CFA Level 1 Practice Question Bank by AnalystPrep - Questions
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Our question bank has been developed by certified CFA charterholders with first-hand experience of the exam. We adopt the exact question structure as the actual exam.Our question bank is divided into specific topics to help you attain an all-round understanding of the curriculum. Every question is accompanied by a detailed solution.
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The Level I CFA exam consists of 10 topics covering a broad range of skills in a large volume of material. Testing your knowledge in each specific area by using the practice questions helps you understand where your strengths and weaknesses are. You can track your performance over time and monitor your progress with our FREE performance tracking tool.
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Question 1Ethical and Professional Standards George Mendes is considering an employment offer made by DR Associates, an investment bank. Should Mendes accept the offer, he will be responsible for supervising twenty portfolio managers. Mendes’ only concern is that employees’ personal trades are not being adequately monitored and many of these transactions involve front-running clients’ trades. To comply with the CFA Institute Standards of Professional Conduct, Mendes should most likely: A) accept the offer and dismiss employees involved in front-running.
B) accept the offer and implement adequate compliance procedures.
C) decline the offer in writing until the firm adopts reasonable procedures to allow the exercise of his supervisory responsibilities. |
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Question 2Ethical and Professional Standards An investment management firm has been in existence for eight years. To enhance the quality of reported performance, the firm’s senior compliance officer decides to make the firm’s presented performance compliant with the GIPS standards. To comply with the GIPS standards, the firm is required to initially present a GIPS-compliant performance track record of: A) one year.
B) five years.
C) eight years. |
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Question 3Quantitative Methods You are presented with 2 investment opportunities and must choose the one with the greater present value: A lump-sum of $2 million or an annuity with 25 payments of $250,000 a year with the first payment starting today. The interest rate is 9% per year compounded annually. A) The annuity
B) The lump-sum
C) There’s no difference between the two options
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Question 4Economics Two hypothetical currencies – ABC and XYZ – are trading at a spot rate of 1.60 ABC/XYZ . If the interest rate in ABC and XYZ’s countries are 7% and 5%, respectively, the arbitrage-free forward rate ABC/YXZ is closest to: A) 1.5410.
B) 1.7113.
C) 1.6304.
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Question 5Financial Reporting and Analysis Galactic Hyper is a chain of hypermarkets which sells most of its products for cash, which is why its days of sales outstanding are as low as 22 days. Assuming that the firm’s average receivables are $234,000, and the cost of goods sold (COGS) for the 1-year period is $1,245,000, the annual sales of Galactic are closest to: A) $3,882,000.
B) $1,410,400.
C) $4,880,200.
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Question 6Corporate Finance Birmingham Corporation is launching a new product with a social media marketing campaign that will cost $2,000,000. To finance the project, Birmingham’s CEO gathered the following information: Required return on equity: 15% If the CEO decides to issue $1,500,00 in new debt and $500,000 in common stocks, then the marginal weighted average cost of capital (WACC) is closest to: A) 7.20%.
B) 7.95%.
C) 9.05%.
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Question 7Portfolio Management Bruce Craig is in the business of trading steel in Chicago, which he inherited from his father one month ago. His financial adviser notes the following aspects of his situation: – He is 24 years old; Given the aforementioned information, which of the following statements is correct? A) Craig has a low ability to take risk, but a high willingness to take risk.
B) Craig has a high ability to take risk, but a low willingness to take risk.
C) Craig has a high ability to take risk, but a high willingness to take risk.
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Question 8Equity Investments Which of the following statements regarding market efficiency is least likely accurate? A) In an efficient market, prices of stocks will slowly adjust to new information.
B) An efficient capital market reflects all of the information about its securities, including risk.
C) There are three forms of market efficiency: weak, semi-strong and strong.
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Question 9Fixed Income A 3-year bond offers a 7% coupon rate with interests paid annually. Assuming the following sequence of spot rates, the price of the bond is closest to:
A) 102.48
B) 106.74
C) 104.24
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