CFA-Level-I Sample Practice Exam Questions 2022 Updated Verified
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CFA CFA-Level-I: CFA Institute CFA Level I Chartered Financial Analyst Certification Path
In the CFA Level 1 test, the candidates can gain results with CFA Level 1 exam dumps pdf. Candidates will find in the Qualification Issues Forum what they are searching for. If the applicant fully practises these queries, he will comfortably deal with his exam. When they memorize them, they get a sense of the real test. Applicants should recognise all measures a candidate should provide in order to pass the CFA Level 1 Exam Qualification. Candidates are only a few steps away from the performance. So if the candidates schedule our CFA level 1 exam dumps, they will realise their dream. Be one with your calculator. You must understand how to use the calculator features that are used to answer the learning outcomes (LOS).Examination issues relating to financial reporting and analysis (FRA) are focused, as otherwise defined, on International Financial Reporting Standards (IFRS). When an issue is focused on the U.S. GAAP, the question is specified. Answer all queries. Answer all the questions. There is no punishment for wrong responses. Comfortably dressed up. There is no dress code, but laid-back attire is encouraged.Calm shoes are a bonus. CFA Level 1 practice exams is the best start towards understanding the concepts of examination.
NEW QUESTION 690
Which of the following is true of a monopoly?
- A. A monopoly always charges the highest possible price.
- B. The main concern of a monopoly is not profit maximization but preservation of its monopoly status.
- C. The monopoly's demand curve and the market demand curve are one and the same.
Answer: C
Explanation:
There is no entry or exit in purely monopolistic markets.
NEW QUESTION 691
Currently commodity markets are in contango. This means the roll yield on commodity indices is:
- A. positive.
- B. negative.
- C. zero.
Answer: B
Explanation:
An investor would need to buy the commodity index above the current spot level when it's time to roll the contract.
NEW QUESTION 692
The law of demand is simply a reflection of
- A. the direct relationship between consumer needs and the price of a good.
- B. a downward sloping demand schedule.
- C. the production possibilities curve.
Answer: B
Explanation:
The law of demand suggests that as the price of a good increases demand for that good will fall; similarly, as the price of the good declines, demand for it will rise. This is reflected in the market demand schedule which has a negative slope when price is on the Y-axis and quantity is on the X-axis.
NEW QUESTION 693
Which of the following is/are true about a cyclical industry?
I). It produces discretionary products, the consumption of which is dependent on economic optimism.
II). Its earnings track and amplify the business cycle.
III). It achieves an above-average rate of return even if the economy is in a recession.
- A. I and II.
- B. II and III.
- C. I, II and III.
Answer: A
NEW QUESTION 694
Equipment with a purchase price of $20,000 and a book value of $12,000 was sold for $10,000. The effect on the cash flow statement, prepared under the indirect method, would be:
- A. add $2,000 to cash flows from operations and show a cash inflow of $10,000 under cash flows from investing.
- B. subtract $10,000 from cash flows from operations and show a cash inflow of $10,000 under cash flows from investing.
- C. subtract $2,000 from cash flows from operations and show a cash inflow under investing of $10,000.
Answer: A
Explanation:
Losses are added back to cash flows from operations since they were originally subtracted to calculate net income. By adding them back, it zeros out the effect of the loss. The entire cash proceeds are listed as a cash inflow under cash flows from investing.
NEW QUESTION 695
______ is the amount at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction, which may involve either market measures or present value measures.
- A. Settlement value.
- B. Current cost.
- C. Fair value.
Answer: C
NEW QUESTION 696
A sample is:
- A. a complete set of individuals, objects, or measurements having some common observable characteristic.
- B. a number resulting from the manipulation of raw data according to specified rules.
- C. a subset of a population.
Answer: C
NEW QUESTION 697
All of the following statements typically characterize the structure of an investment company EXCEPT:
- A. An investment company adopts a corporate form of organization. The board of directors of an investment company hires a separate investment management company to manage the portfolio of securities and to handle other administrative duties.
- B. An investment company receives an annual management fee ranging from 3 to 5% of the total value of the fund.
- C. An investment company invests a pool of funds belonging to many investors in a portfolio of individual investments.
Answer: B
NEW QUESTION 698
For an inferior good:
- A. The price elasticity of demand is positive; the income elasticity of demand is negative.
- B. The price elasticity of demand is negative; the income elasticity of demand is negative.
- C. The price elasticity of demand is negative; the income elasticity of demand is positive.
Answer: B
Explanation:
For an inferior good demand falls as income increases; the quantity demanded falls as price increases; this means the income elasticity and the price elasticity will both be negative.
NEW QUESTION 699
Assume three months have elapsed since the last coupon payment date. The cum-coupon price for
$ 250,000 par value of a 5-year, semi-annual pay, 6% coupon bonds is $225,900. What is the full price?
- A. $229,650
- B. $232,657
- C. $228,490
Answer: A
Explanation:
The clean price is $225,900. The accrued interest is (3/6) (1/2) (6%) $250,000 = $3,750. The full price = $225,900 + $3,750 = $229,650.
NEW QUESTION 700
Which of the following statements is (are) true with respect to valuing contracts?
I). The time value of both a call and a put will decrease as the contracts near expiration.
II). For a call to be at the money, its intrinsic value must be greater than zero.
III). Due to the efficiency of the option's markets, the actual price of the option is usually equal to its intrinsic value.
IV). For a put contract to be out of the money, the actual price of the underlying asset must be greater than the strike price of the option.
- A. I and IV.
- B. II, III, and IV.
- C. I, II, and III.
Answer: A
Explanation:
II is incorrect because for a call to be at the money, its intrinsic value must also be equal to zero.
III is incorrect because even though the option markets are extremely efficient, the actual price of the option contracts is equal too the sum of the option's intrinsic value and its time value. Only on the expiration date, will the actual price of the option be equal to its intrinsic value.
NEW QUESTION 701
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, 3,710 shares outstanding. Convertible into 3.3
*
shares of common stock, Issue price $100
8% convertible preferred stock, $100 par, 5,604 shares outstanding. Convertible into 5 common
*
shares, Issue price $80
12,380 warrants are outstanding with an exercise price of $40. Each warrant is convertible into 1
*
share of common.
Average market price of common is $53.00 per share. Common shares outstanding at the
*
beginning of the year were 45,888.
Net Income for the period was $200,000, while the tax rate was 40%.
*
What was the after-tax interest charge?
- A. 0
- B. 1
- C. 2
Answer: B
Explanation:
(100 bonds)($61.25 interest per bond) = $6125 interest paid ($6125)(1-.4) = $3675 interest.
NEW QUESTION 702
A long-term asset is different from inventory primarily because:
- A. A long-term asset is used in operations and not for resale.
- B. A long-term asset has physical substance.
- C. A long-term asset is long-term in nature.
Answer: A
NEW QUESTION 703
Consider the following statements:
I). The t distribution is a symmetrical probability distribution defined by a single parameter known as the degrees of freedom.
II). When sample size is small and population variance is not known, the t distribution is used.
III). The use of a t reliability factor is appropriate when the population variance is unknown but we have a large sample and can rely on the central limit theorem to ensure approximate normality of the distribution of the sample mean.
Which is true?
- A. I and III.
- B. I, II and III.
- C. I and II.
Answer: A
Explanation:
Some facts about the t-distribution are:
The t distribution is a symmetrical probability distribution defined by a single parameter known as
*
the degrees of freedom.
When sample size is small and population variance is not known, the t distribution is used if the
*
population is normally distributed (this is unknown in the question).
The use of a t reliability factor is appropriate when the population variance is unknown but we
*
have a large sample and can rely on the central limit theorem to ensure approximate normality of the distribution of the sample mean
NEW QUESTION 704
Assume the neutral rate of interest is considered to be 4.5% at the moment. The current interest rate is at 6%. The central bank decides to lower the interest rate to be 5.5%. The central bank's current monetary policy is:
- A. cannot determine.
- B. expansionary.
- C. contractionary.
Answer: C
Explanation:
The policy is still contractionary, although the central bank is going to lower the interest rate.
If its policy rate is higher than the neutral rate then the policy is contractionary; if it's lower then it is expansionary.
NEW QUESTION 705
If a firm's asset turnover were to increase by 10% and the tax rate were to increase from 35% to 40%, leaving all else constant, the resultant change in the firm's ROE equals ________.
- A. +1.5%
- B. -1.9%
- C. -1.1%
Answer: A
Explanation:
ROE = Net income/Equity. Using the Extended DuPont System, = (EBT/sales)*(sales/total assets)*(total assets/equity)*(1-tax rate) The asset turnover ratio equals sales/total assets. Therefore,
ROE(after)/ROE(before) = [asset turnover(after)/asset turnover(before)*]*[0.6/0.65] = 1.1*0.6/0.65 = 1.015.
Thus, the ROE increases by 1.5%.
NEW QUESTION 706
What reflects the net tax effects of the temporary differences between the carrying values of assets and liabilities for financial reporting purposes and amounts used for income tax purposes?
- A. deferred taxes
- B. income taxes payable
- C. income tax expense
Answer: A
Explanation:
The temporary differences in the carrying values of assets and liabilities for financial reporting purposes and the carrying values used for income tax purposes result in deferred tax assets or deferred tax liabilities. Deferred taxes represent the difference between income tax expense and income taxes payable.
NEW QUESTION 707
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