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What is the duration, language, and format of the CFA CFA-Level-I: CFA Institute CFA Level I Chartered Financial Analyst Exam
Format: Multiple choices, multiple answers:
Number of Questions: 120
Language: English
Duration of Examination: 6 hours
Passing score: 70%
CFA CFA-Level-I Exam Syllabus Topics:
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How to book CFA CFA-Level-I: CFA Institute CFA Level I Chartered Financial Analyst Exam
You must follow these steps to apply for CFA Level 1:
- Go to the Official Site CFA Level 1
- Carefully read the directions
- Follow the steps mentioned
- Apply for the CFA level 1
NEW QUESTION 565
Suppose a U.S. firm buys good from Thailand with a payment of Thai Baht 2,000,000 due in 90 days.
The current price of the baht is U.S. 0.02532. The U.S. firm wishes to hedge its currency risk by entering into a 90 day forward contract with a bank at a price of $0.02545. In 90 days the spot rate for Thai baht is
$ 0.02528.
- A. This means the firm will pay the bank $50,560 to fulfill its part of the forward contract.
- B. This means the firm will pay the bank $50,900 to fulfill its part of the forward contract.
- C. The firm can choose not to fulfill the contract because the spot rate at the time baht payment is due is less than the forward contract price.
Answer: B
Explanation:
The firm pays the bank the price agreed on in the forward contract: 0.02545 x 2,000,000 or
$ 50,900. The firm experiences a loss on the contract because the forward price is greater than the spot rate at the time the baht payment must be made. If it had paid at the spot rate at the time the money was due, it would only have paid 2,000,000 x 0.02528 = $50,560.
NEW QUESTION 566
It is estimated that 70% of motorists on a certain stretch of highway exceed the speed limit. A highway patrolman with a radar device randomly selects 15 motorists on this part of the highway and checks their speed. What is the probability that at least 13 are caught speeding?
- A. 0.908
- B. 0.092
- C. 0.128
Answer: C
Explanation:
We use the binomial distribution with n = 15 and pai = 0.7 to get P(X>= 13) = p(13) + p(14) + p(15) = 0.092 + 0.031 + 0.005 = 0.128.
NEW QUESTION 567
An investor wants to study movements of the interest rate. He will collect data every quarter and register whether the interest rate decreased, increased, or remained the same in each quarter. Should this investor opt to treat movements of the interest rate as a continuous or a discrete random variable?
- A. Either one
- B. Continuous
- C. Discrete
Answer: C
Explanation:
Discrete. Although the interest rate is a continuous random variable, its movement is discrete because there are only 3 possible outcomes: an increase, a decrease, or stay the same.
NEW QUESTION 568
Assume that the spot rate curve is flat. Calculate the nominal yield spread on a 5-year, 6.5% bond priced at $96.91 when the spot rates are 6%.
- A. 207 bp
- B. 75 bp
- C. 125 bp
Answer: C
Explanation:
Because the spot rates are constant, the nominal yield spread simply equals YTM - spot =
7 .25 - 6.00 = 125 bp.
NEW QUESTION 569
In calculating diluted earnings per share, which of the following should not be considered?
- A. The amount of cash dividends declared on common shares
- B. The number of common shares resulting from the assumed conversion of outstanding debentures
- C. The amount of cash dividends declared on cumulative preferred shares
Answer: A
Explanation:
Dividends on common shares are never included in calculating EPS.
NEW QUESTION 570
The earnings per share figure based on income before extraordinary items:
- A. Is always higher than the earnings per share figure based on net income.
- B. Applies to all types of stock issued by a corporation-common as well as preferred.
- C. Is the amount used in computing the P/E ratio for a corporation's common stock.
Answer: C
NEW QUESTION 571
Which statement is true?
I). Companies try to get funding for their projects as all of them are worth funding.
II). In financial markets savers determine which projects obtain capital and which projects don't.
- A. Neither is true.
- B. I only.
- C. II only.
Answer: C
Explanation:
I is false. Not all of these projects are worth funding. The financial system makes sure that only the best projects obtain scarce capital funds. II is true. Savers determine capital allocation directly by choosing which securities they will invest in. They will buy those equities that they believe have the best prospects relative to their prices and risks.
NEW QUESTION 572
Operating expenses for closed-end funds include:
I). load fees for purchase or sale of shares.
II). large allowances for marketing.
III). the discount of security value from NAV.
- A. I and II.
- B. None of these answers.
- C. II and III.
Answer: B
Explanation:
Operating expenses for closed-end funds would not include load fees or marketing expenses since the number of shares of the fund is fixed and the shares are publicly traded. The premium/discount of the market price relative to the NAV is not an operating expense.
NEW QUESTION 573
If a product is an inferior good:
- A. Demand is directly related to price.
- B. Demand is inversely related to price.
- C. Demand is inversely related to income.
Answer: C
Explanation:
With inferior goods less is bought when income increases.
NEW QUESTION 574
A large mass of data can best be summarized pictorially by means of:
- A. the range
- B. the frequency table
- C. a histogram
Answer: C
NEW QUESTION 575
Which of the following is true?
- A. All cash flows associated with foreign investments belong to the capital account.
- B. All central bank transactions are excluded from balance of payment accounts.
- C. Repatriation of domestic currency to a foreign country by foreign nationals living in the country is treated as part of the Current account.
Answer: C
Explanation:
A is false - Official assets are included in financial account. B is false - Such cash flows belong to the financial account. However, income associated with investment is treated as part of the current account. III is a direct outflow of domestic currency and is treated as a debit entry on the current account.
NEW QUESTION 576
If the price elasticity of demand is unit then a fall in price:
- A. Leaves revenue unchanged.
- B. Reduces revenue.
- C. Increases revenue.
Answer: A
Explanation:
This means the percentage change in quantity demanded equals the percentage change in price so price changes will not alter the revenue.
NEW QUESTION 577
Which statement is false regarding technical analysis?
- A. Some applications of technical analysis are subjective.
- B. A key shortcoming of technical analysis is that it can be late in identifying changes in trends or patterns.
- C. Technical analysis of any financial instrument does require detailed knowledge of that instrument.
Answer: C
Explanation:
A is true - the interpretation of findings is often subjective. B is false - A technician just needs the chart that represents the action in a freely traded market. C is also true.
NEW QUESTION 578
According to SAS 99, which of the following is least likely to be a risk factor related to opportunities to commit fraudulent accounting?
- A. It's difficult to determine who is in control due to a complex organizational structure.
- B. Significant declines in customer demand and increasing business failures in either the industry or overall economy.
- C. The nature of the firm's industry involves highly complex transactions, especially those close to period end that pose difficult "substance over form" issues.
Answer: B
Explanation:
It is related to pressures.
NEW QUESTION 579
On June 1, 2008, the 12 3/8 May '14 Treasury bond is quoted at 134:05 bid and 134:09 asked. If
Smedley buys a bond at the market and if the value of the bond on December 1, 2008, is 132:00, what will be her holding period return? (Do not take accrued interest, if any, into account in calculating the return)
- A. 1.0291
- B. 2.91%
- C. 1.0300
Answer: B
Explanation:
HPR = (Price + Interest - Price ) /Price0
1 0
One interest payment will be received in November of 6.1875. That is 12.375/2. Buying at the market,
Smedley will pay the asked price of 134 9/32 or 134.28125. HPR = (132 + 6.1875 - 134.28125)/134.28125
= 0.0291
NEW QUESTION 580
All else equal, which one of the following actions is most apt to increase the cash balance of a firm?
- A. reducing the cash cycle.
- B. increasing the accounts receivable period.
- C. increasing the accounts payable turnover.
Answer: A
Explanation:
The other choices will increase the cash cycle and lower the cash balance.
NEW QUESTION 581
A researcher is studying the number of trees that contain a certain type of locust in the Smoky
Mountains each year. He has found an average of 25% of the trees contain the locust with a standard deviation of 4%. If 100 trees were randomly sampled, which of the following statement is incorrect?
- A. The shape of the sampling distribution is approximately normal, and the mean of the sampling distribution is approximately 25%.
1/2 - B. The standard deviation of the sampling distribution is o/n
- C. The standard deviation of the sample mean is approximately 4%.
Answer: C
NEW QUESTION 582
Bond covenants:
I). Are contract provisions to protect bond investors.
II). May limit dividends or restrict new debt or acquisitions.
III). May require the maintenance of certain financial ratios.
IV). Can lead to technical default if provisions are violated.
- A. I, II and III.
- B. I, II, III and IV.
- C. II, III and IV.
Answer: B
NEW QUESTION 583
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