[Aug 17, 2021] Latest CFA-Level-I Exam with Accurate CFA Institute CFA Level I Chartered Financial Analyst PDF Questions
Practice To CFA-Level-I - DumpExam Remarkable Practice On your CFA Institute CFA Level I Chartered Financial Analyst Exam
NEW QUESTION 560
Once a head and shoulders pattern is formed, the expectation is that:
- A. The market will rally again.
- B. The price will remain around the neckline and the market will be in balance.
- C. The price will decline down through the neckline price.
Answer: C
Explanation:
The head and shoulders pattern is not complete and the uptrend is not reversed until neckline support is broken and becomes a new resistance level.
NEW QUESTION 561
A valid test of the weak form of the EMH should incorporate which of the following?
I). only publicly available data
II). an estimate of all transactions costs
III). a risk adjustment of returns
- A. I and II.
- B. I, II and III.
- C. II and III.
Answer: B
Explanation:
All three must be incorporated. The absence of each has been used to criticize research on the EMH. Some studies used information that was not available to investors at the time the historical data was evaluated. Many studies did not explicitly account for transaction costs, even though these would clearly reduce profits. Finally, risk adjustments must be made. As an example, consider a trading strategy that looks at percentage price breakouts as described in the text. Large percentage price breakouts are more likely to be found in lower-priced stocks. Many of these are riskier, smaller firms, so a test like this would be biased toward riskier stocks and should require a higher return just to match the market.
NEW QUESTION 562
A firm had an asset with a carrying value of $600,000. The estimated future undiscounted cash flows from the use of the asset have decreased to $300,000. Under U.S. GAAP, the firm should:
I). write down the asset
II). recognize an impairment loss
III). determine the fair value of the asset, if possible
- A. I and II.
- B. I, II and III.
- C. II and III.
Answer: B
Explanation:
When the undiscounted estimated cash flows expected from use of the asset are decreased significantly, there exists one of the conditions for recognizing an impairment of value.
NEW QUESTION 563
At a price of $30, a firm sells 150 units of output per day. The slope of the demand curve is 0.1 (in absolute value). If the marginal cost of production is $8, what should the firm do?
- A. decrease price
- B. shut down
- C. increase price
Answer: A
Explanation:
MR = 30 - (150*0.1) = 15. Since marginal revenue exceeds marginal cost, the firm should produce more output, which requires lowering the price.
NEW QUESTION 564
Consider resource A that is could be used by firms in two different industries. In Industry 1 the marginal revenue per unit of output is $2.50 and the marginal productivity of resource A is 0.4. In Industry
2 the marginal revenue per unit produced is $5.00 and the marginal productivity of resource A is 0.25.
Which of the following statements is true?
- A. The market price for resource A is determined by the marginal revenue product of resource A in
Industry 1. - B. The market price for resource A is determined by the marginal revenue product of resource A in
Industry 2. - C. The market price for resource A is determined by Industry 2 because of its higher marginal revenue per unit produced.
Answer: B
Explanation:
The market price for resource A will be determined by the industry willing to pay the highest price for the resource. Each industry would be willing to pay as much as the marginal revenue product of the resource. The marginal revenue product in Industry 1 is (0.4)($2.50) = $1.00. The marginal revenue product of resource A in Industry 2 is (0.25)($5.00) = $1.25. Therefore the suppliers of resource A will choose to sell their resource to Industry 2 for $1.25.
NEW QUESTION 565
If BJSH Bank is required to maintain a 20 percent reserve by its central bank, and currently it has excess reserves of $500,000, what is the maximum amount of loan this bank can extend?
- A. $400,000
- B. $2,500,000 ,,
- C. $500,000
Answer: B
Explanation:
The BJSH Bank can lend out all its excess reserves of $500,000 initially. If borrowers deposit the money BJSH Bank lends out with BJSH again, BJSH can continue to keep the 20% as required reserve and lend out the rest. This process could potential "create" a total of $2,500,000 in money supply.
NEW QUESTION 566
Howard Mayfield, a portfolio manager with Churn Brothers Brokerage, is examining a new issue of
7 -year corporate notes. These notes have been issued by Microscam, and feature an 8.00% per year coupon rate. These bonds are trading at a yield of 7.34% per year. The yield on the on-the-run 5-year
Treasury note is 5.12% per year.
What are the relative and absolute yield spreads between these two securities? Further, what is the yield ratio? A Relative yield spread 30 2%; absolute yield spread 222 basis points; yield ratio 1 56
- A. Relative yield spread 43.4%; absolute yield spread 222 basis points; yield ratio 1.43.
- B. Relative yield spread 30.2%; absolute yield spread 222 basis points; yield ratio 1.56.
- C. Relative yield spread 43.4%; absolute yield spread 66 basis points; yield ratio 1.43.
Answer: A
Explanation:
The difference between the yield on an on-the-run Treasury security and a non-Treasury issue of similar maturity is frequently referred to as simply the "yield spread." Further, since non-Treasury sectors of the fixed income market nearly always offer a spread to similar Treasury issues, non-Treasury sectors are referred to as "spread sectors" and securities in these sectors are referred to as "spread products."
There are many measures of yield spread; the most common measures include the absolute yield spread, the relative yield spread, and the yield ratio. Each of these methods is detailed below: {Absolute yield spread = [yield on security A - yield of on-the-run Treasury]} {Relative yield spread = [(yield on security A - yield of on-the-run Treasury) / yield of on-the-run Treasury} {Yield ratio = [Yield on security A / yield of on-the-run Treasury]}
Remember that while the most useful measures of relative yield spread (for purposes of risk analysis) is to measure a spread product against a comparable on-the-run Treasury issue, measures of yield spread can be calculated for any two debt securities, regardless of maturity, coupon, yield, or issuer. In this example, all of the necessary information has been provided, and the calculation of each measure of yield spread is as follows:
{Relative yield spread = [(0.0734 - 0.0512) / 0.0512]] = 0.43359}, or 43.4% {Absolute yield spread =
[0.0734 -0.0512] = 0.0222}, or 222 basis points {Yield ratio = [0.0734 / 0.0512] = 1.43359}, or 1.43
NEW QUESTION 567
Which of the following statements is least accurate with respect to the various measures of duration?
- A. Modified duration and Macaulay duration do not take into account the call risk associated with the bond.
- B. For low levels of yield, the effective duration of a callable bond will the highest among all the measures of duration.
- C. Effective duration may be used for all sorts of bonds.
Answer: B
Explanation:
For low levels of yield, the effective duration of a callable bond will the lowest among all the measures of duration. Effective duration takes into account that the bond may be called anytime soon, thus producing a shorter measure, whereas the other duration measures assume that the bond will be held to maturity.
NEW QUESTION 568
The short run supply curve for a firm is
- A. the rising part of its average variable cost curve.
- B. the marginal cost curve that lies above the average variable cost curve.
- C. the marginal cost curve that lies above the average total cost curve.
Answer: B
Explanation:
In the short run a firm will not operate if the price were below its average variable cost as it would be losing money. Thus, its short run supply curve will be its marginal cost curve that lies above the average variable cost curve.
NEW QUESTION 569
Which of the following statements regarding hypothesis testing is false?
- A. If the population standard deviation is unknown, then the standard error of the estimate is found by dividing the sample standard deviation by the square root of "n."
- B. If the null hypothesis is rejected, then it is said the result is "not statistically significant."
- C. The power of a test is usually equal to (1 - the probability of a Type II error).
Answer: B
Explanation:
Remember that when the null hypothesis is rejected, the results of the regression are said to be "statistically significant." In other words, the analyst has enough reason to assume that the results of the analysis are valid at the given level of significance. When the analyst fails to reject the null hypothesis, then the result is said to "not be statistically significant." While this specification may seem excessive, it is nevertheless important. The remaining answers are all correct.
NEW QUESTION 570
An analyst has collected the following data about a firm:
Receivables turnover = 10 times Inventory turnover = 8 times Payables turnover = 12 times
What is the average receivables collection period, the average inventory processing period, and the average payables payment period respectively? (Assume 360 days in a year)
- A. 45 days: 36 days: 30 days.
- B. 36 days: 45 days: 30 days.
- C. 33 days: 30 days: 20 days.
Answer: B
Explanation:
Receivables collection period = 360/10 = 36 days Inventory processing period = 360/8 = 45 days Payables payment period = 360/12 = 30 days
NEW QUESTION 571
The gains and losses generated by tariffs and quotas are such that
- A. none of these answers.
- B. the gains of domestic producers exceed the losses of domestic consumers for tariffs but not for quotas.
- C. the gains of domestic producers exceed the losses of domestic consumers for quotas but not for tariffs.
Answer: A
Explanation:
The gains of domestic producers are smaller than the losses of domestic consumers for both tariffs and quotas. These policies generate a net deadweight loss.
NEW QUESTION 572
Under the completed-contract method, the billings on construction contract represents:
- A. a measure of the revenue recognized to date.
- B. a measure of the contractor's obligation to perform on the contract.
- C. a measure of the contractor's performance to date.
Answer: B
Explanation:
The billings on construction contract account is the amount that has been billed to the purchaser and represents a measure of the contractor's obligation to perform on the contract.
NEW QUESTION 573
Janet Ver is a portfolio manager managing large institutional clients. Janet does not act on a sale recommendation from the firm's equity division, until she has sold her personal holding in the stock. Once she has sold her personal holding in the stock then she will sell the stock out of her institutional clients' portfolios. In terms of CFA Institute's Standards of Professional Conduct per Standard VI (B): Priority of
Transactions, has Janet violated this standard?
- A. No, since she is allowed to sell her stock before her clients.
- B. Yes, since her early sale could result in losses to her clients.
- C. Yes, since her early sale is not an ethical practice.
Answer: C
NEW QUESTION 574
Cash dividends of $48,500 were declared. The beginning and ending balance of the Cash Dividends
Payable account was $8,000 and $10,500, respectively. On the statement of cash flows, the cash dividend activity would be reported as which of the following?
- A. Financing activity of $46,000
- B. Investing activity of $48,500
- C. Financing activity of $48,500
Answer: A
Explanation:
The dividends declared added to the beginning balance of dividends payable is a total liability of $56,500. The ending balance of dividends payable of $10,500 means that $46,000 of the dividends declared were paid.
NEW QUESTION 575
Which statement is false?
- A. Small bid-ask spreads indicate low costs of trading.
- B. A market order does not allow any control over the price.
- C. A dealer's spread may be smaller than the market spread for the same security.
Answer: C
Explanation:
A: Bid-ask spreads are an implicit cost of trading. B: The market spread is never more than any dealer spread. C: The market order is filled at the best price available at the relevant time.
NEW QUESTION 576
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