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CFA-Level-I Dumps 2021 - New CFA CFA-Level-I Exam Questions
Topics of CFA CFA-Level-I: CFA Institute CFA Level I Chartered Financial Analyst Exam
Before preparation begins, candidates need to know the examination topics. And it’s going to help them to reach the center. CFA Level 1 dumps will include the following topics:
- Quantitative Methods In this section, we explore quantitative concepts and techniques used in financial analysis and investment decision making. We present descriptive statistics for conveying important data attributes, such as central tendency, location, and dispersion, and introduce characteristics of return distributions. The section also considers probability theory and its application in quantifying risk for investment decision making.
- Ethical and Professional Standards The focus of this topic is ethics, related challenges to ethical behavior, and the role ethics and professionalism play in the investment industry. We provide a framework to support ethical decision making and examine the CFA Institute Code of Ethics and Standards of Professional Conduct and Global Investment Performance Standards (GIPS).
- Economics
In this section, we introduce analysis of fundamental concepts of supply and demand for individual consumers and firms. We also cover the various market structures that firms operate in as well as macroeconomic concepts and principles, including aggregate output and income measurement, aggregate demand and supply analysis, and analysis of economic growth factors. The section concludes with coverage of the business cycle and its effect on economic activity.
Derivatives In this section, we build the conceptual framework for understanding the basic derivatives and derivative markets. We then introduce essential features and valuation concepts for forward commitments such as forwards, futures, swaps, and contingent claims. Finally, we examine arbitrage, a critical concept that links derivative pricing to the price of the underlying asset.
Equity Investments Here we explore the characteristics of equity investments, security markets, and indexes and explain how to analyze industries, companies, and equity securities as well as the use of basic equity valuation models. Global equities are important for meeting longer-term growth and diversification objectives.
Corporate finance In this topic, we provide an introduction to corporate governance as well as investing and financing decisions. We present an overview of corporate governance along with a framework for understanding and analyzing corporate governance and stakeholder management. We also highlight the growing impact of environmental and social considerations in investing. We cover how companies make use of leverage and manage their working capital to meet short-term operational needs.
Alternative Investments This topic explores alternative investments, including hedge funds, private equity, real estate, commodities, and infrastructure. We cover the use of alternative investments for diversification and higher returns. In this curriculum, we define alternative investments and the characteristics they have in common.
Portfolio Management In this topic, we explain the fundamentals of portfolio and risk management, including return and risk measurement and portfolio planning and construction. We examine the needs of individual and institutional investors along with the range of available investment solutions. The capital asset pricing model is used to identify optimal risk in portfolios.
Financial Reporting and Analysis Here we provide a thorough explanation of financial reporting procedures and the standards that govern financial reporting disclosures, with an emphasis on basic financial statements and how alternative accounting methods affect those statements and the analysis of them. We examine primary financial statements and provide a general framework for conducting financial statement analysis.
Fixed Income In this topic, we explain how to describe fixed income securities and their markets, yield measures, risk factors, and valuation measurements and drivers. We also cover calculating yields, values of fixed income securities, the securitization of assets, the fundamentals of bond returns and risks, and basic principles of credit analysis.
NEW QUESTION 495
A firm owns a building with a book value of $100,000 and a market value of $250,000. If the building is utilized for a project, then the opportunity cost ignoring taxes is:
- A. $250,000
- B. $150,000
- C. $100,000
Answer: A
NEW QUESTION 496
What is the median of the following observations: 34,21,89,45,66,11,38,57?
- A. 55.5
- B. 41.5
- C. 23.0
Answer: B
Explanation:
The median is the middle observation after sorting the data in ascending or descending order. For odd number of observations it is the middle observations. For even number of observations, it is the average of the middle two observations. Upon sorting:11, 21, 34, 38, 45, 57, 66, 89 The middle two observations are 38 and 45, with their average being 41.5. There is even number of observations.
NEW QUESTION 497
If prices of a product are falling the use of LIFO rather than FIFO will lead to:
- A. higher working capital and lower net income.
- B. higher working capital and higher net income.
- C. lower working capital and higher net income.
Answer: B
Explanation:
COGS will be lower under LIFO in a period of falling prices leading to higher net income and higher tax payments. Working capital will be higher since the higher inventory value will outweigh the lower cash balance due to higher tax payments.
NEW QUESTION 498
A long-term asset is different from inventory primarily because:
- A. A long-term asset is long-term in nature.
- B. A long-term asset has physical substance.
- C. A long-term asset is used in operations and not for resale.
Answer: C
NEW QUESTION 499
A(n) _______ is a numerical descriptive measure of a population, usually unknown.
- A. parameter
- B. statistic
- C. point estimator
Answer: A
NEW QUESTION 500
The mean return in 1999 for a stock mutual fund of large companies was 7.2% with and the mean return for a risk-free bond was 1.0 %. If the Sharpe measure for the mutual fund is 0.50, what is the standard deviation or risk of the stock mutual fund?
- A. 3.2
- B. 12.4
- C. 16.4
Answer: B
Explanation:
(7.2 - 1 ) / 0.5 = 12.4
NEW QUESTION 501
Which of the following is false?
- A. The probabilities for different possible values of a random variable with a continuous uniform distribution are equal.
- B. The probabilities for different possible values of a random variable with a discrete uniform distribution are equal.
- C. A random variable with a binomial distribution can take one of two possible values.
Answer: C
Explanation:
Explanation: A binomial distribution is the discrete probability distribution of the number of successes in a sequence of n independent yes/no experiments, each of which yields success with probability p. It can therefore take all integer values from 0 to n.
NEW QUESTION 502
You have a bond with 6 years to maturity. The bond pays 10% coupons semiannually, but the market demands a 12% return. If the market rate stays constant, what is the price path for years 6,4,2,0?
- A. $87.61; 90.06; 93.93; 98.21
- B. $91.78; 93.93; 96.62; 100
- C. $91.62; 93.79; 96.53; 100
Answer: C
Explanation:
N=12, I/Y=6, PMT=5, FV=100, PV=?=91.62; N=8, PV=93.79; N=4, PV= 96.53; N=0, PV
=100
NEW QUESTION 503
Which one of the following best explains why the crowding out effect, brought on by an increase in government spending financed by the sale of government bonds to the public, is likely to reduce aggregate demand?
- A. The sale of government bonds to the public will drive up interest rates, thereby retarding private investment and aggregate demand.
- B. The question is based on a false premise. The crowding-out effect suggests that the government's selling of bonds to the public is a very effective tool with which to stimulate demand.
- C. The sale of government bonds to the public reduces the money supply and will offset the expansionary impact of the increased government spending.
Answer: A
NEW QUESTION 504
Which one of the following is a source of cash, all else equal?
- A. reducing accounts payable.
- B. retiring commercial paper, or renewing a committed line of credit at a bank.
- C. factoring accounts receivable.
Answer: C
Explanation:
Retiring commercial paper is a use of cash. Renewing a committed line of credit is not a source of cash because there is no net change in borrowing ability.
NEW QUESTION 505
The major difference between an index mutual fund and an EFT is that:
- A. EFT investors can purchase shares on margin.
- B. EFT investors buy fund shares directly from the EFT fund.
- C. ETFs often reinvest the dividends.
Answer: A
Explanation:
A). EFT investor buys EFT shares from other investors.
B). They can short shares too.
C). The dividends are paid out to the shareholders.
NEW QUESTION 506
A portfolio manager is currently evaluating one of the stocks in the portfolio by looking at the following data:
Current dividend per share: $0.75 Current earnings per share: $1.82 Total NO. of shares outstanding: 22 million Book value of common Equity: $350 million
In particular, what is the best estimate of this particular company's dividend growth rate?
- A. Inconclusive given the data.
- B. 4.7%
- C. 6.7%
Answer: C
Explanation:
Sustainable Growth Rate = ROE ( 1 - Dividend Payout Ratio) = [($1.82 x 22M)/$350M] [1 -
0 .75/1.82] = 6.7%Note: ROE equals total earnings divided by total equity book value.
NEW QUESTION 507
A lessee has leased a corporate building for 7 years and has classified it as a capital lease. The collectability of the lease payments is reasonably predictable and no important uncertainties surround the amount of unreimbursable costs to be incurred by the lessor under the lease. There are no manufacturing or dealer profits involved in the deal nor has the lessor levered it.
The lessor must classify the deal as:
- A. a sales-type lease.
- B. a capital lease.
- C. a direct-financing lease.
Answer: C
Explanation:
If the lessee classifies the lease as a capital lease, then the lessor's classification depends on whether the following two additional conditions are satisfied:
The collectability of the lease payments is reasonably predictable.
*
No important uncertainties surround the amount of unreimbursable costs to be incurred by the lessor
*
under the lease.
If both these conditions are met, then the lease is a "sales-type lease" if there are manufacturing or dealer profits involved in the deal and is a "direct-financing lease" otherwise. If either of these conditions is not satisfied, the lessor must classify the lease as operating lease even if the lessee classifies as a capital lease.
NEW QUESTION 508
Anti-dilutive securities should:
- A. be used in calculating basic EPS but not diluted EPS.
- B. be used in calculating diluted EPS but not basic EPS.
- C. not be used in calculating basic or diluted EPS.
Answer: C
Explanation:
Antidilutive securities would increase EPS if exercised or converted to common stock.
NEW QUESTION 509
An individual has part of his money tied up in 6 stocks. He decided that each must remain in his portfolio, be sold, or be given to his son. How many possible outcomes does this individual face?
- A. 0
- B. 1
- C. 2
Answer: A
Explanation:
6
The number of possible outcomes is 3 = 729.
NEW QUESTION 510
The convexity adjustment for a callable bond with a duration of 5.5 and convexity of -38, when the interest shock is 250 basis points, is:
- A. -11.375
- B. -16.125
- C. -2.375
Answer: C
Explanation:
Convexity adjustment = -38(.025)(.025) 100 = -2.375
NEW QUESTION 511
According to CFA Institute's Standards of Professional Conduct, what is the responsibility of members in terms of Standard I.A.(Knowledge of the Law)?
- A. Members are responsible for violations they knowingly participate in or assist.
- B. Members are only responsible for gross negligence but not other violations.
- C. Members are not responsible for violations they knowingly participate in or assist if they did not have all the correct facts at the time.
Answer: A
NEW QUESTION 512
Which of the following transactions belong to the current account?
I). Unrequited transfers.
II). Purchase of a foreign company.
III). Income from foreign investments.
- A. I and III.
- B. I, II and III.
- C. II and III.
Answer: A
Explanation:
The current account consists of trade and services balance, net income from all foreign investments and unrequited transfers.
NEW QUESTION 513
Assumptions of the Markowitz model include which of the following?
- A. Investors base decisions solely on historical return and systematic risk.
- B. Investors estimate portfolio risk using beta.
- C. Investors seek to maximize one-period expected utility.
Answer: C
Explanation:
The Markowitz model assumes that investors seek to maximize one-period expected utility.
NEW QUESTION 514
In terms of CFA Institute's Standards of Professional Conduct per Standard III (A): Loyalty, Prudence, and Care, what are the duties that a member would have when managing an individual client's assets?
The Manager has the responsibility:
I). To ensure that the client's objectives and expectations are realistic.
II). To ensure that the client's objectives and expectations suit the client's set of circumstances.
III). To explain all the risks involved to the client and ensure that he has understood them.
IV). To make sure that his own personal objectives do not conflict with that of the client.
- A. I, II and III.
- B. I, II, III and IV.
- C. II, III and IV.
Answer: B
Explanation:
When managing individuals' accounts, the manger has the responsibility to ensure that the client's objectives and expectations are realistic and suit the client's set of circumstances. The manager must explain all the risks involved to the client and ensure that he has understood them. The Manager must make sure that his own personal objectives do not conflict with that of the client.
NEW QUESTION 515
Which statement is false?
- A. MACD is all about the convergence and divergence of the two moving averages.
- B. Generally speaking a 60-day moving average should be smoother than a 20-day moving average.
- C. The put/call ratio is normally above 1.0 but below 10.0.
Answer: C
Explanation:
The put/call ratio is normally below 1.0.
NEW QUESTION 516
Diseconomies of scale are associated with:
- A. a downward-sloping long-run average total cost curve.
- B. an upward-sloping long-run average total cost curve.
- C. an upward-sloping short-run average total cost curve.
Answer: B
Explanation:
Diseconomies of scale occur when an increase in all inputs results in an increase in long-run average total cost.
NEW QUESTION 517
Which of the following is NOT a disadvantage of the IRR method?
- A. It is affected by the scale and timing of project cash flows.
- B. It measures the expected rate of return from a project.
- C. It is more difficult to compute than NPV.
Answer: B
Explanation:
The IRR measures the expected rate of return when expected cash flows are used for its calculation. This is not a disadvantage of the IRR method.
NEW QUESTION 518
Your research department has just made a sound presentation arguing that the equity markets are due for a sever correction in the short term. Which of the following strategies would be most suitable to safeguard the portfolio that you manage?
- A. Buy call options on an equity index.
- B. Buy put options on an equity index.
- C. Long futures contacts on an equity index.
Answer: B
Explanation:
If you expect stock prices to decline, then you'll want to enter into an agreement that will allow you to sell shares at a pre-determined price. This way, you are effectively locking in the future value of the shares. There are only two strategies that will enable you to carry out this transaction. First, buying a put will give you the "right" to deliver these shares at a pre-determined price. And second, selling stock index futures will "obligate" you to deliver these shares at a pre-determined price.
NEW QUESTION 519
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