» CFA 1 – 10 questions

Which of these characteristics best describe commodity goods?

Low competition and high profitability.

High competition and low profitability.

High competition and high profitability.

The type of chart drawn on a grid, which consists of column X’s alternating with column O’s and does not represent time or volume is most likely the:

point and figure chart.

bar chart.

candlestick chart.

Assuming the correlation between an asset and market is 0.67 and the asset and market have standard deviations of 0.34 and 0.19 respectively, the market beta would be closest to:

0.09.

1.20.

1.00.

The Cournot model of oligopoly form of market structure assumes that the number of firms in an oligopoly is:

1

2

3

Which of the following statements is most likely correct regarding the major sections of GIPS standards?

According to section 5 ‘Presentation and Reporting’, firms cannot include in GIPS-compliant presentations information not addressed by the GIPS standards.

According to Section 4 ‘Disclosures’, firms are required to make negative assurance disclosures.

According to Section 3’Composite Construction’, a composite return is the asset weighted average of the performance of all portfolios in the composite.

The expected P/E ratio of a stock is 10, and the actual P/E ratio is 10.8. What can we say about the stock?

We can not say anything about the stock.

The stock is undervalued.

The stock is overvalued.

Which of the following statements is most likely correct regarding the fundamental weighting method?

It is similar to momentum investment strategy where securities’ weights are reduced when their relative investment values are increased.

It is not biased towards shares of firms with largest market capitalization.

It is biased towards highest priced stocks as they receive highest weights in the index.

GIPS standards least likely resolve misleading practices related to:

survivorship bias.

analyst financial statement adjustments.

varying time periods.

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?

Market demand

Financial strength

Interest rates

Which of the following transactions do not offset each other?

'Dividends paid to shareholders' and 'dividends received from an investment in equity'

'Provision for doubtful debts' and 'trade receivables'

'Accumulated depreciation' and 'property, plant and equipment'

CFA 1 - 10 Questions