CFA一级模考题
CFA一级模考
CFA一级模考题1 . If the price of World Cup Soccer tickets increases from $40 a ticket to $50 a ticket and the quantity demanded of tickets stays the same, demand for the tickets is:A)elastic, but not perfectly elastic.B)perfectly inelastic.C)inelastic, but not perfectly inelastic.The correct answer was: BSince the quantity of tickets demanded stayed the same after the price changed, the demand curve would have to be vertical which is a perfectly inelastic demand curve.2 . If the market demand for a product increases in a competitive market, then in the short run the quantity supplied by an individual firm will:A)decrease and the firm will generate economic profits.B)increase and the firm will generate economic profits.C)increase and the firm will generate economic losses.The correct answer was: BIf the market demand for a product increases in a competitive market, then both price and quantity supplied by an individual firm will increase and the firm will generate economic profits in the short run because price will be greater than average total costs.3 . A technology that all of the firms in a perfectly competitive industry are using in their production process has been banned by new legislation. What will most likely be the effect if these firms stop using this technology?A)Firms will adopt a different technology that reduces their costs of production.B)Profit will no longer be maximized at the level of output where marginal cost is equal to the market price.C)The quantity that the industry will supply at a given price will be reduced.The correct answer was CIf all the firms in a competitive industry have adopted a technology for production, it is presumably the technology that minimizes their production costs . If that technology is outlawed, firms will haveto revert to the second-best technology, which will increase their costs of production. This is represented by a shift to the left in the industry supply curve. At each price level, the quantity supplied will be less than before.Just as a technological improvement will cause firms that adopt it early to earn economic profits that attract new entrants to the industry, prohibition of the cost-minimizing technology will cause economic losses and typically force some firms to exit the industry. Under perfect competition, profit is always maximized at the level of output where marginal cost equals the market price. The state of technology is one factor that determines the level of output at which this occurs.4 . Monopolistic competition differs from pure monopoly in that:A)barriers to entry are high under monopoly, but low under monopolistic competition.B)monopolists maximize profit; monopolistic competitors do not.C)monopolistic competitors are price takers, monopolists are not.The correct answer was AMonopolistic competition is characterized by the low barriers to enter its competitive markets. In contrast, a monopoly exists only where there are high barriers to market entry.5 . Which of the following is the most likely effect of a subsidy in the market for corn?A)Marginal costs will be less than marginal benefit.B)The supply curve for corn will shift to the right.C)The equilibrium quantity of corn will decrease.The correct answer was: BA subsidy causes a shift rightward in the supply curve (increase in supply at a given price level) by the amount of the subsidy. The equilibrium quantity will increase and the price paid by buyers will decrease. Marginal cost will exceed marginal benefit and a deadweight loss will result from overproduction.。
CFA一级模考
3 . A stock is expected to pay a dividend of $1.50 at the end of each of the next three years. At the end of three years the stock price is expected to be $25. The equity discount rate is 16 percent. What is the current stock price? A)$24.92. B)$19.39. C)$17.18.
5 . Compared to a publicly traded firm, a private equity firm is most likely to: A)be more concerned with short-term results. B)exhibit stronger corporate governance. C)disclose less information about its financial performance.
The correct answer was C Private equity firms are not held to the same financial reporting requirements as publicly traded firms. Less public scrutiny and limited financial disclosure may lead to weaker corporate governance. However, with less pressure from public shareholders, a private equity firm is typically more able to focus on long-term performance.
CFA一级模考
CFA一级模考题1 . A stock has an expected return of 4% with a standard deviation of returns of 6%. A bond has an expected return of 4% with a standard deviation of 7%. An investor who prefers to invest in the stock rather than the bond is best described as:A) risk neutral.B) risk averse.C) risk seeking.The correct answer was BGiven two investments with the same expected return, a risk averse investor will prefer the investment with less risk. A risk neutral investor will be indifferent between the two investments. A risk seeking investor will prefer the investment with more risk.2 . Which of the following is NOT a rationale for the importance of the policy statement in investing? It:A) forces investors to take risks.B) allows the investor to judge performance by objective standards.C) specifies a benchmark against which to judge performance.The correct answer was ABy no means should the policy statement force the investor to take risks. The statement forces investors to understand the risks of investing.3 . A stock's abnormal rate of return is defined as the:A) rate of return during abnormal price movements.B) expected risk-adjusted rate of return minus the market rate of return.C) actual rate of return less the expected risk-adjusted rate of return.The correct answer was CAbnormal return = Actual return – expected risk-adjusted return4 . Which of the following asset class specifications is most appropriate for asset allocation purposes?A) Emerging markets.B) Consumer discretionary.C) Domestic bonds.The correct answer was CAn asset class should be specified by type of security (e.g., stocks, bonds, alternative assets, cash) and can then be further subdivided by region or industry classification. An asset class defined only as "emerging markets" or "consumer discretionary firms" should identify the type of securities (e.g., equities or debt).5 . Which of the following statements about systematic and unsystematic risk is least accurate?A) The unsystematic risk for a specific firm is similar to the unsystematic risk for other firms in the same industry.B) Total risk equals market risk plus firm-specific risk.C) As an investor increases the number of stocks in a portfolio, the systematic risk will remain constant.The correct answer was AThis statement should read, "The unsystematic risk for a specific firm is not similar to the unsystematic risk for other firms in the same industry." Thus, other terms for this risk are firm-specific, or unique, risk.Systematic risk is not diversifiable. As an investor increases the number of stocks in a portfolio the unsystematic risk will decrease at a decreasing rate. Total risk equals systematic (market) plus unsystematic (firm-specific) risk.。
CFA一级模考
CFA一级模考题1 .Edelman Enginenering is considering including an overhead pulley system in this year's capital budget. The cash outlay for the pully system is $22,430. The firm's cost of capital is 14%. After-tax cash flows, including depreciation are $7,500 for each of the next 5 years.Calculate the internal rate of return (IRR) and the net present value (NPV) for the project, and indicate the correct accept/reject decision.NPV IRR Accept/RejectA) $3,318 20% AcceptB) $15,070 14% AcceptC) $15,070 14% RejectThe correct answer was A)$3,318 20% AcceptUsing the cash flow keys:CF0 = -22,430; CFj = 7,500; Nj = 5; Calculate IRR = 20%I/Y = 14%; Calculate NPV = 3,318Because the NPV is positive, the firm should accept the project.2 .Which of the following is least likely to be considered a “best practice” regarding corporate governance?A) Use of a third party to tabulate votes and retain voting records.B) A code of ethics that is audited and improved periodically.C) Board members are limited to a six-year term.The correct answer was C) Board members are limited to a six-year term.Anything beyond 2- or 3-year term limits on board membership has the potential to restrict the ability for shareholders to change the composition of the board if its members are not acting in the shareholders’ best interest.3 . The expected annual dividend one year from today is $2.50 for a share of stock priced at $25. What is the cost of equity if the constant long-term growth in dividends is projected to be 8%?A) 19%.B) 15%.C) 18%.The correct answer was C) 18%.Ks = (D1 / P0) + g = (2.5/25) + 0.08 = 0.18 or 18%.5 . Ferryville Radar Technologies has five-year, 7.5% notes outstanding that trade at a yield to maturity of 6.8%. The company’s marginal tax rate is 35%. Ferryville plans to issue new five-year notes to finance an expansion. Ferryville’s cost of debt capital is closest to:A) 4.9%.B) 4.4%.C) 2.4%.The correct answer was BFerryville’s cost of debt capital is kd(1 - t) = 6.8% × (1 - 0.35) = 4.42%. Note that the before-tax cost of debt is the yield to maturi ty on the company’s outstanding notes, not their coupon rate. If the expected yield on new par debt were known, we would use that. Since it is not, the yield to maturity on existing debt is the best approximation.。
CFA一级模考
CFA一级模考CFA一级模考题1 . Lane Industries has a project with the following cash flows:Year Cash Flow0 ?$200,0001 60,0002 80,0003 70,0004 60,0005 50,000The project's cost of capital is 12%. The discounted payback period is closest to:A) 2.9 years.B) 3.9 years.C) 3.4 years.The correct answer was: BThe discounted payback period method discounts the estimated cash flows by the project’s cost of capital and then calculates the time needed to recover the investment.Year Cash Flow Discounted Cash Flow Cumulative Discounted Cash Flow0 ?$200,000 ?$200,000.00 ?$200,000.001 60,000 53,571.43 ?146,428.572 80,000 63,775.51 ?82,653.063 70,000 49,824.62 ?32,828.444 60,000 38,131.08 5,302.645 50,000 28,371.30 33,673.98discounted payback period =number of years until the year before full recovery +2 .Which of the following rights concerning shareholder-sponsored board nominations and shareholder-sponsored resolutions would be advantageous to an investor?A) The right to nominate or remove board members in certain circumstances, and the right to propose initiatives for consideration at the annual meeting.B) The right to propose initiatives for consideration at the annual meeting, but not the right to nominate or remove board members in certain circumstances.C) The right to nominate or remove board members in certain circumstances, but not the right to propose initiatives for consideration at the annual meeting.The correct answer was A The right to nominate or remove board members in certain circumstances, and the right to propose initiatives for consideration at the annual meeting. Investors need the power to put forth an independent board nominee. In addition, the right to propose initiatives for consideration at the annual meeting is an important method to send a message to management.3 . Additional debt should be used in t he firm’s capital structure if it increases:A) the value of the firm.B) firm earnings.C) earnings per share.The correct answer was A the value of the firm.The key to finding the optimal capital structure is identifying the level of debt that will maximize firm value. Earnings and earnings per share are not critical in and of themselves when assessing firm value, because they do not consider risk.4 .Carlos Rodriquez, CFA, and Regine Davis, CFA, wererecently discussing the relationships between capital structure, capital budgets, and net present value (NPV) analysis. Which of the following comments made by these two individuals is least accurate?A) “The optimal capital budget is determined by the intersection of a firm’s marginal cost of cap ital curve and its investment opportunity schedule.”B) “A break point occurs at a level of capital expenditure where o ne of the component costs of capital increases.”C) “For projects with more risk than the average firm project, NPV computations should b e based on the marginal cost of capital instead of the weighted average cost of capital.”The correct answer was C) “F or projects with more risk than the average firm project, NPV computations should be based on the marginal cost of capital instead of the weighted average cost of capital.”The marginal cost of capital (MCC) and the weighted average cost of capital (W ACC) are the same thing. If a firm’s capital structure remains constant, the MCC (W ACC) increases as additional capital is raised.5 . Sincl air Construction Company’s Board of Directors is considering repurchasing $30,000,000 worth of common stock. Sinclair assumes that the stock can be repurchased at the market price of $50 per share. After much discussion Sinclair decides to borrow $30 million that it will use to repurchase shares. Sinclair’s Chief Executive Officer (CEO) has compiled the following informat ion regarding the repurchase of the firm’s common stock:Share price at the time of buyback = $50Shares outstanding before buyback = 30,600,000EPS before buyback = $3.33Earnings yield = $3.33 / $50 = 6.7%After-tax cost of borrowing = 8.0%Planned buyback = 600,000 sharesBased on the inform ation above, Sinclair’s earnings per share (EPS) after the repurchase of its common stock will be closest to:A) $3.18.B) $3.32.C) $3.23.The correct answer was: BTotal earnings = $3.33 × 30,600,000 = $101,898,000Since the 8.0% after-tax cost of borrowing is greater than the 6.7% earnings yield (E/P) of the shares, the share repurchase reduces Sinclair’s EPS.。
CFA一级模考
The correct answer was B The P/E ratio may be defined as: Payout ratio / (k - g), so if k is constant and g goes to zero, the P/E will decrease.
2 . A firm is most likely to have pricing power if: A)costs to exit the industry are high. B)its product is differentiated. C)its market share is high.
The correct answer was: A Accounting data on sales is used to calculate the P/S multiple. The P/S multiple is thought to be more reliable because sales figures are not as easy to manipulate as the earnings and book value, both of which are significantly affected by accounting conventions. However, it is not true that "sales data cannot be distorted by management" because aggressive revenue recognition practices can influence reported sales.
The correct answer was B Firms offering products that are differentiated in terms of quality and features are more likely to have pricing power than firms that produce undifferentiated (commodity-like) products. High market share does not necessarily imply pricing power; for example, if four firms each have 25% market share, none of them are likely to have significant pricing power. High exit costs can create overcapacity in an industry and result in a high degree of price competition as firms try to maintain production volume during a period of reduced demand.
CFA一级模考
CFA一级模考题1 . Which of the following should least likely be included as a constraint in an investment policystatement (IPS)?A) Constraints put on investment activities by regulatory agencies.B) Any unique needs or preferences an investor may have.C) How funds are spent after being withdrawn from the portfolio.C was correct!How funds are spent after withdrawal would not be a constraint of an IPS.2. Based on historical data for the United States, compared to long-term bonds, equities havetended to exhibit:A) higher average annual returns and higher standard deviation of returns.B) higher average annual returns and lower standard deviation of returns.C) lower average annual returns and higher standard deviation of returns.A was correct!Based on data for securities in the United States from 1926 to 2008, both small-cap stocks and large-cap stocks have exhibited higher average annual returns and higher standard deviations of returns than long-term corporate bonds and long-term government bonds.3. An analyst has developed the following data for two companies, PNS Manufacturing (PNS)and In Charge Travel (In Charge). PNS has an expected return of 15% and a standarddeviation of 18%. In Charge has an expected return of 11% and a standard deviation of 17%.PNS’s correlation with the market is 75%, while In Charge’s correlation with the market is 85%. If the market standard deviation is 22%, which of the following are the betas for PNS and In Charge?Beta of PNS Beta of In ChargeA) 0.66 0.61B) 0.92 1.10C) 0.61 0.66C was correct!Beta i = (s i/s M) × r I, MBetaPNS = (0.18/0.22) × 0.75 = 0.6136BetaInCharge = (0.17/0.22) × 0.85 = 0.65684. Which is NOT an assumption of capital market theory?A) Investments are not divisible.B) There are no taxes or transaction costs.C) There is no inflation.A was correct!Capital market theory assumes that all investments are infinitely divisible. The otherstatements are basic assumptions of capital market theory.5. Which of the following statements about portfolio theory is least accurate?A) When the return on an asset added to a portfolio has a correlation coefficient of less thanone with the other portfolio asset returns but has the same risk, adding the asset will notdecrease the overall portfolio standard deviation.B) Assuming that the correlation coefficient is less than one, the risk of the portfolio willalways be less than the simple weighted average of individual stock risks.C) For a two-stock portfolio, the lowest risk occurs when the correlation coefficient is closeto negative one.A was correct!When the return on an asset added to a portfolio has a correlation coefficient of less than onewith the other portfolio asset returns but has the same risk, adding the asset will decrease the overall portfolio standard deviation. Any time the correlation coefficient is less than one, there are benefits from diversification. The other choices are true.。
CFA一级模考
CFA一级模考题1 . The primary reason for a firm to issue equity securities is to:A)improve its solvency ratios.B)acquire the assets necessary to carry out its operations.C)increase publicity for the firm’s products.The correct answer was BWhile issuing equity securities c an improve a company’s solvency ratios and increase the firm’s visibility with the public, the primary reason to issue equity is to raise the capital needed to acquire operating assets.2. If a company has a "0" earnings retention rate, the firm's P/E ratio will equal:A)1 / kB)k + gC)D/P + gThe correct answer was r: AP/E = div payout ratio / (k − g)where g = (retention rate)(ROE) = (0)(ROE) = 0Dividend payout = 1 − retention ratio = 1 − 0 = 1P/E = 1 / (k − 0) = 1 / k3 . The Sustainable Growth Rate is equal to:A)(ROE) x (1+RR).B)(ROE) x (RR).C)(ROE) x (1-RR).The correct answer was BThe Sustainable Growth Rate is equal to the return on the equity portion of new investments (ROE) multiplied by the firm's retention rate (RR).4 . A company with a return on equity (ROE) of 27%, required return on equity (ke) of 20%, and a dividend payout ratio of 40% has an implied sustainable growth rate closest to:A)12.00%.B)16.20%.C)10.80%.The correct answer was Bg = (RR)(ROE)= (.60)(.27)= 0.162 or 16.2%5 . Regarding the estimates required in the constant growth dividend discount model, which of the following statements is most accurate?A)Dividend forecasts are less reliable than estimates of other inputs.B)The model is most influenced by the estimates of "k" and "g."C)The variables "k" and "g" are easy to forecast.The correct answer was BThe relationship between "k" and "g" is critical - small changes in the difference between these two variables results in large value fluctuations.。
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CFA一级模考题
1 . If the standard deviation of stock A is 13.
2 percent, the standard deviation of stock B is 17.6 percent, and the covariance between the two is 0, what is the correlation coefficient?
A) +1.
B) 0.31.
C) 0.
The correct answer was C
Since covariance is zero, the correlation coefficient must be zero.
2 . A mutual fund that invests in short-term debt securities and maintains a net asset value of $1.00 per share is best described as a:
A) money market fund.
B) balanced fund.
C) bond mutual fund.
The correct answer was A
Money market funds invest primarily in short-term debt securities and are managed to maintain a constant net asset value, typically one unit of currency per share. A bond mutual fund typically invests in longer-maturity securities than a money market fund. A balanced fund invests in both debt and equity securities.
3 . When the market is in equilibrium:
A) all assets plot on the CML.
B) investors own 100% of the market portfolio.
C) all assets plot on the SML.
The correct answer was C
When the market is in equilibrium, expected returns equal required returns. Since this means that all assets are correctly priced, all assets plot on the SML.
By definition, all stocks and portfolios other than the market portfolio fall below the CML. (Only the market portfolio is efficient.
4 . Which of the following statements regarding the covariance of rates of return is least accurate?
A) It is a measure of the degree to which two variables move together over time.
B) If the covariance is negative, the rates of return on two investments will always move in different directions relative to their means.
C) It is not a very useful measure of the strength of the relationship, there is absent information about the volatility of the two variables.
The correct answer was B
Negative covariance means rates of return will tend to move in opposite directions on average. For the returns to always move in opposite directions, they would have to be perfectly negatively correlated. Negative covariance by itself does not imply anything about the strength of the negative correlation.
5 . Which of the following statements about a stock's beta is CORRECT? A beta greater than one is:
A) risky, while a beta less than one is risk-free.
B) riskier than the market, while a beta less than one is less risky than the market.
C) undervalued, while a beta less than one is overvalued.
The correct answer was B
Beta is a measure of the volatility of a stock. The overall market's beta is one. A stock with higher
systematic risk than the market will have a beta greater than one, while a stock that has a lower systematic risk will have a beta less than one.。