CFA Level 1 – Free Mock Exam

A continuously-compounded effective interest rate of 6.25% is equal to a quoted interest rate of:

If you have invested $100,000 today, the annual percentage rate compounded semiannually that you must earn to accumulate $150,000 in 5 years is:

Which of the following is generally correct about the relationship between different means?

If the probability of a country being included in a popular emerging market benchmark is 0.60, and the probability that its stock market would have a double-digit growth given the inclusion is 0.55 and the probability of such a growth in case of non-inclusion is 0.30, what is the probability of the stock market registering a double-digit growth regardless of inclusion in the benchmark:

Which of the following is least likely an assumption that underlies the binomial distribution?

A Bernoulli random variable is one which can take

Which of the following is most likely a biased estimator?

When working with time-series data, an analyst should:

If we reject a true null-hypothesis, we are:

The smallest level of significance at which the null can be rejected is called:

When the population size is large (i.e. greater than 30), hypotheses regarding population mean can be tested using:

A series of cash flows consists of $500 paid each month for three years at 6% compounded monthly. The ratio of the future value of the series if it an annuity due to a future value if it is an ordinary annuity, is most likely:

A good whose quantity demanded increases with an increase in its price is called as:

Marginal cost curves intersect which of the following cost curves at their lowest points?

Varys Vines and Dorea D are the only two firms producing vodka in Lys. If both expand production, their net income declines by $50,000 each, if neither does, their incomes increase by $2,000 each. However, if one expands and the other does not, the one expanding production earns $50,000 and the one not expanding earns nothing. The Nash equilibrium in this case is:

If the price elasticity of demand is 1.50 and current price is $45, marginal revenue would be:

Equilibrium in the goods market and the financial market is represented by:

In study of consumer behavior and its relationship with economic activity, which measure of income is most relevant?

When the supply of money increases but demand remains constant,

The long-run aggregate supply curve represents a fixed amount of capital, existing technological base and:

Which of the following least likely base macroeconomics on sound microeconomic foundations?

Which of the following is an instrument most often used by central banks to enforce the policy rate that it sets?

In absence of auctioning of import licenses, the exporter or the exporting country would capture quote rents in:

If the domestic currency is the base currency, the quote is called a/an:

Information about earnings per share is included on:

Which of the following is least likely a purpose of financial reporting framework?

e-ticketers, Inc. has a three-year contract with a Lahorail, mass transit operator for collection of revenue. Under the contract, it is entitled to deduct a charge of 10% of all fare revenue collected and pay the rest to Lahorail. If the total revenue collected during the first year of the contract is $100 million, e-ticketers, Inc. should report revenue of:

When an inventory that was previously written down subsequently recovers, the reversal of any losses recognized is allowed by:

Acquisition of a company by issue of shares of common stock would be reported as:

A common-size analysis of the income statement is carried out by:

Company M manufactures just one product, a comb-binding machine which it values using the LIFO method under US GAAP. At the end of last year, it wrote down its inventories from $22 million to $19 million. During the first quarter of the current year, as reassessment showed that the inventory value has recovered to $24 million. The company would most likely:

In a business combination, which of the following types of intangible assets would most likely be identified separately?

The tax base of a company’s unearned revenue (a liability) most likely equals:

When a bond is issued at a discount, it reflects that:

Which of the following accounting choices may create a sustainability issue?

If an analyst backtests a model using a database which is updated for restatements, it would most likely suffer from:

Which of the following is correct about audit reports?

Mercancia, Inc., a commodity producer participates actively in the futures market to hedge its position and bet on commodity price movements. It recently sustained heavy losses on a single position. The company would most likely report it as:

Which of the following is an indicator of poor earnings quality?

On 1 January 20X1, Company H revalued its building upwards and recognized the difference in the revaluation surplus in equity. On 1 July 20X2, the building was revalued down. The decrease in value should be reflected:

Which of the following is least likely one of the advantages of leasing?

In calculation of an adjusted EBITDA, which of the following would least likely be excluded?

Conflict of interest may arise between controlling shareholders and minority shareholders:

Which of the following is least likely a responsibility of a company’s board of directors?

Which of the following correctly reflect the level of uncertainty inherent in different capital budgeting projects?

Internal rate of return:

Which of the following is not correct about the bond-rating approach to the cost of debt calculation?

The sustainable growth rate is the growth rate achieved by:

A company increases its financial risk, as evident from its degree of financial leverage when it increases its

A high degree of financial leverage increases:

Which of the following is correct about the operating cycle and cash conversion cycle?

Under cash before delivery credit terms, shipment cannot be made unless checks are

Which of the following statements are correct?

A financial system in which prices reflect the fundamental value is:

An equal-weighted index underrepresents which of the following securities

Vincent Vega was giving a presentation to a junior analyst. He states the following as a reason why style indexes based on market capitalization differ:
* There is no universal definition of small-cap, mid-cap, and large-cap.
* There is no agreement on the minimum capitalization limit required.
* Some use absolute market capitalization while other use relative market capitalization.

The correct statements are:

Tom quoted two reasons why many calendar anomalies have been eliminated. Which of the reason(s) is/are valid?

Which of the following statement(s) are correct about market efficiency?

Which of the following is least likely to be a factor which an issuer of global depository receipts would consider while issuing GDRs in selection of the appropriate exchange:

Which of the following is correct about the price-to-book ratio?

A group of companies whose principal business activity is the same and whose valuation depends on closely-related factors is called:

In which stage of the industry life cycle can price wars are rare but can occur in recessionary conditions?

An investor whose required rate of return is 10%, wants to hold a stock for 3 years and then sell it an expected price of $25. If in the intervening period, the stock is expected to pay a dividend of $2, $3 and $4, the value of the stock today is:

Which of the following is not a valid reason relative valuation should be used with caution?

Which of the following statements is correct about asset-based valuation?

Which of the following is not a responsibility of a trustee of a bond?

With respect to the restrictions on distributions to shareholders, which of the following is correct?

Which principal repayment structure would have the lowest coupon payment in the last year?

Which of the following is correct about fixed-income indexes?

Which of the following is a major advantage of privately placed bonds for investors?

Which of the following is not affected by any change in yield to maturity?

Which of the following is least likely to cause an FRN to trade away from par?

Which of the following statements is correct about the prepayment option in a mortgage loan?

Which of the following statements is incorrect about loan-level call protection in a commercial mortgage-backed security:

The effective duration can differ from modified duration if:

Which of the following is not a problem encountered in applying the cash flow yield of aggregate cash flows approach to calculation of duration of a portfolio of bonds?

Which of the following is correct about notching?

Which of the following statements is correct about bond covenants?

In an over-the-counter derivative market,

European options are:

Which of the following is not correct about the price discovery function of derivatives?

A long position in a risk-free asset and a long position in a futures contract on equity index is equivalent to:

A long position in a 30-day FRA with 90-day Libor as an underlying can be created by:

Time value of an option is inversely related with:

If a call option is selling at a price higher than what is dictated by the binomial option pricing model, an investor can earn arbitrage profit by:

Which of the following is correct about the investment structure of hedge funds and private equity funds?

Which of the following is incorrect about equity hedge strategies used by hedge funds?

Debt raised during a leveraged buyout is carried on the balance sheet of the:

Public market equivalent index for comparison with private equity is created by:

Which type of real estate indexes are biased by current economic conditions?

Which of the following approaches is least appropriate for obtaining a significant exposure to commodities?

Which of the following is correct about endowments and foundations?

If an investment’s return over the last 15 months is 12%, its annual return would be:

George has invested $20,000 in T-bills which yield 2.4% and $30,000 in a portfolio of risky assets which are expected to earn 4.8%. The expected return on the portfolio would be:

Mark has borrowed at 5% to invest 150% in a broad-market equity index yielding 10% with a standard deviation of 12%. His expected return would be:

If the standard deviation of a stock’s return is 1.2 times the standard deviation of the market and they have a perfect correlation, the expected return on the stock when the risk-free rate is 3% and the market return is 8% would be:

Marvick is a 40-years old engineer who wants to retire by 60. He just won a lottery of $1,000,000 on which he would pay taxes of 20%. Besides the lottery, he has savings of $200,000. If he needs to have $2,000,000 by the time he retires and he is unable to save anytime from his paycheck, what would be his pre-tax return objective?

Which of the following is not a part of compliance risk?

On a point and figure chart, we move to the next column when the security price moves in the opposite direction of the existing column:

Which of the following is correct about robo-advisory?