CFA 1 - 50 Questions

Mathew Chambers manages individual accounts, including his father’s, at Harvey Securities. During a Sunday lunch at a restaurant with his friend Neil Rojas, Chambers noticed the directors of Navarro Motors sitting at the adjacent table. Rojas stated, “I believe Navarro has hired a new CEO as the firm is undertaking many positive amendments in its production process”. On Monday Chambers noticed a $1 increase in Navarro’s share price and purchased 500 shares for his father’s account. Chambers least likely violated:
Under which of the following accounting standards would a deferred tax be recognised on temporary differences arising from undistributed profits of associates (investments) when the investor controls the sharing of profit?
You are given: Price of corn today: $7.00 per bushel 1-year corn future: $8.00 per bushel Which of the following terms most accurately describes this environment?
Regarding the definition of the firm, the GIPS Standards require all of the following except:
Jason Briggs purchased a 3-month call option by paying $0.08. The exercise price of the option is $1.32 while the underlying is priced at $1.35. Is the option currently in-the-money and at what price will break-even occur?
You are presented with 2 investment opportunities and must choose the one with the greater present value: A lump-sum of $2 million or an annuity with 25 payments of $250,000 a year with the first payment starting today. The interest rate is 9% per year compounded annually. Which one will you choose?
Which of the following types of indices is most likely to rely on appraisal data?
Leading economic indicators (LEI) are variables that:
Samantha Bjork, CFA, has been offered an equity analyst position at a firm that has not adopted a formal code of ethics. Which of the following statements is most likely correct? Bjork:
Zooror, a Japanese notepad maker, has an inventory turnover of 8.7 times per year. The average number of days of inventory for notepad manufacturing is 45 days. How does Zooror compare to its competition?
DLF Ltd is an Indian company in the business of constructing residential houses. The proceeds derived from the residential houses by the company will most likely be recorded as:
A real exchange rate is different from a nominal exchange rate in that the real exchange rate:
Howard Walton, CFA, is a member of a team working on a heating oil price forecast. There are some specific portions of the forecast with which Walton does not agree, but he is generally confident of the group’s decision-making processes. Which of the following statements is most accurate? Walton:
In repurchase agreements, repo margin provides a margin of safety to the:
An analyst makes the following comment regarding derivative contracts: “All derivative contracts must have an underlying, two parties – a buyer and a seller, and low degrees of leverage” The comment is most likely to be:
Which of the following statements is/are accurate? I. Differences in laws across countries determine different behavior between CFA members and candidates. II. Within the investment industry, a CFA member or candidate will always understand ethical behavior by strictly adhering to the laws of the country in which he/she operates.
The four broad categories of hedge fund strategies identified by HFRI are:
Which fo the following best describes a stockholder's claim to a company's assets under bankruptcy?
GIPS standards least likely resolve misleading practices related to:
The efficiency of an unbiased estimator is measured by its:
Michael recently purchased a new sedan. He then acquired insurance to protect against loss due to accident, nature, failure, or theft. Because the vehicle was insured, Michael didn't bother locking the doors, and the car was soon stolen. This is an example of what insurance problem?
Nisha Mazhar is a risk analyst, and she has been given the task to identify the factor that helps measure her organization's risk tolerance. Which of the following factors will help Mazhar complete her task?
Which of the following is defined as the latest sovereign bond issue for a given maturity?
A firm values its assets using fair values. Its asset base comprises of the following asset categories: Category 1: Fee-paying discretionary portfolios Category 2: Non-fee paying discretionary portfolios Category 3: Fee-paying non-discretionary portfolios Category 4: Non-fee paying non-discretionary portfolios Based on the requirements of the Global Investment Performance Standards (GIPS), for periods beginning on or after January 1, 2011, the firm's total assets are the aggregate of:
Which of the following statements is most accurate?
An investor is holding an inverse floating rate note. If interest rates increase, the periodic coupons paid to the investor will:
Pension expense for employees directly related to production is reflected by an increase in:
Roberto Vargas, CFA, is in charge of the compliance program at his investment firm. According to the Standards of Practice Handbook, as a supervisor, Vargas is least likely required to:
Identify the most appropriate explanation of ''channel stuffing''.
Which of the following is least likely a characteristic of open-ended mutual funds?
As compared to firms with high degree of financial leverage, firms with high degree of operating leverage:
Mark Johnson is an analyst for Big Riches Investment Firm. He replaced Todd Phillips, who was an analyst with Big Riches, but resigned to move overseas. Phillips passed on all of his prior analytical reports and backup data for Johnson to use in his new role. In preparation for an annual valuation of the foodservice equipment industry, Johnson pulled up a valuation model developed by Phillips and changed it to include economic indicators published by the US Bureau of Economic Analysis. Once these revisions were made, Johnson back-tested the results using the S&P 500. Which of the following is most accurate?
The Cournot model of oligopoly form of market structure assumes that the number of firms in an oligopoly is:
Which of the following options on the same underlying is most likely to have the highest value?
An investor uses simple stock screen criteria based on a P/E ratio of less than 5 and financial leverage ratio of less than 0.5. The investor will least likely exclude stocks of companies:
Which of the following statements is most likely correct regarding the fundamental weighting method?
Under IFRS the definitional criteria for identifiable intangible assets most likely includes:
The correlation of a risk-free asset to a risky portfolio is closest to
Generating sufficient income and maintaining the real capital value of the fund are most likely the objectives of:
In conversation with a prospective client, a portfolio manager stated “I cannot guarantee that you will earn 18% on equities this year but I can provide you a range within which your return will lie. My range is quite popular among my clients and has a history of ten years. Each year, I develop the range by using financial models, economic forecasts and accredited reports. Based on the CFA Institute Standards, the portfolio manager:
EBB Inc. entered into a three-year contract to construct a building with an estimated total cost of $32 million. Due to limitations, project costs are uncertain and the output of the project cannot be measured reliably. If at the end of year 1EBB spent $26 million, under U.S.GAAP EBB would most likely recognize:
Which of the following is most accurately considered a systematic risk?
Gloria Inc. ships 5 machines to a customer at $5,550 per machine. The total cost for Gloria Inc. is $26,250 and payment is due in 60 days. No cash changes hands at delivery. The accounting treatment related to this transaction at the time of shipment most likely includes:
A lognormal distribution:
If the yield curve rises uniformly, how would the price of a 8.5% coupon bond yielding 2.75% most likely change in a year?
Turkey is the strongest importer of Russian oil products. Which of the following will be the outcome if Turkey places tariffs on imported products?
Under U.S. GAAP at the end of year 1, EBB would recognize $0 revenue, $0 cost of construction and $0 income. The $26 million expenditure would be recorded as an increase in inventory account and decrease in cash (if EBB paid cash for all expenditures).
Which type of financing is required for a leveraged buyout?
The performance of commodity indices can be quite different from their underlying commodities because
Lauren Sims, marketing director of Karma Advisors, planned a brief performance presentation in five different U.S states where majority of the firm’s clients are located, in celebration of Karma’s five years of success. In his presentation, Sims clearly includes references to the information presented and also prepared a detailed information report to support his brief presentation. At the conclusion, Sims provided the report only to the clients who requested it. By failing to provide the report to all the clients who attended the session, Sims:
CFA 1 - 50 Questions
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