CFA-LEVEL-1 Online Practice Questions and Answers
Affirmative action commitments by industrial organizations have led to an increase in the number of women in executive positions. Satellite Office Systems has vacancies for two executives, which it will fill from among four women and six men. What is the probability that two woman are selected?
A. 3/5
B. 8/15
C. 3/4
D. 2/15
E. None of these answers
What is the net operating income (NOI) of this property?
A. $113,124.
B. $108,599.
C. $92,886.
D. $97,410.
If the calculated NPV is negative, then which of the following must be true? The discount rate used is ________.
A. equal to the internal rate of return
B. too high
C. greater than the internal rate of return
D. too low
E. less than the internal rate of return
Two stocks, Rich Shaw Inc., and Melon Inc., have identical total risk. The Rich Shaw stock risk is comprised of 60% systematic risk and 40% unsystematic risk, while the Melon stock risk is comprised of 40% systematic risk and 60% unsystematic risk. Relative to the Melon stock, the Rich Shaw stock has:
A. a higher required return.
B. a lower required return.
C. the same required return.
The graph below combines the efficient frontier with the indifference curves for two different investors, X and Y (represented by U(X) and U(Y)). The letters A, B, C, and D represent four distinct portfolios.
Which of the following statements about the above graph is CORRECT?
A. The backward bend in the efficient frontier is due to less than perfect correlation between portfolio assets.
B. Investor X would be better off moving to indifference curve U(X)1 and Portfolio C because of the higher return on that portfolio.
C. Investor X is less risk-averse than Investor Y.
D. Portfolio B is an optimal portfolio, Portfolio A is suboptimal.
The direct capitalization approach equals: Market Value = Annual NOI / ________
A. Market Capitalization Rate
B. Market Discount Rate
C. None of these answers
D. Subject Property Capitalization Rate
E. Subject Property Discount Rate
A preferred stock has a $100 par value and a dividend payout of $8 per year. Your required return is 9. What is the value of the preferred stock?
A. not enough information to calculate it
B. $88.89
C. $92.24
D. $85.67
Short interest is
A. the cumulative number of shares that have been sold short by investors and not covered. * the cumulative number of shares that have been sold short.
B. the cumulative number of shares that have been sold short and covered.
C. the cumulative number of shares that have been sold short, divided by daily NYSE volume.
D. the cumulative number of shares that have been sold short, divided by daily NYSE + OTC volume.
Holding everything else equal, which of the following firms would likely have a high payout ratio? Further, as time progresses (in the long run), would the retention ratio of similar firms be expected to increase or decrease?
A. Automobile manufacturer; increase
B. Specialty retailer; decrease
C. Pharmaceutical firm; decrease
D. Specialty retailer; increase
E. Automobile manufacturer; decrease
F. Pharmaceutical firm; increase
What is the best proxy for the risk-free rate?
A. The rate on T-bills.
B. The rate on 20-year Treasury bonds.
C. The rate on 5-year Treasury notes.
D. The rate on AAA corporate bonds.