[Aug 26, 2023] Latest Questions CFA-Level-I Guide to Prepare Free Practice Tests
Reliable CFA-Level-I Dumps Questions Available as Web-Based Practice Test Engine
NEW QUESTION # 1006
Industry consolidation usually happens in the _____ stage.
- A. mature
- B. shakeout
- C. decline
Answer: A
NEW QUESTION # 1007
If the Laspeyres index is 120, the Paasche index is 115, then the Fisher index is:
- A. 235.
- B. 117.47.
- C. 117.5.
Answer: B
Explanation:
It is the geometric mean of the two indices.
NEW QUESTION # 1008
In the long run the price a monopolistic competitor sets is equal to:
- A. marginal revenue.
- B. marginal cost.
- C. average total cost.
Answer: C
Explanation:
After long-run adjustments have been made, price and quantity fall with firm entry until P =
ATC and firms earn zero economic profit.
NEW QUESTION # 1009
Which of the following is true of a monopolist's demand curve?
- A. It is identical with the industry demand curve for the product.
- B. It indicates that the monopolist will be able to sell more units at a higher price.
- C. It is perfectly inelastic.
Answer: A
Explanation:
A monopolist is the sole supplier to a market; therefore, the monopolist provides the industry supply. The demand curve that the monopolist faces then is the market demand curve.
NEW QUESTION # 1010
Which of the following statement(s) is/are true?
I). The Accumulated Depreciation account has a credit balance and is increased by the year-end adjusting entry for depreciation.
II). For most companies, adjusting entries are made on a yearly basis.
III). An end-of-period journal entry in which the Office Supplies Expense account is debited and the Office Supplies account is credited is an example of an adjusting entry.
IV). Adjusting entries may involve recording expenses before they are due to be paid.
- A. I, III, IV.
- B. I, II and III.
- C. I, II, III and IV.
Answer: A
Explanation:
II). For most companies, adjusting entries are made on a monthly basis. Monthly adjustments provide a more accurate presentation of interim (monthly) statements.
III). Adjusting entries are made at the end of the accounting period for the purpose of recognizing revenue and expenses that are not properly measured as a result of journalizing transactions as they occur.
IV). For example, accruing unpaid wages at the end of the accounting period assigns the wages to current time period even though they will be paid in the subsequent time period.
NEW QUESTION # 1011
Suppose that the future short-term outlook for the economy is favorable, with probability 0.6, and unfavorable with probability 0.4. For two stocks, F and G, the return on each stock is 0.25 and 0.2 respectively in favorable conditions, and 0.01 and 0.02 in unfavorable conditions. Calculate cov(Rf,Rg).
- A. 0.010368.
- B. 0.0041472.
- C. 0.0062208.
Answer: A
Explanation:
E[Rf] = 0.6*0.25 + 0.4*0.01= 0.154. E[Rg] = 0.6*0.2 + 0.4*0.02 = 0.128. Cov(Rf,Rg) = E[{Rf -
E(Rf)}*{Rg - E(Rg)}]= 0.6 * [{0.25-0.154}*{0.2-0.128}] + 0.4 * [{0.01 - 0.154}*{0.02-0.128}] = 0.010368.
NEW QUESTION # 1012
An uptrend is when a security makes ____ lows and _____ highs.
- A. lower, higher.
- B. higher, higher.
- C. higher, lower.
Answer: B
Explanation:
An uptrend for a security is when the price goes to higher highs and higher lows.
NEW QUESTION # 1013
Suppose you have a discrete probability function such that P(X=5) = 10%, P(X=6) = 20%, P(X=7) =
3 0%, P(X=8) = 20%, P(X=9) = 20%. Find F(8).
- A. 20%
- B. 80%
- C. 60%
Answer: B
Explanation:
F(8) is the probability that the function takes on values less than or equal to 8. So F(8) = p(5)
+ p(6) + p(7) + p(8) = 0.10 + 0.20 + 0.30 + 0.20 = 0.80 = 80%.
NEW QUESTION # 1014
The divisor for the Dow Jones Industrial Average (DJIA) is most likely to decrease when a stock in the
DJIA:
- A. has a stock split.
- B. is removed and replaced.
- C. has a reverse split.
Answer: A
NEW QUESTION # 1015
Which of the following is correct?
- A. The Investment Constraints include: Liquidity Constraints; Time Horizon; Tax Concerns; Legal and
Regulatory; and Unique Circumstances. - B. A Policy Statement lays out the duties of an investment advisor to her client.
- C. Return Objectives address liquidity needs and time horizons of the clients.
Answer: A
Explanation:
A policy statement is the statement that contains the investor's goals and constraints as it relates to his investments.
NEW QUESTION # 1016
If the existing money stock is $100 billion, the nominal GDP is $400 billion, and the average price level is $20, then according to the quantity theory of money, the velocity of money is
- A. 0
- B. 1
- C. 2
Answer: C
Explanation:
Since PY = GDP = MV, V = GDP/M: Velocity = 400 / 100 = 4. The price level is not needed here.
NEW QUESTION # 1017
A firm might wish to use a capital lease under which of the following conditions?
- A. Lease terms that are equal to the life of the asset
- B. The firm has debt covenants that restrict the amount of debt
- C. High effective tax rates
Answer: C
Explanation:
When a firm is in a high tax bracket, there are certain tax advantages to owning assets, and a capital lease would increase asset ownership.
NEW QUESTION # 1018
Almost all bonds and currencies trade in:
- A. Order-driven markets.
- B. Brokered markets.
- C. Quote-driven markets.
Answer: C
Explanation:
In a quote-driven market customers trade at the prices quoted by dealers.
NEW QUESTION # 1019
What is the present value today of these annual cash flows: $1,000, $2,000, $3,000? Assume the first cash flow occurs 1 year from today and an interest rate of 10% per year, compounded annually.
- A. $2,754.32.
- B. $4,104.98.
- C. $4,815.93.
Answer: C
Explanation:
You could solve this question using 3 different compound interest problems, but it is easier to solve them using the calculator's cash flow functions.
On the BAII Plus, press CF 2nd CLRWork 0 ENTER DownArrow 1000 ENTER DownArrow DownArrow
2 000 ENTER DownArrow DownArrow 3000 ENTER DownArrow DownArrow 2nd Quit. Then press NPV
1 0 ENTER DownArrow CPT.
On the HP12C, press these keys: 0 BlueShift CFo 1000 BlueShift CFj 2000 BlueShift CFj 3000 BlueShift
CFj. Then press 10 i, YellowShift NPV.
The "DownArrow" represents the downward-pointing arrow on the top row of the BAII Plus keyboard.
Make sure that the BAII Plus has the P/Y value set to 1.
NEW QUESTION # 1020
Equity real estate investment trusts are evaluated using common stock analysis techniques because:
- A. REITs trade on stock exchanges and over-the-counter markets as stocks do
- B. real estate markets tend to move in tandem with stock markets over time
- C. they offer a return in the form of an ongoing stream of income with the potential for capital appreciation
Answer: C
Explanation:
Equity REITs are valued using stock valuation techniques because they offer return streams that are similar in nature to those offered by equities, i.e. income and price appreciation.
NEW QUESTION # 1021
Which of the following is long-term asset?
I). An idle building.
II). Land held by land developers or sub-dividers.
- A. I only.
- B. none of them.
- C. both of them.
Answer: B
Explanation:
I is an investment and II is an inventory.
NEW QUESTION # 1022
BWT, Inc. shows the following data in its financial statements at the end of the year. Assume all securities were outstanding at the beginning of the year:
6.125% convertible bond, convertible into 33 shares of common stock. Issue price $1,000, 100
*
bonds outstanding.
6.25% convertible preferred stock, $100 par, 2,315 shares outstanding. Convertible into 3.3
*
shares of common stock, Issue price $100
8% convertible preferred stock, $100 par, 2,572 shares outstanding. Convertible into 5 common
*
shares, Issue price $80
9,986 warrants are outstanding with an exercise price of $38. Each warrant is convertible into 1
*
share of common.
Average market price of common is $52.00 per share. Common shares outstanding at the
*
beginning of the year were 40,045.
Net Income for the period was $200,000, while the tax rate was 40%.
*
How many new shares had to be issued to facilitate warrant conversion?
- A. 0
- B. 1
- C. 2
Answer: B
Explanation:
9986 x $38 = $379,468 $379,468/$52 = 7297 common shares 9986 - 7297 = 2689 new common shares
NEW QUESTION # 1023
If prices of a product are falling the use of LIFO rather than FIFO will lead to:
- A. higher working capital and higher net income.
- B. lower working capital and higher net income.
- C. higher working capital and lower net income.
Answer: A
Explanation:
COGS will be lower under LIFO in a period of falling prices leading to higher net income and higher tax payments. Working capital will be higher since the higher inventory value will outweigh the lower cash balance due to higher tax payments.
NEW QUESTION # 1024
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CFA Level I Certification Exam is an assessment offered by the CFA Institute designed to test the proficiency of candidates in the field of investment management. CFA-Level-I exam is the first in a series of three exams that must be completed in order to earn the prestigious CFA designation. The CFA Level I Exam is widely regarded as one of the most rigorous and comprehensive assessments in the finance industry, and passing it is a significant achievement for any professional seeking to establish themselves in the field.
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