUESTION # 836
Two events, A and B, are independent if:
- A. P(A and B) = P(A) + P(B)
- B. P(A and B) = P(A) P(B)
- C. P(A and B) = 1
Answer: B
Explanation:
This is the definition of independence.
NEW QUESTION # 837
A small office building that recently sold for $175,000 generates annual net operating income of
$ 27,500. Using a 12% capitalization rate, how much NOI should a property generate under the income approach if the market value of the building is $195,000?
- A. $26,400
- B. $23,400
- C. $171,600
Answer: B
Explanation:
Under the income approach, assuming a capitalization rate of 12%, a building with a market value of $195,000 should generate NOI of: NOI = MV x k = $195,000 x .12 = $23,400.
NEW QUESTION # 838
At the present price of $1,035, the 10-year, 7.5 % Treasury note has a yield to maturity of 7.00%. The market consensus expected rate of inflation is 3.5%. Select the correct statement:
- A. If the average realized inflation over the next 10 years is less than or equal to 3.50%, the real return from owning the bond will be greater than or equal to 4.0%
- B. If the average realized inflation over the next 10 years is less than or equal to 4.0%, the real return from owning the bond will be greater than or equal to 7.0%
- C. If the average realized inflation over the next 10 years is less than or equal to 3.5%, the real return from owning the bond will be greater than or equal to 3.5%
Answer: C
Explanation:
Yield to maturity is a nominal measure of required return. If the realized rate of inflation is less than expected, then the real return will be greater than expected.
NEW QUESTION # 839
Which of the following will increase the aggregate demand?
I). Higher prices in stock market.
II). Higher prices in real estate market.
III). Higher real wealth.
- A. None of them. They will increase the quantity of aggregate demand but not the aggregate demand itself.
- B. III only.
- C. I, II, III.
Answer: C
Explanation:
Increase in stock and housing prices increases real wealth of households, and thus increases the aggregate demand.
NEW QUESTION # 840
The crowding-out model implies that a
- A. budget surplus will retard aggregate demand and throw the economy into a downward spiral.
- B. budget deficit is likely to stimulate aggregate demand and trigger a multiplier effect that will lead to inflation.
- C. budget deficit will increase the real interest rate and thereby retard private spending.
Answer: C
Explanation:
The crowding out theory implies that government borrowing drives up real interest rates and thus crowds out" private investment. Private investment falls under higher interest rates because the cost of investment (the real interest rate) rises if the government borrows heavily. Under the usual law of supply and demand, the government causes the interest rate to rise under deficit spending because there is a limited supply of loanable funds. The government competes with the private sector for these resources and thus drives up the price (i.e., the interest rate).
NEW QUESTION # 841
Everything else equal, an increase in fund expenses will:
- A. not affect NAV
- B. decrease NAV
- C. increase the total portfolio value
Answer: B
Explanation:
Given NAV = (Plan assets - Expenses) / Shares outstanding, an increase in expenses will decrease NAV.
NEW QUESTION # 842
All of the following statements about the value of a call option at expiration are true EXCEPT the:
- A. value of the long position equals zero or the stock price minus the exercise price, whichever is higher.
- B. value of the long position equals zero or the exercise price minus the stock price, whichever is higher.
- C. short position in the same call option has a zero value for all stock prices equal to or less than the exercise price, and can result in a loss if the stock price exceeds the exercise price.
Answer: B
NEW QUESTION # 843
Which of the following is NOT true about exchange rates quoted in the United States?
- A. A direct exchange rate quotation in the Wall Street Journal tells you literally how many U.S. dollars it takes to buy one unit of the foreign currency quoted.
- B. When an exchange rate is quoted in the Wall Street Journal as a U.S. $ equivalent it is called a direct quote.
- C. They are usually quoted in terms of the home currency.
Answer: C
Explanation:
In the US and UK indirect quotes are more common than direct quotes.
NEW QUESTION # 844
What is the best way to avoid data-snooping bias?
- A. Examine fresh data, if available.
- B. Remove snooped data from your own analysis.
- C. Ignore the prior research of others until after you do your own study.
Answer: A
Explanation:
The best way to avoid data-snooping bias is to examine fresh data, if it is available. This can be difficult in investment research, as the historical record is well-documented and fresh data are only added at a slow rate.
NEW QUESTION # 845
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CFA-Level-I exam covers a wide range of topics, including ethics and professional standards, quantitative methods, economics, financial reporting and analysis, corporate finance, equity investments, fixed income investments, derivatives, alternative investments, and portfolio management. CFA-Level-I exam is divided into two parts, each consisting of 120 multiple-choice questions. Candidates must pass both parts to earn the CFA-Level-I certification. CFA-Level-I exam is known for its rigor and requires a significant amount of preparation and dedication to pass. However, earning the CFA-Level-I certification can lead to increased job opportunities, higher salaries, and a greater understanding of the finance industry.
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