CFA一级模考

ANSWERS FOR MOCK EXAM 1 (MORNING SESSION)1. D.Although Terence has passed Level III, he has not yet received his charter andcannot use the CFA designation. The description provided in the cover letterproperly describes his situation.2. C.Amy must take both actions-notifying her immediate supervisor and delivering acopy of the Code and Standards.3. D.4. C.Members may undertake an independent practice that could result in compensationor other benefit in competition with their employer provided they obtain writtenconsent from both their employer and the party for whom they undertakeindependent practice.5. C.To maintain his objectivity, Keith should pay his own hotel bill. Because the itineraryrequired charter flights due to a lack of commercial transportation, A& K Limited can appropriately provide them.6. C. Under ERISA, fiduciaries must act solely in the interest of, and for the exclusivepurpose of benefiting, the plan participants and beneficiaries.7. B. Daniel must give priority to transactions for clients and employers over transactionsfor his children.8. A.To avoid violating the standards, members cannot trade until the member's clients andemployers have had an adequate opportunity to act on the recommendation.9. C.The requirements of Standard IV (B.5) are not intended to prevent Lambert fromcooperating with an investigation by AIMR's Professional Conduct Program.10. B.Vivian should disclose to her clients and prospects her husband's holdings in DoubleLimited because this matter could be expected to impair her ability to makeunbiased and objective recommendations.11. B.12. B.Accruals accounting is required.13. C.Standard I(B) Fundamental Responsibilities. Prohibition against participating orassisting in illegal and ethical violations. If Roberts suspects someone isplanning or engaging in illegal activities, he should: (1) determine the legalityof the activities, (2) disassociate himself from the illegal or unethical activity, and(3) urge his firm to attempt to persuade the perpetrator to stop. The AIMRStandards of Professional Conduct do not require that Roberts report suchactivities to the authorities, but the law might.14. C.Standard III(C) Disclosure of Conflicts to Employer. Gloria should disclose to heremployer all matters that could reasonably be expected to interfere with herability to make unbiased and objective recommendations. Her service as atrustee of the Well Limited Foundation for Heart Research is most likely to beconsidered a conflict of interest with her responsibility to her employer.15. C.Standard III (E) Responsibilities of Supervisors. Paul may delegate supervisory duties,but such delegation does not relieve him of his supervisory responsibility.16. A.Standard IV (B.3) Fair Dealing. Johnson violated the standard on fair dealingbecause he did not deal fairly and objectively with all clients and prospectswhen disseminating investment recommendations. Instead, he showedfavoritism to his best clients. In disseminating investment recommendations,Johnson should consider making the information available to clients based ontheir interest and suitability. A change of recommendation from buy to sell or sellto buy is generally material.17. D.Standard IV(B.5) Preservation of Confidentiality. Choice B is false because thisAnswers for Mock Exam 1 (Morning Session) (Rev. 1) 1standard prohibits members from executing settlement agreements that preventmembers from providing information in an investigation by AIMR's ProfessionalConduct Program (PCP). Choice C is false because a person cannot withholdinformation during PCP investigations. Choice A is false because if a memberreceives information due to his or her special relationship with the clientindicating illegal behavior on the past of the client, the member may not have anobligation to inform the appropriate authorities.18. A.Standard IV(B.6) Prohibition against Misrepresentation. Members are not permitted tomake any assurances or guarantees about any investment, except tocommunicate accurate information. The statement that investment grade bondshave less default risk than junk bonds is an accurate statement.19. e BGN node: n = 10; i = 12 PMT = 1,000, compute FV = 19.654.5820. B.The present value of a perpetuity is PV = A/r = 500/0.1 = $5,000.21. B.i = 6/12 = 0.5; n = 10x12 = 120; PV = 40,000 Compute PMT22. A.23. A.A binomial random variable has an expected value or mean equal to np andvariance equal to np(1-p).Mean = 12(0.5) = 6; variance (12)(0.5)(1-0.5) = 324. D.25. B.Rbt-1 = In St+1 /St = (1+RL1-1) = In (40/25) = 0.47. Thus, 47% is thecontinuously computed return for the one-year holding period.26. B.Choice A describes cross-sectional data.Choice B describes time-series data.27. D.The dependent variable, Y, is equal to the intercept, b0, plus a slope coefficient, b1,times the independent, X, plus an error term, ε.28. C.I N FV Compute PV10 1 100 90.9110 2 150 123.9710 3 200 150.2610 4 250 170.75Total 535.8929. B.Step 1: Solve for the PV of the 5 payments of 3,000 to be received in years 3through 7.n = 5; i = 10; PMT = 3,000; compute PV =11,372.3611,372.36 falls one year before the first payment, or in year 2.Step 2: Find the present value of 11,372.36 that is two years in the future. n= 2; i = 10; FV =11,372.36; compute PV =9,398.64 or 9,399(rounded).30. D.From weakest to strongest, the ordering of measurements scales is nominal, ordinal,interval, and ratio.31. B.An interval is a set of return values within which an observation not falls.32. C.Step 1. Calculate the mean monthly return = 2% + (- 4%) + 1% + 5% = 4%M = 1%Step 2.Calculate the population standard deviation:([(2% - 1%) 2 + (-4% -1%) 2 +(1% - 1%) 2 +(5% -1%)2 ]N)1/ 2=3.24%Step 3. Calculate the sample standard deviation: ([(2% - 1%)2 + (-4% -1%) 2+ (1% - 1%) 2+ (5% - l%) 2 ])/n - 1) 1/ 2 = 3. 74%33. B.According to Chebyshev's inequality, the proportion of the observations within 2,which is k, standard deviations of the mean is at least 1 -(l/k) 2 = 1-(1/2 2) =0.75 or 75%.34. A.The probability is 30/200 = 0.15.35. ing the addition rule for probabilities, P (analyst or positive) =P(analyst) +Answers for Mock Exam 1 (Morning Session) (Rev. 1) 2P(positive) - P(analyst and positive)P (A or positive) = 130/200 + 140/200 - (100/130) = 0.58 or 58%36. B.Savings increases to hold interest rates constant. This means aggregate demandchanges little.37. C.The empirical evidence on the relationship between budget deficits and interest ratesis mixed.Few studies show a significant positive short-term link between budgetdeficits and real interest rates.38. B.Expansion = 1 / reserve requirement = 1/0.25 = 4(4)(150) = 60039. C.People realize this leads to inflation in the long run, so they reduce their moneyholdings. Output rises because the increase is unexpected.40. C.In purely competitive markets, there are a large number of dependent firms.41. D.42. D.43. C.44. C.45. D.Choice A: Accrual accounting does not require the receipt of cash for assurance ofpayment to exist.Choice C and D: These relate only to the condition of completion of theearnings process.46. D.47.ADemand for currency decreases when real interest rates decrease because ofdecreased capital flows.48.CForeign exchange quotations can be expressed on a direct basis -the home currencyprice of another currency — or an indirect basis-- the foreign currency price ofthe home currency.49.C F/S= (1 + r D )/(l + r F) where rates are listed as DC/FCF = (1.3/1.25)(0.4) = 0.41650. C.Direct method:Net income 1000Depreciation 70Goodwill 30Change in accounts receivable 25Change in inventory (35)Change in accounts payable 30Change in wages payable 15Operating cash flows 113551. B. Purchase equipment (200)Sell truck 25Investing cash flows (175)52. D. Sale of common stock 100Issuance of bonds 20Financing cash flows 12053. D.A common size balance sheet expresses all balance sheet accounts as apercentage of total assets.54. C. Original shares of common stock = 1,000,000(12) = 12,000,000Stock dividend = 200,000(12) = 2,400,000New shares of common stock = 200,000(3) = 600,000Total shares of common stock = 15,000,000/12= 1,250,000 Stock dividends are assumed to have been outstanding since the beginningof the year.55. D.Inventory turnover, defined as COGS/Average inventory, if often meaningless forLIFO companies due to the mismatching of costs. The numerator representscurrent costs, whereas the denominator reports outdated historical costs. Thus,the turnover ratio under LIFO will, when prices decrease, trend lower becauseof small COGS and larger inventory. Net profit margin, defined as EA T/Sales,is higher during periods of decreasing profits for LIFO companies. LIFO leadsto a smaller COGS, which reduces EAT, without affecting sales.56. A.In this situation, LIFO results in lower cost of goods sold because it uses the morerecent and lower costs than LIFO. LIFO results in lower cash flows becausethe cash on income taxes is a percentage(the marginal tax rate) of thedifference in inventory values. Thus, with LIFO:Sales-COGS(smaller)EBT (larger)-Taxes (larger) Because taxes paid out are a cash outflow.EAT (larger) If taxes are larger, then cash flow ill be smaller.57. D.COGSFIFO = COGSLIFO - (Ending LIFO Reserve - Beginning LIFO Reserve)COGSFIFO = $250,000 - ($8,000-$5,000) = $247,00058. pared to expensing, capitalizing results in higher profitability in early yearsand lower profitability in later years.59. C.60. D.The present value of the minimum lease payments equals or exceeds 90 percent ofthe value of the fair value of the leased property.61. B.Capital lease affects on the income statement:Step1: Calculate the depreciation charge: ($3,500,000-$450,000)/10 = $305,000Step2: Calculate the interest expense: $3,500,000(0.15) = $525,000Total expense: $305,000+$525,000 = $830,00062. A.63. C.64. A.65. B.66. D.67. B.Dealer-markets are price-driven markets.68. D.69. C.70. C.P/E = Dividend payout ratio/(k-g)Dividend payout ratio = 1 - retention ratio = 1-0.2 = 0.8P/E = 0.8(0.15-0.08) =5.671. B.k = D1/P0+g = $4/$25+0.09 = 0.2572. A.Step1: Calculate the ending index value = ($100)(5) = $500Step2: Calculate the expected return.E(R1) = [Dividends + (Ending value - Beginning value)]/(Beginning value)=[40+(500-490)]/$490 = 0.1 or 10%73. D.The critical factors determining the franchise P/E are the difference between theexpected return on the new opportunities (R) and the current cost of capital (k)and the size of these growth opportunities relative to the firm's current size.74. A.75. C.76. D The completed contract method less net income in the periods beforeconstruction is completed, but not at the end of the contract, than using thepercentage-of-completion method. This is because the completed contractmethod recognizes revenue and expense only when the contract has beencompleted.77. A. Net income 1,000Adjustment for non-cash andnon-operating itemsDepreciation 100Deferred taxes (increase) 40Profit from sale ofequipment (10)Adjustment for workingcapital items:Accounts receivable (decrease) (120)Inventory (increase) (40)Accounts payable (increase) (20)Wages payable (decrease) (10)Cash flow from operations 94078. D79.A When inventory and accounts receivable increase, this is a use of cash (cashoutflow); when assets decrease, this is a source (cash inflow). When accountspayable increase, this is a source of cash (cash inflow); when liabilities decrease,this is a use (cash outflow).80.BCash conversion cycle = receivables days + inventory processing days -payables payment period.Receivables days = 365/receivabies turnover = 365/30 = 12.17 days.Inventory processing days = 365/inventory turnover = 365/15 = 24.33 days.Payables payment period = 365/payabIes turnover = 365/20 = 18.25days.Cash collection cycle = 12.17 + 24.33 –18.25 = 18.25 days.81.BChoice A: Buying fixed assets on credit does not affect current assets butincreases current liabilities. Therefore, the current ratio falls.Choice B: Buying inventory on account increases both inventory and accountspayable. Because the current ratio started off below I, the ratio will increase.Choice C: Selling marketable securities for cash does not affect the amount ofcurrent assets and leaves the current ratio unaffected,Choice D : Paying off accounts payable from cash lowers current assetsand current liabilities by the same amount. Because the current ratio startedoff below 1, the ratio will fall.82.D ROE = Profit margin x Total asset turnover x financial leverageROE = (0.3)(2.1)(0.5)= 0.315 or 31.5%83.AROE = [(S/A)(EBIT/S) - (I/A)](A/EQ)(I - t)ROE = [(2.5)(0.2) - (0.08)](1.2)(0.6) = 0.30 or 30%84. A85.B EPS = ($180,000 - $4,000) / 50,000 = $3.52 per share86. B87. D88.CThese relationships are reversed in the latter years of the asset's life if the firm'scapital expenditures decline.89. D90. C.91. C.92. D.93. D.Absolute yield spread = Yield on Bond A - Yield on Bond B = 10%-7% = 3%94. B.Relative yield spread = (Yield on Bond A - Yield on Bond B)/(Yield on BondB)=(10%-7%)/7% = 0.43 = 43%95. B.Yield ratio = (Yield on Bond A)/(Yield on Bond B) = 6%/7% = 1.4396. B.Current yield = (Annual dollar coupon interest)/(Price of the bond) = 8/130 =0.0625 or 6.25%97. A.When the stock's price (S) - the strike price (X) is positive, a call option isin-the-money. 25-X = 8 so X = 17.98. A.99. A.The writer of put loss = $60-premiun$5 = $55 Thewriter of call gets a maximum gain of $8100. A.101. C.102. D.103. A.104. D.105. B.106. D.107. C.108. A.Securities that fall on the SML are properly valued.109. A.110. A.If a stock's beta were equal to 1, an investor would be expected to get the marketrate of return from buying the stock. E(R) = 5%+1(10%-5%) = 10% 111. D112. D113. C114.BPerfect positive correlation (r = + 1) of the returns of two assets offers no risk reduction, whereas perfect negative correlation (r = -1) offers the greatestrisk reduction.115.BPortfolio A does not lie on the efficient frontier because it has a lower return than Portfolio B but has greater risk. Portfolio D does not lie on the efficient frontier because it has higher risk than Portfolio C but has the same return. 116. C.117.DChoice A: Unsystematic risk is diversifiable risk.Choice B: Systematic risk is undiversifiable risk.Choice C: Total risk= Systematic risk+ Unsystematic risk.118. C119.DCAPM specifies the factor (market risk) but APT does not.120. A。

CFA一级模考题1 . Ed Socho states that in a GIPS-compliant presentation, (1) total firm value must be based on the market values of all accounts including non-fee-paying accounts and accounts where the client makes the investment decisions. and that (2) the firm must include the performance results of third-party advisors selected by the firm in composite performance. Are Socho's statements accurate?A. Both of these statements are accurate.B. Neither of these statements is accurate.C. Only one of these statements is accurate.解析：ABoth statements are correct. Total firm assers must include fee-paying and non-fee- paying accounts. If a sub-advisor who manages firm assets is selected by the firm, the performance of assers under the sub-advisor's control must be included in the performance of the firm's composite for those assets.2 . Upon completing investment reports on equity securities, Shannon Mason, CFA. routinely shreds all documents used in preparing the reports. In a report on UltraTech Software, Mason provides detailed explanations of the upside and downside risks associated with UltraTech, but provides no information on a sharp decrease in insider buying over the last 12 months. Mason has most likely violated:A. CFA Institute Standards by failing to maintain adequate records.B. CFA Institute Standards by neglecting to include the insider buying information in the investment report.C. none of the Standards.解析：AStandard V(C). This Standard requires CFA charterholders and candidates to maintain appropriate records to support investment recommendations. Shredding all of the supporting documents is clearly a violation of the standard. Mason did nor violate Standard V(B), however, since she fully described the basic charaaeristics of the investment. The level of insider buying is not a basic characreristic of an equity security.3 . William Callahan, CFA, is an energy analyst. His supervisor, Nancy Deininger, CFA, has recently decided to let Callahan cover a few of The firms that Deininger had been covering previously. Deininger gives Callahan specific instructions not to change her prior recommendation on one of these firms, Mayfield Energy. Callahan's least appropriate action is to:A. tell Deininger that he cannot cover Mayfield Energy under those restrictions.B. perform his own independent analysis of Mayfield and reach an independent conclusion.C. use ambiguous language in the report, in order to not mislead the investor while complying with his employer's instructions.解析：CIn accordance with Standard I(B) Independence and Objectivity, Callahan must only issue recommendations that reflect his own independent judgment. If Deininger will not permit him to do so, Callahan must refuse to cover the firm under the conditions specified.4 . Wayne Sergeant, CFA, is an independent investment advisor who works with individuals. A longtime client asks Sergeant if he can recommend an attorney. Sergeant refers his client to Jim Chapman, a local attorney who is also a friend of Sergeant's. Previously, Chapman had agreed to perform some legal work for Sergeant in exchange for the referral of new clients. Do Sergeant's actions violate CFA Institute Standards of Professional Conduct?A. No, because the client is under no obligation and is still free to select another attorney.B. Yes, because Sergeant is prohibited from a making recommendations that could be considered biased due to his friendship with Chapman.C．Yes, because Sergeant did not disclose the nature of his arrangement with Chapman to his client.解析：CStandard VI(C) Disclosure of Conflicts requires members to disclose to their clients any compensation or benefit received by, or paid to, others for the recommendation of services. Sergeant's failure to disclose that he receives legal services for his referral of clients to Chapman is in violation of the Standards.5 . Linda Schultz, CFA, is an investment advisor at Wheaton Investments. Schultz has been employed there for five years, and has never signed a "non-compete" clause. While at Wheaton, Schultz makes preparations to set up her own money management firm. She does not contact any existing clients before leaving Wheaton and does not take any firm records or files. After her resignation becomes effective, Schultz replicates a list of former clients from memory and uses public sources to get their contact information. She then contacts these former clients and solicits their business for her new firm. Has Schultz violated any CFA Institute Standards?A. Yes. Schultz may not contact clients of her old firm.B. No. Schultz is in compliance with CFA Institute Standards.C. Yes. Schultz is permitted to notify clients that she has left her old firm, but she cannot encourage them to come with her to the new firm.解析：BSchultz continued to act in her employer's best interest while still employed and did not engage in any activities that would conflict with this duty until her resignation became effective. Standard IV(A) Loyalty does not prohibit her from contacting clients from her previous firm if she does not get the contact in formation from the records of her former employer or violate an applicable non-compete agreement.。

CFA一级模考题1 .The formative stage of venture capital investing when capital is furnished for market researchand product development is best characterized as the:A) seed stage.B) early stage.C) angel investing stage.A was correct!In the seed stage of venture capital investing, capital is furnished for product development, marketing, and market research. The angel investing stage is when investment funds are used for business plans and assessing market potential. The early stage refers to investments made to fund initial commercial production and sales.2.For which of the following investments is an investor most likely to require the greatest liquiditypremium?A) Real estate investment trusts.B) Private equity funds.C) Commodity futures.B was correct!Private equity funds tend to have lockup periods; investors will require liquidity premiums as compensation. REITs and commodity futures are exchange-traded instruments and much more liquid than private equity funds.3.An additional risk of direct investment in real estate, which is not typically a significant risk in aportfolio of traditional investments, is:A) market risk.B) liquidity risk.C) counterparty risk.B was correct!Direct investment in real estate involves liquidity risk because large sums may be invested for long periods before a sale of the property can take place. Market risk exists for both traditional portfolio and real estate investments. Counterparty risk applies mainly to derivative contracts that require a payment from a counterparty, such as swaps and forwards.4.A private equity provision that requires managers to return any periodic incentive fees resulting ininvestors receiving less than 80% of profits is a:A) clawback.B) drawdown.C) high water mark.A was correct!A clawback provision requires the manager to return any periodic incentive fees to investors thatwould result in investors receiving less than 80% of the profits generated by portfolio investments as a whole.5.Bulldog Fund is a hedge fund with a value of £100 million at the beginning of the year. BulldogFund charges 1.5% management fee based on assets under management at the end of the year anda 25% incentive fee with no hurdle rate. Incentive fees are calculated independent ofmanagement fees. The fund’s value at the end of year before fees is £120 million. Compared to a2 and 20 fee structure, Bulldog Fund’s total fees for the year are:A) higher.B) lower.C) the same.A was correct!。

CFA一级模考题1. In the long run, if price is below average total cost (ATC) the firm will:A) keep running.B) cover its variable costs.C) shut down.The correct answer was :C shut down.If the price is below ATC then the firm is losing money. If the firm believes the price will never exceed ATC the only way to eliminate fixed costs is to go out of business.2 .Equilibrium in a perfectly competitive market results in a quantity for which the:A) producer surplus equals zero.B) sum of consumer and producer surpluses is maximized.C) consumer and producer surpluses are equal.The correct answer was: BIn a competitive market, the equilibrium quantity is the one for which the sum of the consumer and producer surpluses is maximized.3 .In which of the following market structures is price least likely to be greater than marginal cost?A) Monopoly.B) Monopolistic competition.C) Perfect competition.The correct answer was: C Perfect competition.In a perfect competition price is equal to marginal cost and marginal revenue when a firm is producing at its profit maximizing quantity. In monopolies and markets characterized by monopolistic competition, price is greater than marginal cost and marginal revenue when producing at the profit maximizing quantity.4 .The upward sloping segment of a long-run average total cost curve represents the existence of:A) diseconomies of scale.B) economies of scale.C) efficiencies of scale.The correct answer was :A diseconomies of scale.Diseconomies of scale occur along the upward sloping segment of the long-run average total cost curve where costs rise as output increases. The flat portion at the bottom of the long-run average total costs curve represents constant returns to scale.5 .A columnist is discussing how the efficient quantity of output for a good or service isdetermined. These two statements appear in his column:Statement 1: The equilibrium quantity of production for a good or service can be considered efficient as long as the marginal social benefit of that quantity is greater than its marginal social cost.Statement 2: Subsidies and quotas typically result in production of a good or service in quantities at which the marginal social cost exceeds the marginal social benefit.With respect to these statements:A) both are correct.B) only one is correct.C) both are incorrect.The correct answer was :C both are incorrect.Statement 1 is incorrect. The efficient quantity of output is the quantity at which the marginal social benefit (demand) is equal to the marginal social cost (supply). Statement 2 is also incorrect. Subsidies typically lead to overproduction, where the marginal social cost at the quantity produced is greater than the marginal social benefit. Quotas, however, typically limit production to a level below equilibrium, such that the marginal social benefit at the quantity produced is greater than the marginal social cost.。

CFA一级模考题1.High risk tolerance, a long investment horizon, and low liquidity needs are most likely tocharacterize the investment needs of a(n):A) insurance company.B) bank.C) defined benefit pension plan.C was correct!A defined benefit pension plan typically has a long investment time horizon, low liquidity needs,and high risk tolerance. Insurance companies and banks typically have low risk tolerance and high liquidity needs. Banks and property and casualty insurers typically have short investment horizons.2 . Risk aversion means that if two assets have identical expected returns, an individual willchoose the asset with the:A) higher standard deviation.B) lower risk level.C) shorter payback period.B was correct!Investors are risk averse. Given a choice between assets with equal rates of expected return, the investor will always select the asset with the lowest level of risk. This means that there is a positive relationship between expected returns (ER) and expected risk (Es) and the risk return line (capital market line [CML] and security market line [SML]) is upward sloping.Standard deviation is a way to quantify risk. The payback period is used to evaluate capital projects, not investment returns.3 . Consider the following graph of the Security Market Line (SML). The letters X, Y, and Zrepresent risky asset portfolios. The SML crosses the y-axis at the point 0.07. The expectedmarket return equals 13.0%. Note: The graph is NOT drawn to scale.Using the graph above and the information provided, which of the following statements ismost accurate?A) Portfolio Y is undervalued.B) The expected return (or holding period return) for Portfolio Z equals 14.8%.C) Portfolio X's required return is greater than the market expected return.B was correct!At first, it appears that we are not given the information needed to calculate the holding period, or expected return (beginning price, ending price, or annual dividend). However, we are given the information required to calculate the required return (CAPM) and since Portfolio Z is on the SML, we know that the required return (RR) equals the expected return (ER). So, ER = RR = R f + (ER M – R f) × Beta = 7.0% + (13.0% − 7.0%) × 1.3 = 14.8%.The SML plots beta (or systematic risk) versus expected return, the CML plots total risk (systematic plus unsystematic risk) versus expected return. Portfolio Y is overvalued –any portfolio located below the SML has an RR > ER and is thus overpriced. Since Portfolio X plots above the SML, it is undervalued and the statement should read, “Portfolio X’s required return isless than the market expected return.”4 . Based on Capital Market Theory, an investor should choose the:A) portfolio that maximizes his utility on the Capital Market Line.B) portfolio with the highest return on the Capital Market Line.C) market portfolio on the Capital Market Line.A was correct!Given the Capital Market Line, the investor chooses the portfolio that maximizes his utility. That portfolio may be exactly the market portfolio or it may be some combination of the risk-free asset and the market portfolio.5 . In the context of the capital market line (CML), which of the following statements isCORRECT?A) The two classes of risk are market risk and systematic risk.B) Market risk can be reduced through diversification.C) Firm-specific risk can be reduced through diversification.C was correct!The other statements are false. Market risk cannot be reduced through diversification; market risk = systematic risk. The two classes of risk are unsystematic risk and systematic risk.。

CFA一级模考题1. Which of the following is a characteristic of perfect competition?A) The products of different firms are sold at different prices.B) There are a few sellers.C) There are no barriers to entry into the market.The correct answer was: C There are no barriers to entry into the market.The only true statement listed in the question is that, under perfect competition there are no barriers to entry into the market. Each of the other possible answers is not a characteristic of perfect competition. While the competitors can earn positive economic profits in the short-run, they cannot earn long term economic profits due to ease of entry and exit.2 .For a linear demand curve, at the price where elasticity is -2.0, reducing prices will:A) increase total revenue and we are at the point of maximum total revenue.B) increase total revenue and we are not at the point of maximum total revenue.C) decrease total revenue and we are not at the point of maximum total revenue.The correct answer was: BIf the price elasticity of demand is -2.0, this indicates that the percentage change in quantity demanded is twice the percentage change in price. Thus, a decrease in price will be more than offset by the increase in quantity, and total revenue will increase. We are not at the point of maximum total revenue which is where elasticity is -1.0—the point of unit elastic demand.3 .Which of the following is least likely to be considered a feature that is common to bothmonopolistic competition and perfect competition?A) Low or no barriers to entry.B) Extensive advertising to differentiate products.C) Zero economic profits in the long run.The correct answer was: BThe only item listed in the question that monopolistic competition and perfect competition do not have in common is the use of advertising to differentiate their products. Extensive advertising is a key feature of monopolistic competition.4 .In the long-run, a firm operating under perfect competition will:A) produce a quantity where marginal revenue is less than marginal cost.B) generate zero economic profit.C) face a vertical demand curve.The correct answer was: BA firm operating under conditions of perfect competition will generate zero economic profit inthe long run. Firms may generate economic profits in the short run, but due to the lack of entry barriers, new competitors will enter the market and prices will adjust downward untileconomic profits become zero.5 .Which of the following is least likely a characteristic of perfect competition?A) The demand curve for an individual firm is a vertical line.B) The size of each firm is small relative to the size of the overall market.C) The products produced within a given market are homogenous.The correct answer was: A The demand curve for an individual firm is a vertical line.Under perfect competition individual firms have no control over price resulting in a demand schedule that is perfectly elastic or horizontal.。

CFA一级模考题1 . Which of the following sources of liquidity is the most reliable?A) Revolving line of credit.B) Committed line of credit.C) Uncommitted line of credit.The correct answer was: AA revolving line of credit is typically for a longer term than an uncommitted or committed line of credit and thus is considered a more reliable source of liquidity. With an uncommitted line of credit, the issuing bank may refuse to lend if conditions of the firm change. An overdraft line of credit is similar to a committed line of credit agreement between banks and firms outside of the U.S. Both committed and revolving lines of credit can be verified and can be listed in the footnotes to a firm’s financial statements as sources of liqui dity.2 . Which of the following is least likely to be useful to an analyst when estimating the cost of raising capital through the issuance of non-callable, nonconvertible preferred stock?A) The firm’s corporate tax rate.B) The stated par value of the preferred issue.C) The preferred stock’s dividend rate.The correct answer was: AThe corporate tax rate is not a relevant factor when calculating the cost of preferred stock.The cost of preferred stock, k ps is expressed as:k ps = D ps / Pwhere:D ps = divided per share = dividend rate × stated par valueP = market price3 .Which of the following statements regarding leverage is most accurate?A) A firm with low operating leverage has a small proportion of its total costs in fixed costs.B) A firm with high business risk is more likely to increase its use of financial leverage than a firm with low business risk.C) High levels of financial leverage increase business risk while high levels of operating leverage will decrease business risk.The correct answer was: AA firm with high operating leverage has a high percentage of its total costs in fixed costs.4 . Which of the following is a key determinant of operating leverage?A) The competitive nature of the business.B) The tradeoff between fixed and variable costs.C) Level and cost of debt.The correct answer was B The tradeoff between fixed and variable costs.Operating leverage can be defined as the trade off between variable and fixed costs.5. One of the issues shareholders should consider is the issue of confidential voting of proxies. Which of the following statements would be considered most accurate in regard to proxy voting and confidential votes?A) It is an SEC requirement that the proxy voting process be confidential.B) Confidentiality of voting does not ensure that all votes are counted equally.C) Shareholders are more likely to vote conscientiously if allowed to do so confidentially.The correct answer was C Shareholders are more likely to vote conscientiously if allowed to do so confidentially.Shareholders will be more likely to vote and vote conscientiously if they are sure that board members and/or management will not find out how they voted. There is no SEC requirement of confidentiality regarding proxy voting. Confidentiality of voting does insure that all votes are counted equally.。

CFA一级模考题1 .Which of the following sources of credit would an analyst most likely associate with a borrower of the lowest credit quality?A) Committed line of credit.B) Uncommitted line of credit.C) Revolving line of credit.The correct answer was BCommitted lines and revolving lines of credit all contain a commitment by a lender to lend up to a maximum amount, at the borrower’s option for some period of time. A firm with lower credit quality may have an uncommitted line of credit which offers no guarantee from the lender to provide any specific amount of funds in the future.2 . Which of the following activities would least likely be an example of good corporate governance?A) Management is allowed to act independently of board of directors.B) The board has decided to eliminate finders’ fees for its members for any potential acquisitions that are brought to management’s attention.C) The board of directors has decided to conduct a self-assessment.The correct answer was A) Management is allowed to act independently of board of directors. The board of directors should be allowed to act independently of management. Management should not be allowed to act independently from the board.3 . A firm has average days of receivables outstanding of 22 compared to an industry average of29 days. An analyst would most likely conclude that the firm:A) has better credit controls than its peer companies.B) has a lower cash conversion cycle than its peer companies.C) may have credit policies that are too strict.The correct answer was C) may have credit policies that are too strict.The firm’s average days of receivables should be close to the industry average. A significantly lower average days receivables outstanding, compared to its peers, is an indication that the firm’s credit policy may be too strict and that sales are being lost to peers because of this. We can not assume that stricter credit controls than the average for the industry are “better.” We cannot conclude that credit sales are less, they may be more, but just made on stricter terms. The average days of receivables are only one component of the cash conversion cycle.4 . Pearl City Breweries has 8 million shares outstanding that are currently trading at $34 per share. The company is choosing whether to distribute $22 million as dividends or to use the same amount to repurchase its shares. Ignoring tax effects, what will be the amount of total wealth from owning one share of Pearl City Breweries under each of these alternatives?Cash dividend Share repurchaseA) $34.00 $34.00B) $31.25 $37.00C) $31.25 $34.00The correct answer was A)$34.00 $34.00If the company pays a cash dividend, the dividend per share will be $22 million/8 million = $2.75. The value of its shares will be:So the total wealth from owning one share will be $31.25 + $2.75 = $34.00.If the company repurchases shares, it can buy $22 million/$34 = 647,058 shares. The value of one share would then be:If you remember that both a cash dividend and a share repurchase for cash leave shareholder wealth unchanged, this question does not require calculations of the amounts.5 . A firm has $4 million in outstanding bonds that mature in four years, with a fixed rate of 7.5% (assume annual payments). Th e bonds trade at a price of $98 in the open market. The firm’s marginal tax rate is 35%. Using the bond-yield plus method, what is the firm’s cost of equity risk assuming an add-on of 4%?A) 11.50%.B) 12.11%.C) 13.34%.The correct answer was BIf the bonds are trading at $98, the required yield is 8.11%, and the market value of the issue is $3.92 million. To calculate this rate using a financial calculator (and figuring the rate assuming a $100 face value for each bond), N = 4; PMT = 7.5 = (0.075 ×100); FV = 100; PV = -98; CPT →I/Y = 8.11. By adding the equity risk factor of 4%, we compute the cost of equity as 12.11%.。

CFA一级模考题1 .When a firm operates under conditions of perfect competition, marginal revenue always equals:A)total cost.B)price.C)average variable cost.The correct answer was: BWhen a firm operates under conditions of perfect competition, marginal revenue always equals price. This is because, in perfect competition, price is constant (a horizontal line) so that marginal revenue is constant.2 . Which of the following statements about the short-run and long-run decision time frames is most accurate?A)In the long run, quantities of some resources are fixed.B)In the long run, a firm can adjust its input quantities, production methods, and plant size.C)In the short run, technology of production is variable.The correct answer was BIn the short run, quantities of some resources, including technology of production, are fixed. Typically, economists treat labor and raw materials as variable, holding plant size, the amount of capital equipment, and technology constant. In the long run, all factors of production are assumed to be variable.3 . A decrease in the price of Good Y can result in a decrease of the quantity of Good Y demanded by consumers if the substitution effect:A)and the income effect are negative.B)is positive and the income effect is negative and larger than the substitution effect.C)is negative and larger than the positive income effect.The correct answer was BIf the price of Good Y decreases, the substitution effect will have a positive impact on the quantity demanded of Good Y. Thus, the only way that quantity demanded of Good Y can decrease is if there is a negative income effect that is greater in magnitude than the substitution effect; i.e., if Good Y is aGiffen good.4 . A monopolist will continue expanding output as long as:A)marginal revenue is positive.B)marginal revenue is greater than marginal cost.C)economic profit is greater than zero.The correct answer was BThe optimum behavior of all firms is to produce until the point where MR = MC. So, the monopolist can increase total profit by increasing production as long as marginal revenue is greater than marginal costs.5 . Which of the following conditions is most likely to exist for a typical production process when average product is at its maximum?A)Marginal product is increasing.B)Marginal cost is at a minimum.C)Average variable cost is at a minimum.The correct answer was CWhen average product is at a maximum, average variable cost is at a minimum. At the corresponding labor and output level, marginal product is decreasing and marginal cost is increasing.。

CFA一级模考题1 . Which of the following is NOT an assumption of capital market theory?A) Investors can lend at the risk-free rate, but borrow at a higher rate.B) The capital markets are in equilibrium.C) Interest rates never change from period to period.The correct answer was ACapital market theory assumes that investors can borrow or lend at the risk-free rate. The other statements are basic assumptions of capital market theory.2 . The optimal portfolio in the Markowitz framework occurs when an investor achieves the diversified portfolio with the:A) highest utility.B) highest return.C) lowest risk.The correct answer was AThe optimal portfolio in the Markowitz framework occurs when the investor achieves the diversified portfolio with the highest utility.3 . All of the following are investment constraints EXCEPT:A) tax concerns.B) pension plan contributions of the employer.C) liquidity needs.The correct answer was BInvestment constraints include: liquidity needs, time horizon, tax concerns, legal and regulatory factors and unique needs and preferences. While employer contributions may be of interest, and an issue in some instances, it is not classified as a specific investment constraint.4 . Which of the following statements about risk and return is least accurate?A) Specifying investment objectives only in terms of return may expose an investor to inappropriately high levels of risk.B) Risk and return may be considered on a mutually exclusive basis.C) Return objectives may be stated in absolute terms.The correct answer was: BRisk and return must always be considered together when expressing investment objectives. Return objectives may be expressed either in absolute terms (dollar amounts) or in percentages.5 . There are benefits to diversification as long as:A) there is perfect positive correlation between the assets.B) the correlation coefficient between the assets is less than 1.C) there must be perfect negative correlation between the assets.The correct answer was: BThere are benefits to diversification as long as the correlation coefficient between the assets is less than 1.。