Mock Exam 2_ Morning Session
一、选择题
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1.
Alen Bishop earned the right to use the CFA designation in September 1968.Alen recently retired from the investment management profession.As he is retired, Alen no longer attends CFA Institute society meetings and has stopped paying his CFA Institute dues.According to the Standards of Practice Handbook, how should Alen refer to his affiliation with the CFA Program?
参考答案C
解析If a charter holder fails to pay dues for any year, the right to use the CFA designation is suspended.However, stating he was awarded the CFA charter in 1968 is a matter of fact.
2.
A stated objective of the CFA Institute’s Global Investment Performance Standards (GIPS) is to:
参考答案B
解析GIPS Objectives:
?To obtain worldwide acceptance of a standard for performance and presentation.
?To ensure accurate and consistent investment performance data for reporting, record keeping, marketing, and presentation.
?To promote fair, global competition among investment firms for all markets without creating barriers to entry for new firms.
?To foster the notion of industry self-regulation on a global basis.
?To obtain worldwide acceptance of a standard for performance and presentation.
?To ensure accurate and consistent investment performance data for reporting, record keeping, marketing, and presentation.
?To promote fair, global competition among investment firms for all markets without creating barriers to entry for new firms.
?To foster the notion of industry self-regulation on a global basis.
3.
During an onsite company visit, Jane Wang, CFA.accidentally overheard the Chief Executive Officer (CEO) of Stargazer, Inc.discussing the company’s tender offer to purchase Dynamica Enterprises, a retailer of Stargazer products.According to the CFA Institute Standards of Professional Conduct, Wang most likely cannot use the information because:
参考答案A
解析According to Standard II (A), A is correct because trading on the information is restricted as it relates to a tender offer; which is clearly material, nonpublic information.
4.
According to the Standards of Practice Handbook, which of the following statements about fair dealing is least accurate? The Standard relating to fair dealing:
参考答案A
解析The Standard relating to fair dealing states that all clients cannot be treated equally because it is impossible to reach everyone simultaneously and each client has unique needs and objectives.
5.
The Standards of Practice Handbook is least likely to require a member of member’s firm to disclose which of the following to clients and prospective clients?
参考答案C
解析The Standards do not require members to disclose to clients and prospective clients their obligation to abide by the Code and Standards.
6.
Heidi Krueger, CFA, has discretionary authority over the accounts of Johnson, for whom she manages a portfolio of energy stocks, and Osaki, for whom she manages a diversified portfolio of domestic and international stocks.Krueger always seeks the best price and execution and has disclosed to all of her clients the process she follows to make use of soft dollars and apply them for the benefit of her clients.In the year 2008, Krueger applied soft dollars generated from the Johnson and Osaki accounts to purchase a report on the economic impact of world events, to purchase an analysis of the domestic steel indusdivy, and to purchase a new conference div for her office.Krueger was in compliance with the Code and Standards in the year 2008:
参考答案A
解析Standard III (A) requires members to act for the benefit of their clients and to place their clients interests above their own.Soft dollars may be used for client benefit if the practice is disclosed.It is not required that each element of research purchased benefit each client involved, however, the manager should seek to assure that over time, all clients benefit from the use of research purchased with client brokerage.Using soft dollars for the purchase of office furniture does not directly benefit any client and is a violation.
7.
Gloria Brown, CFA, is the founder and portfolio manager of the Everglades Fund.In its first year the fund generated a return of 35%.Building on the fund’s performance, Gloria created new marketing materials that showed the fund’s gross 1-year return as well as the 3-, and 5-year returns which he calculated by using back-tested performance information.As the marketing material is used only for presentations to institutional clients, Gloria does not mention the inclusion of back-tested data.According to the Standards of Practice Handbook, did Gloria violate any CFA Institute Standards of Professional Conduct?
参考答案B
解析The CFA institute Standard on Duties to Clients, Standard III (D), prohibits members/candidates from making any statements that misrepresent the performance achieved by them or their firms and requires every reasonable effort to be made to ensure that performance information is fair, accurate, and complete.By failing to clearly identify the simulated performance results, Gloria violated the standard.Gloria should have disclosed the fact that the returns were generated only in one year of the fund’s operation and the other performance information is back-tested.
8.
Scott Marsh is a research analyst for a brokerage firm following the computer indusdivy.Joe Perry is Marsh’s former college roommate and is the head of technology for Mercury, a large software company.Perry informs Marsh on Tuesday that in two days the company will be making an official announcement that its release of its newest version of its software will be moved up one month, from October 1 to September 1.The announcement will be surprising to the indusdivy and will likely be met with skepticism because the company has had divouble meeting release dates in the past.Perry assures Marsh that he is certain that they will meet the September 1 date.Marsh considers Perry to be very honest and highly competent.Marsh should:
参考答案A
解析The research report cannot be released until the official announcement is made, otherwise he will be violating the Standard on prohibition against the use of material nonpublic information.Once it is made public, Marsh can disclose the nature of the conversation without violating that Standard because the information will now be public.However, he should disclose the relationship with Perry or he will be violating the Standard on research reports.
9.
Whenever an investment management firm presents investment performance in compliance with the Global Investment Performance Standards (GIPS), it must state how it defines itself as a firm.Under GIPS, a firm may define itself for the purpose of claiming GIPS compliance using any of the following options except when:
参考答案C
解析In order for an investment firm to claim GIPS compliance, GIPS must be applied on a firm-wide basis.If the parent company is GIPS compliant, this does not automatically mean the divisions or subsidiaries are compliant.A division or subsidiary of a company would also have to comply with GIPS to be able to claim compliance.If an investment firm, subsidiary, or division is held out to clients or potential clients as a distinct business unit it can claim GIPS compliance even if the parent company is not compliant.
10.
Bill Kimm, CFA owns an asset management firm with offices downtown.To minimize rent expenses, each year Bill ships the previous year’s research records to a nearby warehouse.There, the reports are digitized and stored in both elecdivonic and hard-copy forms.After five years, all paper copies are desdivoyed and only elecdivonic copies are retained.Are Bill’s record-retention procedures in compliance with the CFA Institute Standards of Practice?
参考答案A
解析According to Standard V(C) Investment Analysis, Recommendations, and Actions: Record Retention, members must maintain appropriate records in either electronic or hard copy form for a minimum of seven years.The Standards do not require on-site storage.
11.
The following information involves two research analysts at a brokerage firm.
Erik Bagenot, CFA, is preparing a research report on Global Enterprises, Inc.In preparing the report, he uses materials from many sources.For example, he uses factual information published by Standard & Poor’s Corporation without acknowledging the source.He also uses excerpts from a research report prepared by another analyst.Bagenot makes only a slight change in wording for these excerpts, but acknowledges the source.
Sally Wain, who is currently enrolled in the CFA program, is preparing a research report, on Manson Telecommunications.She attends a conference in which several investment experts provide their views about the future prospects of this company.Wain cites several quotations from these investment experts in her report without specific reference.
According to the CFA institute Standards of Professional Conduct involving prohibition against plagiarism, which of the following statements is divue?
Erik Bagenot, CFA, is preparing a research report on Global Enterprises, Inc.In preparing the report, he uses materials from many sources.For example, he uses factual information published by Standard & Poor’s Corporation without acknowledging the source.He also uses excerpts from a research report prepared by another analyst.Bagenot makes only a slight change in wording for these excerpts, but acknowledges the source.
Sally Wain, who is currently enrolled in the CFA program, is preparing a research report, on Manson Telecommunications.She attends a conference in which several investment experts provide their views about the future prospects of this company.Wain cites several quotations from these investment experts in her report without specific reference.
According to the CFA institute Standards of Professional Conduct involving prohibition against plagiarism, which of the following statements is divue?
参考答案C
解析Wain violated the Standards, but Begenot did not.Bagenot complied with code of Standard, which permits publishing factual information from Standard & Poor’s without acknowledgment and using excerpts with acknowledgment.Wain committed plagiarism because she failed to give specific references for the quotations that she used.
12.
Sean Dahib, CFA, is in charge of the compliance program at his investment firm.According to the Standards of Practice Handbook, as a supervisor, Sean should least likely perform which of the following activities?
参考答案B
解析According to Standard IV (C) Duties to Employers, Responsibilities of Supervisors, members must make reasonable efforts to detect and prevent violations of applicable laws, rules, regulations, and the Code and Standards.Supervisors must disseminate the contents of the program to appropriate personnel.It is unnecessary to disseminate the contents of the program to all employees.
13.
Karen Wilson, CFA, supervises eight junior analysts at Spartan Financial Services.Karen suspects that one of the analysts is violating Spartan’s personal investing policy.According to the Standards of Practice Handbook, Karen’s most appropriate initial action is to.
参考答案A
解析Once a supervisor learns that an employee has violated or may have violated the Code and Standards, the supervisor must promptly initiate an investigation to ascertain the extent of the wrongdoing.
14.
Fred Funk, CFA, agreed in writing with his former employer not to solicit former clients for a period of one year after his termination.After he left his former employer, he consulted with a lawyer about whether the agreement was legally enforceable.The lawyer advised Fred that it was doubtful that the agreement could be enforced, so Fred sent a marketing brochure about his new firm to his former clients.According to the Standards of Practice Handbook, which of the following statements is most accurate with respect to Fred’s conduct?
参考答案B
解析A member’s duty of loyalty to his employer prohibits him from violating any applicable non-compete agreement.
15.
Hal Chen, CFA, develops marketing materials for an investment fund he founded three years ago.The materials show the 3-, 2- and 1-year returns for the fund.He includes a footnote that states in small print “Past performance does not guarantee future returns.” He also includes a separate sheet showing the most recent semi-annual and quarterly returns, which notes they have been neither audited nor verified.Has Chen most likely violated any CFA Institute Standards of Professional Conduct?
参考答案A
解析According to Standard III (D), A is correct because the Standards require members to make reasonable efforts to make sure performance information is fair, accurate, and complete.The Standards do not require compliance with Global Investment Performance Standards (GIPS), auditing, or verification requirements.
16.
Andrew Mader, CFA, is an analyst with Medivo Investment Services.During lunch with some of Medivo’s managers, Mader is told, “There are going to be major problems at Gebco (a firm that Medivo had brought public last year).I was just over there and the place is just crawling with government inspectors.” Mader had just issued a report with a “buy” recommendation on Gebco last week.Mader should:
参考答案B
解析Under Standard III (E), members are bound to preserve the confidentiality of information that they receive in the scope of their employment.There is nothing in the information to suggest that any illegal act had occurred.He is, therefore, obligated not to disclose the information to others until it becomes public.
17.
Theresa Hatcher, CFA, is making arrangements to establish her own investment advisory business before terminating her relationship with her current employer, Elite Brokers, Inc.Elite is a small company consisting of only six investment professionals and a small support staff.According to CFA Institute Standards of Professional Conduct, which of the following activities is least likely a violation of Hatcher’s duty to Elite?
参考答案C
解析Standard IV (A) permits Hatcher to make preparations to begin a new practice, such as leasing office space, furniture, and other equipment, but not to engage in the other activities that may violate her duty to employer.
18.
Gabrielle Gabber CFA has been accused of professional misconduct by one of her competitors.The allegations concern Gabber’s personal bankruptcy filing when she was a college student ten years ago and had a large amount of uninsured medical bills.By not disclosing the bankruptcy filing to her clients, did Gabber violate any CFA Institute Standards of Professional Conduct?
参考答案A
解析A is correct as a personal bankruptcy does not necessarily constitute a violation of Standard I (D).If the circumstances of the bankruptcy involved fraudulent or deceitful business conduct, then failing to disclose it may constitute a violation of the Standards.
19.
If no other estimator of a given parameter has a sampling disdivibution with a smaller variance, the estimator used is best characterized as:
参考答案C
解析An unbiased estimator is efficient if no other unbiased estimator of the same parameter has a sampling distribution with smaller variance.
20.
Robert Lamy is an equity advisor.One day he gathered information about three microeconomic variables X, Y, Z.He noticed that whenever variable X increased by one unit, variable Y decreased by 0.3 units but variable Z increase by 0.3 units.The correlation between variables X and Y and the correlation between variables X and Z, respectively, are closest to:
Correlation between Correlation between
Variables X and Y variables X and Z
Correlation between Correlation between
Variables X and Y variables X and Z
参考答案C
解析The estimated slope coefficient is interpreted as the change in the dependent variable for a one-unit change in the independent variable.The correlation coefficient is a measure of the strength of the relationship between two variables.Correlation is a useful measure of the tendency of two variables to move together.The correlation coefficient is bounded by +1 (the variables move together perfectly) and -1 (the variables move exactly opposite of each other).
21.
An investor plans to retire eight years from today.To maintain her standard of living through retirement, she needs to have $2.5 million accumulated when she retires.Her portfolio is currently valued at $1.2 million and is expected to earn 7.0 percent annually.The minimum annual amount she must save at the beginning of each of the next eight years to achieve a retirement accumulation of $2.5 million is closest to:
参考答案C
解析The present value of the $2,500,000 required in eight years compounded at 7 percent is approximately $1,455,023; the portfolio currently is below that amount by approximately $255,000.The minimum annual contribution that must be made at the beginning of the year (annuity due) over the next eight years is closest to $39,914.
22.
An analyst asked an junior associate to evaluate the performance of group of mutual funds over the last 10 years.The associate calculated the following performance statistics:
The analyst suspects that the associate has made some errors in calculating the performance statistics.Based only on the expected mathematical relationships between the two measures of return and between the two measures of dispersion calculated by the associate, did the associate most likely make errors in calculating the statistics associated with:
Mutual Fund A? Mutual Fund B?
The analyst suspects that the associate has made some errors in calculating the performance statistics.Based only on the expected mathematical relationships between the two measures of return and between the two measures of dispersion calculated by the associate, did the associate most likely make errors in calculating the statistics associated with:Mutual Fund A? Mutual Fund B?
参考答案C
解析Arithmetic Mean Return exceeds Geometric Mean Return, while Standard Deviation exceeds Mean Absolute Deviation.
23.
When using stock return data, a geomedivic mean return calculation is most likely preferred over a geomedivic mean calculation because:
参考答案A
解析Taking the nth root of a negative number when n is an even number cannot be done (unless one uses imaginary numbers).As returns can be negative, it might not be possible to find their geometric mean.However, returns cannot be lower than -100%.By adding one to each return, as is done in the geometric mean return calculation, we create a series of numbers greater than or equal to zero.The product of such terms must therefore also be positive and the nth root can always be found.
24.
An analyst is investigating the disdivibution of the SMG stock’s return over time.He calculated the mode of 12 percent, the mean of 11 percent, and the median of 11.5 percent.The disdivibution can best be described as:
参考答案B
解析For a symmetrical distribution, the mean, median, and mode are equal.
For a positively skewed distribution, the mode is less than the median, which is less than the mean.The mean is affected by outliers.In a positively skewed distribution, there are large, positive outliers which will tend to “pull” the mean upward.
For a negatively skewed distribution, the mean is less than the median, which is less than the mode.In this case, there are large, negative outliers which tend to “pull” the mean downward.
For a positively skewed distribution, the mode is less than the median, which is less than the mean.The mean is affected by outliers.In a positively skewed distribution, there are large, positive outliers which will tend to “pull” the mean upward.
For a negatively skewed distribution, the mean is less than the median, which is less than the mode.In this case, there are large, negative outliers which tend to “pull” the mean downward.
25.
An analyst collects the following set of past stock returns: -2.3%, -5.1%, 7.6%, 8.2%, 9.1%, and 9.8%.Which of the following measures of return is most likely the highest?
参考答案A
解析For this data, the median is (7.6% + 8.2%)/2 = 7.90%.The arithmetic mean is (-2.3% +-5.1% + 7.6% + 8.2% + 9.1% + 9.8%)/6 = 4.55%.The geometric mean return is ([1 +-2.3%] × [1 + -5.1%] × [1 + 7.6%] × [1 + 8.2%] × [1 +9.1%] × [1+9.8%])1/6 - 1 = 4.38%.
26.
An analyst is investigating one stock with high after-tax return above the benchmark and is concerned about his perceptions of slowdown in the macroeconomic next year.So he adjusts the historical probability of the stock’s return above the benchmark.The analyst is best characterized as gaining a (n):
参考答案C
解析An empirical probability is established by analyzing past data; A priori probability is determined using a formal reasoning and inspection process; A subjective probability is the least formal method of developing probabilities and involves the use of personal judgment.
27.
An economist predicts that over the next year, there is a 56 percent probability that oil prices will fall slightly and a 17 percent probability that new estate tax legislation will be enacted.According to this prediction, the probability that at least one of these independent events will occur is closest to:
参考答案C
解析The probability that one of these events will occur:
0.56+0.17-(0.56*0.17) =0.6348, or 63.5%.
0.56+0.17-(0.56*0.17) =0.6348, or 63.5%.
28.
An analyst is investigating the performance of three portfolio over the same time period and gathered the following information:
If the returns from all portfolios were normally disdivibuted, the portfolio that maximized the probability of earning less than the risk-free rate of return is most likely portfolio:
If the returns from all portfolios were normally disdivibuted, the portfolio that maximized the probability of earning less than the risk-free rate of return is most likely portfolio:参考答案A
解析In fact, the Sharp ratio is a special case of Roy’s ratio where the “threshold” level is the risk-free rate of return.Under both the Sharp and Roy criteria, the best portfolio is the one that has the largest ratio.The portfolio that maximized the probability of earning less than the risk-free rate of return is the lowest Sharp ratio.
29.
On 1 January 2009, the value of an investor’s portfolio is $89,000.The investor plans to donate $4,000 to charity organization and pay $2,000 to his insurance account on 31 December of 2009, but meanwhile he does not want the year-end portfolio value to be below $89,000.If the expected return on the existing portfolio is 12 percent with a variance of 0.0125, the safety-first ratio that would be used to evaluate the portfolio based on Roy’s criterion is closest to:
参考答案C
解析Roy’s safety-first criterion states that the optimal portfolio minimizes the probability that the return of the portfolio falls below some minimum acceptable level.This minimum acceptable level is called the “threshold” level.
Symbolically, Roy’s safety-first criterion can be stated as:
Maximize the SF Ratio where SF Ratio = [E (RP) - RL ] / SP
Where:
RP= portfolio return
RL.= threshold level return
Symbolically, Roy’s safety-first criterion can be stated as:
Maximize the SF Ratio where SF Ratio = [E (RP) - RL ] / SP
Where:
RP= portfolio return
RL.= threshold level return
30.
An analyst is investigating a stock index and gathered the following information:
If the analyst takes a sample of 56 companies from the index, the standard error of the sample mean is closest to:
If the analyst takes a sample of 56 companies from the index, the standard error of the sample mean is closest to:参考答案C
解析
31.
What is the yield on a discount basis for a Treasury bill priced at $97,965 with a face value of $100,000 that has 172 days to maturity?
参考答案B
解析
= bank discount yield.
= bank discount yield.
32.
Use the following data to calculate the standard deviation of the return:
·50% chance of a 12% return
·30% chance of a 10% return
·20% chance of a 15% return
·50% chance of a 12% return
·30% chance of a 10% return
·20% chance of a 15% return
参考答案A
解析The standard deviation is the positive square root of the variance.The variance is the expected value of the squared deviations around the expected value, weighted by the probability of each observation.The expected value is:
The variance is:
The standard deviation is the square root of 0.0003 = 0.017 or 1.7%.
The variance is:
The standard deviation is the square root of 0.0003 = 0.017 or 1.7%.
33.
Compared with outcomes that result from collusion, independent action by companies operating in an oligopolistic indusdivy would tend to decrease:
参考答案B
解析By colluding with rivals, oligopolists are able to replicate monopolistic industry conditions, and maximize industry profits.Oligopolists face two conflicting tendencies - the incentive to collude with rivals, so that industry profits can be maximized, and the incentive to cheat on any collusive agreement so that their own firm’s profits can be maximized.
34.
In the long run, when the economy is at full employment, will a decrease in the quantity of money due to resdivictive monetary policy that brings a decrease in aggregate demand likely result in:
The price level? Real GDP?
The price level? Real GDP?
参考答案C
解析From an initial long-run equilibrium, an increase (decrease) in aggregate demand will increase (decrease) prices and output in the short run, and the resulting increase (decrease) in money wages will decrease (increase) short-run aggregate supply, resulting in further price increases (decreases) and a return to full-employment long-run equilibrium.
35.
All else being equal, would appreciation or depreciation of a coundivy’s currency most likely result from a (n):
Decrease in the coundivy’s real interest rate? Decrease in the coundivy’s inflation rate?
Decrease in the coundivy’s real interest rate? Decrease in the coundivy’s inflation rate?
参考答案C
解析Differences in inflation rates will cause the residents of the country with the highest inflation rate to demand more imported (cheaper) goods.If a country’s inflation rate is higher than its trading partner’s, the demand for the country’s currency will be low, and the currency will depreciate.
Differences in real interest rates will cause a flow of capital into those countries with the highest available real rates of interest.Therefore, there will be an increased demand for those currencies, and they will appreciate relative to countries whose available real rate of return is low.
Differences in real interest rates will cause a flow of capital into those countries with the highest available real rates of interest.Therefore, there will be an increased demand for those currencies, and they will appreciate relative to countries whose available real rate of return is low.
36.
Is unanticipated inflation likely to result in a gain to:
Employees Borrowers
at the expense of employers? at the expense of lenders?
Employees Borrowers
at the expense of employers? at the expense of lenders?
参考答案B
解析Unanticipated increases in inflation decrease the value of a fixed-payment mortgage held by a bank, and benefit borrowers because their future payments will have less real value; that is, borrowers will give up less in real goods in order to make their payments.If inflation decreases unexpectedly instead, real wage rates are higher than employers expected to pay, and employees have unexpected gains at the expense of their employers.
37.
In a flexible exchange rate system, is a coundivy’s currency likely to depreciate as a result of an:
Decrease in the Unanticipated shift to a more
real interest rate? expansionary monetary policy?
Decrease in the Unanticipated shift to a more
real interest rate? expansionary monetary policy?
参考答案C
解析Differences in real interest rates will cause a flow of capital into those countries with the highest available real rates of interest.Therefore, there will be an increased demand for those currencies, and they will appreciate relative to countries whose available real rate of return is low.
An unanticipated shift to an expansionary monetary, policy will lead to a depreciating currency.
An unanticipated shift to an expansionary monetary, policy will lead to a depreciating currency.
38.
If the cendival bank unexpectedly shifts to a more resdivictive monetary policy, the most likely effect is:
参考答案A
解析If the effects of an increase in the growth rate in the supply of money are anticipated, then prices, wages and interest rates will rise quickly in response to an increase in the money supply.However, if the increase in the money supply catches the economy by surprise, then there will be a temporary but real increase in output and drop in unemployment since decision makers will at first think the increase in the money supply is an increase in demand.
If the effects of an increase in the money supply are unanticipated, the real rate of interest will fall in the short run, stimulating an increase in demand.This in turn increases output and employment.The long-run effect is higher prices and nominal interest rates.
Expectations often determine whether economic policies succeed in achieving their objectives.The effects of fiscal or monetary policy shifts can be dramatically different, depending on whether the shifts were expected or not.
If the effects of an increase in the money supply are unanticipated, the real rate of interest will fall in the short run, stimulating an increase in demand.This in turn increases output and employment.The long-run effect is higher prices and nominal interest rates.
Expectations often determine whether economic policies succeed in achieving their objectives.The effects of fiscal or monetary policy shifts can be dramatically different, depending on whether the shifts were expected or not.
39.
The short-run effects of unanticipated expansionary monetary policy are most likely to include:
参考答案A
解析In the short run, a decline in the interest rate increases expenditure, the real GDP and the price level.
40.
Is monopolistic competition a market in which:
Each seller produces a differentiated product? Compete on price, quality, marketing?
Each seller produces a differentiated product? Compete on price, quality, marketing?
参考答案C
解析Monopolistic competition has the following market characteristics:
A large number of independent sellers; Each seller produces a differentiated product; Firms compete on price, quality, and marketing; Low barriers to entry.
A large number of independent sellers; Each seller produces a differentiated product; Firms compete on price, quality, and marketing; Low barriers to entry.
41.
At low wage rates, will an increase in the wage rate most likely result in:
The substitution effect? An increase in the supply of labor?
The substitution effect? An increase in the supply of labor?
参考答案A
解析At low wage rates, an increase in the wage rate will induce a worker to work longer hours, leading to the substitution effect and an increase in the quantity of labor supplied.
42.
An analyst does research about technologically efficient and economically efficient.A method of production is economically efficient when:
参考答案C
解析The cost of producing a given output is as low as possible.
43.
Given the following possibilities, which one results in an increase in total consumer expenditures?
参考答案C
解析When demand is inelastic, the percentage change in unit sales is less than the percentage change in price.An increase in price leads to an increase in total expenditure on the good.The opposite is also true.
44.
Suppose that rubber is the primary input in the production of golf balls.If the price of rubber increases while all else remains constant, then in the short-run:
参考答案C
解析Marginal cost (MC) is the change in total cost resulting from the production of one additional unit.In the short run, MC will typically decline if output is increased, reaching a minimum, and then will increase sharply as maximum production capacity is approached.
Total variable costs are those costs that rise as output increases.For a given level of output, the average variable cost (AVC) is the total variable cost divided by output.In the short run, AVC will slightly decline, to a certain point at which output will increase by smaller and smaller amounts, causing AVC to rise.This is the point of diminishing returns, where it will take successively larger amounts of the variable factor to expand output by one unit.
Total fixed cost is the sum of costs that do not vary with output.Average fixed cost (AFC) is the total fixed cost divided by output.AFC will be high for low rates of output, but will decline as output increases, causing the curve to slope downward to the right.
Average total cost (ATC) is the total cost divided by the total number of units produced.ATC will be a U-shaped curve, since AFC will be high for small rates of output and MC will be high as the plant approached maximum capacity.
Total variable costs are those costs that rise as output increases.For a given level of output, the average variable cost (AVC) is the total variable cost divided by output.In the short run, AVC will slightly decline, to a certain point at which output will increase by smaller and smaller amounts, causing AVC to rise.This is the point of diminishing returns, where it will take successively larger amounts of the variable factor to expand output by one unit.
Total fixed cost is the sum of costs that do not vary with output.Average fixed cost (AFC) is the total fixed cost divided by output.AFC will be high for low rates of output, but will decline as output increases, causing the curve to slope downward to the right.
Average total cost (ATC) is the total cost divided by the total number of units produced.ATC will be a U-shaped curve, since AFC will be high for small rates of output and MC will be high as the plant approached maximum capacity.
45.
In which of the following situations when recording inventory at a value greater than its historical cost is permitted?
参考答案B
解析IFRS allows inventories of producers of agricultural, forest products, minerals, mineral products and commodity broker-traders to be measured at net realizable value.
46.
An analyst is preparing common-size financial statements for each of five companies in the same indusdivy during the same period.The most appropriate way of expressing the ending inventory for each company is as a percentage of:
参考答案A
解析Inventory is a balance-sheet account and the common-size percentage should be computed as a percentage of the total assets for that company.
47.
An analyst gathered the following information about a company and the company’s indusdivy:
After preparing common-size balance sheets for the company and the indusdivy, the analyst noted that the company and the indusdivy both have the same proportion of current liabilities, long-term liabilities, and shareholders’ equity.Would the common-size balance sheets for the company or the indusdivy most likely have a higher percentage associated with inventory and accounts receivable, respectively?
Higher percentage Higher percentage associated
associated with inventory with accounts receivable
After preparing common-size balance sheets for the company and the indusdivy, the analyst noted that the company and the indusdivy both have the same proportion of current liabilities, long-term liabilities, and shareholders’ equity.Would the common-size balance sheets for the company or the indusdivy most likely have a higher percentage associated with inventory and accounts receivable, respectively?Higher percentage Higher percentage associated
associated with inventory with accounts receivable
参考答案A
解析The current ratio includes inventory but the quick ratio does not.The quick ratio includes accounts receivable but the cash ratio does not.The denominator for all three ratios is current liabilities, which are the same proportion for both the company and the industry.The difference in ratios is therefore created by inventory and accounts receivable.The company has the higher percentage of inventory because the difference between the current ratio and quick ratio is greater for the company.The industry had the higher percentage of accounts receivable because the difference between the current ratio and quick ratio is greater for the company.
48.
All else being equal, a company’s cash flow from operating activities for 2008 will most likely be greater than that company’s net income for 2008 if, compared with the beginning of the year, the company had a lower balance at the end of the year in:
参考答案A
解析(B) and (C) are both liability items.If they have a lower balance at the end of year than at the beginning, they will decrease CFO.Prepaid expenses is an asset item, the lower balance at the end of year will increase the CFO.
49.
An analyst gathered the following information about Koplet Autos Corp financials reports:
·Beginning LIFO Reserve $2,309
·Cost of Goods Sold (COGS) using LIFO $6,160
·COGS using FIFO of $ 4,351
What is the Ending LIFO reserve?
·Beginning LIFO Reserve $2,309
·Cost of Goods Sold (COGS) using LIFO $6,160
·COGS using FIFO of $ 4,351
What is the Ending LIFO reserve?
参考答案C
解析Ending LIFO Reserve = (LIFO COGS - FIFO COGS) + Beginning LIFO Reserve = (6,160 - 4,351) + 2,309 = $4,118.
50.
Using a 365-day year, if a firm has net annual sales of $250,000 and average receivables of $150,000, what is its average collection period using above information?
参考答案C
解析Receivables turnover = $250,000/$150,000 = 1.66667
Collection period : 365/1.66667 = 219 days
Collection period : 365/1.66667 = 219 days
51.
During a period of declining prices, a company using the LIFO inventory method instead of FIFO would most likely report:
参考答案B
解析If prices were declining, using LIFO would match the lower (most recent) costs with current sales.Costs of goods sold would be lower with LIFO and gross profit (income) would be higher compared to using FIFO.Lower cost of goods sold means inventory balances, consisting of older higher priced items, would be higher using LIFO, increasing current assets relative to FIFO.
52.
During periods of rising prices and sdiv or increasing inventory quantities, using FIFO compared to using LIFO is most likely to result in:
参考答案C
解析In the periods of rising prices and stable or increasing inventory quantities, FIFO results in higher inventory balance, then the inventory turnover ratio=cost of goods sold/average inventory will be lower.Also FIFO results in lower cost of goods sold, then a higher net profit margin and lower cash flow (due to the tax paid out increases).
53.
An analyst has calculated the following ratios from a company’s financial statements:
Based on the information above, during 2009, did the company experience an increase in the:
Asset turnover ratio? Financial leverage ratio?
Based on the information above, during 2009, did the company experience an increase in the:Asset turnover ratio? Financial leverage ratio?
参考答案B
解析In 2008, financial leverage ratio is 0.168/0.105=1.6 and in 2009, financial leverage ratio is 0.18/0.10=1.8, an increase of 0.2%.In 2008, asset turnover ratio=0.105/0.042=2.5 and in 2009, asset turnover ratio=0.10/0.04=2.5, which is unchanged.
54.
A lessee company named YYK corporation entered into a new capital lease agreement with its partner.The lease payments are $200,000 annually and are due at the end of each year for ten years.The appropriate discount rate is 10 percent.Depreciation is on a sdivaight-line basis with zero salvage value.The total expense that should be reported on the company’s income statement for the first full year of the new capital lease is closest to:
参考答案C
解析N=10, PMT=200,000, FV=0, I/Y=10→PV=l,228,913 (ignore the sign), expense for the first year is $1,228,913*10%=$122,891, Deprecation=S1,228,913/10=$122,891, total expense=S122,891 +$122,891 =$245,782.
55.
General International manufacture Inc.sold a piece of equipment for $50,000 cash.The company paid $150,000 for the equipment several years ago and had a accumulated depreciation of $120,000 at the date of sale.Due to the equipment sale, the company’s cash flow from operations is:
参考答案B
解析CFO is net income subtracts gains or add losses that result from financing or investment cash flows (such as gains from sales of land).Here, 50,000-(150,000-120,000) =20,000 gain, should subtract.
56.
An analyst gathered following information about Fuzi Manufacture Inc in year 2009:
On the year 2009 statement of cash flows, the company would report net cash flow from investing activities (CFI) closest to:
On the year 2009 statement of cash flows, the company would report net cash flow from investing activities (CFI) closest to:参考答案B
解析Cash flow from investing should:
Adjust for changes in fixed assets.
Adjust for changes in marketable securities.
CFI= -Purchase of equipment+ Proceeds from sale of equipment
= -250,000+170,000= -80,000.
Adjust for changes in fixed assets.
Adjust for changes in marketable securities.
CFI= -Purchase of equipment+ Proceeds from sale of equipment
= -250,000+170,000= -80,000.
57.
Fillinion Corp’s stock divansactions during the year 2009 were as follows:
When computing for earnings per share (EPS) computation purposes, what was Fillinion’s weighted average number of shares outstanding during 2009?
When computing for earnings per share (EPS) computation purposes, what was Fillinion’s weighted average number of shares outstanding during 2009?参考答案A
解析The January 1 balance is adjusted retroactively for the stock dividend and 540,000 * 1.5= 810,000 shares are treated as outstanding from January 1.The weighted average number of shares is computed by multiplying the shares by the number of months held, as follows:
Weighted average shares was (8,820,000 / 12) = 735,000 shares.
Weighted average shares was (8,820,000 / 12) = 735,000 shares.
58.
During a period of rising prices, the financial statements of a firm using first in first out (FIFO) reporting instead of last in first out (LIFO) reporting would show:
参考答案A
解析When the FIFO method is used when prices are rising, the cheaper goods in beginning inventory reflecting earlier purchases are assigned to COGS (hence, higher income) and the more expensive units (last purchases) are assigned to ending inventory (greater current assets).When a LIFO method is used during a period when prices are rising, the more expensive last purchases are assigned to COGS (hence, lower income) and the cheaper units in beginning inventory and earlier purchases are assigned to ending inventory.
59.
Two firms build identical buildings with identical costs over the same 2-year period.Firm A pays for the $1 million cost of consdivuction with general cash flow and has no debt on its books.Firm B borrows the $1 million to fund consdivuction at a cost of 10 percent.When the buildings are completed (at the end of two years), at what cost will the firms report the buildings on their balance sheets?
参考答案C
解析Accounting standards require the capitalization of interest costs incurred during construction.If the firm does not borrow explicitly to fund construction, but has debt outstanding, a cost based on the weighted average interest rates on outstanding debt is imputed.However, if the firm has no debt, no interest capitalization is allowed.
60.
Over the life of a zero-coupon bond, are the issuing company’s interest expense and cash flow from operations, respectively, overstated?
interest expense understated Cash flow from operations understated
interest expense understated Cash flow from operations understated
参考答案C
解析In the case of bonds issued at a premium, recorded interest expense will be lower than the coupon payment.Amortization of the bond’s premium will serve to reduce the interest expense that is shown on the income statement.In general, interest expense will equal the coupon payment less the premium amortization.In the case of discount bonds, the interest expense will be higher than the coupon payment.Here, amortization of the bond’s discount will serve to increase the interest expense that is reported on the income statement.In general, interest expense will equal the coupon payment plus the discount amortization.
Cash flow: For premium bonds, the cash coupon is higher than interest expense.Consequently, CFO is understated and CFF is overstated relative to a company that does not have premium bonds in its capital structure.For discount bonds, the cash coupon is lower than interest expense.Consequently, CFO is overstated and CFF is understated relative to a company that does not have discount bonds.
Cash flow: For premium bonds, the cash coupon is higher than interest expense.Consequently, CFO is understated and CFF is overstated relative to a company that does not have premium bonds in its capital structure.For discount bonds, the cash coupon is lower than interest expense.Consequently, CFO is overstated and CFF is understated relative to a company that does not have discount bonds.
61.
A company purchased a new equipment oven directly from Italy for $13,289.It will work for 5 years and has no salvage value.The tax rate is 41 percent, and annual revenues are constant at $7,192.For financial reporting, the sdivaight-line depreciation method is used, but for tax purposes depreciation is accelerated to 35 percent in years 1 and 2, and 30 percent in year 3.For purposes of this exercise ignore all expenses other than depreciation.What is the annual depreciation expense for financial reporting purposes?
参考答案B
解析The annual depreciation expense on financial statements will be $2,658 = ($13,289/5 years)
62.
If a company is a lessee and inventory prices and quantities have been increasing, the accounting methods used for new lease diveatment and inventory accounting method, respectively, that are most likely to have understated asset turnover ratios are:
New lease diveatment Inventory accounting method
New lease diveatment Inventory accounting method
参考答案A
解析Asset turnover=net sales/average total net assets.Capital lease results in increase in assets, then lower asset turnover ratios.FIFO results in increase in inventory balance, then increase in assets, then lower assets turnover ratios.
63.
Which one of the following items would most likely result in a permanent difference between pretax financial income and taxable income?
参考答案A
解析Tax credits directly reduce taxes payable.
64.
An analyst is investigating an investment project of Hellet Corporation.The investment project with the same risk as the company has the following expected net cash inflows during year 1 to year 4:
The company’s cost of equity is 12 percent, cost of debt is 7 percent, and weighted average cost of capital is 9 percent, the risk-free rate is 5%.The maximum that the company should be willing to invest in the project is closest to:
The company’s cost of equity is 12 percent, cost of debt is 7 percent, and weighted average cost of capital is 9 percent, the risk-free rate is 5%.The maximum that the company should be willing to invest in the project is closest to:参考答案C
解析WACC=9%, CF1=250,000, CF2=300,000, CF3=35,000, CF.4=325,000, CF0=-982,364.
65.
Selected financial information gathered from Alpha Company and Omega Corporation follows:
Which of the following statements is most accurate?
Which of the following statements is most accurate?参考答案A
解析Using the EBITDA coverage (EBITDA / interest expense) to measure leverage tolerance, Omega has less tolerance for leverage.Omega’s EBITDA coverage is 1.4($79,300 EBITDA / $58,100 interest expense) and Alpha’s EBITDA coverage is 1.6($69,400 EBITDA / $44,000 interest expense).Using the quick ratio to measure liquidity, Alpha is more liquid than Omega.Alpha’s quick ratio is 0.6 ($216,700 quick assets /$361,000 current liabilities) and Omega’s quick ratio is 0.5 ($211,300 quick assets /$404,400 current liabilities).Using EBITDA margin to measure operational efficiency, Alpha is less operationally efficient than Omega.Alpha’s EBITDA margin is 4.2% ($69,400 EBITDA / $1,650,000 revenue) and Omega’s EBITDA margin is 5.5% ($79,300 EBITDA / $1,452,000 revenue).
66.
Which of the following ratios would least likely measure liquidity?
参考答案B
解析ROA = (EBIT / average total assets) which measures management’s ability and efficiency in using the firm’s assets to generate operating profits.Other ratios that measure liquidity (if a company can pay its current bills) besides the quick, cash, and current ratios are the: receivables turnover, inventory turnover, and payables turnover ratios.
67.
Falcon Financial Group is considering the purchase of Company A or Company B based on a low price-to-book investment sdivategy that also considers differences in solvency.Selected financial data for both firms, as of December 31,2009,as follows:
The firms’ financial statement footnotes contain the following:
· Company A values its inventory using the first in, first out (FIFO) method.
· Company B’s inventory is based on the last in, first out (LIFO) method.Had Company B used FIFO, its inventory would have been $700 million higher.
· Company A leases its manufacturing plant.The remaining operating lease payments total $1,600 million.Discounted at 10%, the present value of the remaining payments is $1,000 million.
· Company B owns its manufacturing plant.
To make the firms financials ratios comparable, calculate the adjusted price-to-book ratios for Company A and Company B.
Company A Company B
The firms’ financial statement footnotes contain the following:· Company A values its inventory using the first in, first out (FIFO) method.
· Company B’s inventory is based on the last in, first out (LIFO) method.Had Company B used FIFO, its inventory would have been $700 million higher.
· Company A leases its manufacturing plant.The remaining operating lease payments total $1,600 million.Discounted at 10%, the present value of the remaining payments is $1,000 million.
· Company B owns its manufacturing plant.
To make the firms financials ratios comparable, calculate the adjusted price-to-book ratios for Company A and Company B.
Company A Company B
参考答案B
解析Company A should be adjusted for the operating lease liability and the related assets; however, adding the present value of the lease payments to both assets and liabilities does not change equity (book value).Thus, Company A’s adjusted P/B ratio is 2.17 = [$26 price / ($6,000 million equity / $500 million shares)].Company B’s inventory should be adjusted back to FIFO by adding the LIFO reserve to both assets and equity.Thus, Company B’s P/B ratio is 2.06 = $22.50 / [($7,500 million equity + $700 million LIFO reserve) / 750 million shares].
68.
For a company that needs to borrow the same amount of cash, which of the following statements about the relative impact of issuing interest-bearing debt and zero-coupon bonds on the financial statements is (are) divue?
Zero coupon bonds Interest-bearing debt
I.Cash flow from operations Higher Lower
II.Cash flow from financing Higher Lower
III.Balance sheet liability Higher Lower
Zero coupon bonds Interest-bearing debt
I.Cash flow from operations Higher Lower
II.Cash flow from financing Higher Lower
III.Balance sheet liability Higher Lower
参考答案C
解析Zero-coupon bonds have no interest and therefore produce higher operating cash flows but lower cash flows from financing because the entire repayment of principal is treated as a financing activity.By not paying any interest, zero coupon bonds effectively shift the interest due to the principal, resulting in a higher balance sheet liability than interest-bearing debt.(I) and (Ⅲ) are true.
69.
Compared to a classified board (staggered multiple-year terms), do annual terms for members of a company’s board better serve the interests of the company’s shareowners by providing the Board with:
Flexibility to handle changes in the marketplace? Continuity of expertise?
Flexibility to handle changes in the marketplace? Continuity of expertise?
参考答案C
解析Anything beyond an annual limit on board member tenure (i.e., two- or three-year terms) limits shareowners’ ability to change the board’s composition, in the event that board members fail to represent shareowners’ interests fairly.
While reviewing firm policy regarding election of the board, investors should consider whether:
There are annual elections or staggered multiple-year terms.Staggered board may serve another purpose--to act as a takeover defense.
The board filled a vacant position for a remaining term without shareholder approval.Shareholders can remove a board member.
The board is the proper size for the specific facts and circumstances of the firm.
While reviewing firm policy regarding election of the board, investors should consider whether:
There are annual elections or staggered multiple-year terms.Staggered board may serve another purpose--to act as a takeover defense.
The board filled a vacant position for a remaining term without shareholder approval.Shareholders can remove a board member.
The board is the proper size for the specific facts and circumstances of the firm.
70.
A firm is reviewing an investment opportunity that requires an initial cash outlay of $336,875 and promises to return the following irregular payments:
Year 1: $100,000
Year 2: $82,000
Year 3: $76,000
Year 4: 5111,000
Year 5: $142,000
If the required rate of return for the firm is 8 percent, what is the net present value of the investment?
Year 1: $100,000
Year 2: $82,000
Year 3: $76,000
Year 4: 5111,000
Year 5: $142,000
If the required rate of return for the firm is 8 percent, what is the net present value of the investment?
参考答案C
解析In order to determine the net present value of the investment, given the required rate of return, we can discount each cash flow to its present value, sum the present value, and subtract the required investment.
71.
Given a project with normal cash flows, the point at which the net present value profile intersects the vertical axis is most likely to be the:
参考答案C
解析For a project with normal cash flows, the NPV profile intersects the vertical axis at the point where the discount rate is zero.
72.
An analyst of a company is evaluating the following investment proposals A, B, C that have the same risk as the company:
Which of the following statements about the proposals is most accurate?
Which of the following statements about the proposals is most accurate?参考答案B
解析NPV=0, IRR=WACC.
73.
Which of the following statements about Net Present Value (NPV) and Internal Rate of Return (IRR) is least accurate?
参考答案C
解析For mutually exclusive projects you should use NPV to rank and select projects.
74.
Fiona Acquisition, Inc., is considering the purchase of Kingbet Company.The acquisition would require an initial investment of $190,000, but Fiona’s after-tax net cash flows would increase by $30,000 per year and remain at this new level forever.Assume a cost of capital of 15 percent.Should Fiona take the action to buy Kingbet using above information?
参考答案A
解析Yes, because the NPV = $10,000.This is similar to a perpetuity.
PV=PMT/I=30,000/0.15=200,000
200,000 - 190,000 = 10,000
PV=PMT/I=30,000/0.15=200,000
200,000 - 190,000 = 10,000
75.
Pholep Productions is estimating the weighted average cost of capital (WACC).They have several pieces of data to consider.The firm pays 60 percent of its earnings out in dividends.The return on equity (ROE) is 16 percent.Last year’s earnings were $4.00 per share and the dividend was just paid to shareholders.The current price of shares is $35.00.If the firm must issue new shares of common stock, they must pay a flotation cost to the investment bankers of 6 percent.The firm’s optimal capital sdivucture includes 10 percent preferred stock, 40 percent debt and 50 percent equity.They can sell additional bonds at a rate of 9 percent.The cost of issuing new preferred stock is 13 percent.The firm’s marginal tax rate is 40 percent.Pholep Productions’ weighted average cost of capital (WACC) using retained earnings is closest to:
参考答案C
解析ROE × retention ratio = growth rate.16% × (1 - 0.60) = 6.4%.
D0 = $4.00 × 0.60 = $2.40.
Ke = [$2.40 × (1.064) / $35.00] + 0.064 = 13.7%.
WACC = 0.4x (9%) × (1-0.40) + 0.1 ×(13%) + 0.5 × (13.7%) = 10.31%.
D0 = $4.00 × 0.60 = $2.40.
Ke = [$2.40 × (1.064) / $35.00] + 0.064 = 13.7%.
WACC = 0.4x (9%) × (1-0.40) + 0.1 ×(13%) + 0.5 × (13.7%) = 10.31%.
76.
A company is evaluating the following three capital projects that have the same risk as the company:
If the company accepts each project, the actual cash flows associated with each project are received as expected, and the company’s weighted average cost of capital remains unchanged over the life of each project, the project that is most likely to exactly earn its estimated internal rate of return is project:
If the company accepts each project, the actual cash flows associated with each project are received as expected, and the company’s weighted average cost of capital remains unchanged over the life of each project, the project that is most likely to exactly earn its estimated internal rate of return is project:参考答案C
解析When WACC equals to IRR, the estimated net present value will be zero.
77.
An analyst does research about relationship between marginal cost of capital schedule and investment opportunity schedule.As a company continues to raise additional capital and invests in additional capital investment projects, is that company likely to experience an upward sloping:
marginal cost of capital schedule? investment opportunity schedule?
marginal cost of capital schedule? investment opportunity schedule?
参考答案B
解析Additional raising capital has positive relationship with marginal cost of capital scheduleand a negative relationship with investment opportunity schedule (IRR).
78.
Barap.Co has 2 million shares outstanding and this year’s earnings are $4 million.The company decides to repurchase shares in the open market.Barap’s current share price is $40.If Barap uses $20 million idle cash to repurchase shares at the market price, the company’s EPS will be closest to:
参考答案C
解析At the price of $40 per share, 500,000 ($20 million/S40) shares can be repurchased.The company would then has 1,500,000 (2 million - 0.5 million) shares outstanding after the repurchase.EPS after the buyback will be $2.67 ($4 million/1.5 million).
79.
An analyst gathered the following information about a company and that company’s common stock:
The company’s investment projects for the year are expected to return 17 to 20 percent.Which of the following best characterizes the company and the company’s common stock?
The company’s investment projects for the year are expected to return 17 to 20 percent.Which of the following best characterizes the company and the company’s common stock?参考答案B
解析Investment return from 17% - 20% is more than WACC 15% indicates that it is a growth company.
The market price per share is more than its intrinsic value per share indicates that it is a speculative stock.
The market price per share is more than its intrinsic value per share indicates that it is a speculative stock.
80.
Which of the following system adopts a three-tier classification system:
参考答案A
解析The Russell system uses a three-tier classification system; while the other two use four-tier systems.
81.
An investor opens a margin account with an initial deposit of $5,000.He then purchases 200 shares of PRK stock at $46 in his margin account, which has a margin maintenance requirement of 25 percent.Ignoring commissions and interest, the minimum price that PRK stock can fall to before the investor receives a margin call is closest to:
参考答案C
解析Determine the price (P) that is equal to 25 percent: (200P-4200)/200P=0.25, P=$28.00.
82.
Davis Company, Inc.(DCI) earned $5 a share last year and paid dividend of $2 a share.The company is expected to grow by 8 percent annually and continue its payout ratio for the foreseeable future.An investor with a 11 percent required return expects to sell the stock at $75 two years from now.The maximum amount that an investor should be willing to pay for DCI stock today is closest to:
参考答案B
解析The holding period is two years.The value of the stock is
83.
An analyst gathered the following information from a company’s most recent financial statements (U.S.$ in millions):
The analyst also determined that the company uses the LIFO inventory method, but most companies in the indusdivy use the FIFO method.The footnotes to the financial statements indicate that if the company had used the FIFO method, the inventory balance would have been $45 million higher than the amount reported on the company’s most recent financial statements.If the company’s common stock is currently selling for $59 per share, the most appropriate price to book value ratio to use in valuing the company is:
The analyst also determined that the company uses the LIFO inventory method, but most companies in the indusdivy use the FIFO method.The footnotes to the financial statements indicate that if the company had used the FIFO method, the inventory balance would have been $45 million higher than the amount reported on the company’s most recent financial statements.If the company’s common stock is currently selling for $59 per share, the most appropriate price to book value ratio to use in valuing the company is:参考答案C
解析The book value of common equity is $325-40 in preferred stock+ an inventory adjustment of 45*(1-40%) = 27 for adjusted common equity of $312 million.The inventory adjustment must be tax affected because although cost of goods sold would be reduced by $45 million only (l-T) or 60% would be added to retained earnings.
The price to book rate is $59/$31.20=1.89.
The price to book rate is $59/$31.20=1.89.
84.
Which of the following statements about a stock market series is least accurate?
参考答案C
解析If the growth rate of dividends for stocks in an index increases, the P/E ratio should increase since k-g is in the denominator of the P/E ratio.
85.
An analyst gathered the following information about a perpetual preferred stock:
The current risk-free rate of return is 2 percent.The perpetual preferred stock is most appropriately described as being:
The current risk-free rate of return is 2 percent.The perpetual preferred stock is most appropriately described as being:参考答案A
解析
,
,
86.
An analyst gathered the following information about Fuzzy Corporation on 2009:
The expected dividend payout ratio and the leading price/earnings (P/E) ratio, respectively, are closest to:
Expected dividend payout ratio Leading P/E ratio
The expected dividend payout ratio and the leading price/earnings (P/E) ratio, respectively, are closest to:Expected dividend payout ratio Leading P/E ratio
参考答案C
解析
, 
,
87.
An analyst gathered the following information about a company:
The company’s potential (sustainable) growth rate is closest to:
The company’s potential (sustainable) growth rate is closest to:参考答案C
解析
88.
Which of the following statements concerning indusdivy analysis is least accurate?
参考答案C
解析During the mature growth phase of the industry life cycle, sales growth is above the average growth rate of the economy, but sales growth is no longer accelerating.
89.
Which of the following statements concerning security valuation is least accurate?
参考答案B
解析A stock with a dividend last year of $3.25 per share, an expected dividend growth rate of3.5%, and a required return of 12.5% is estimated to be worth $37.33 using the DDM where P0=D1 / (K-g).We are given D0=$3.25, g=3.5%, and k = 12.5% What we need to find is D1 which equals D0 × (1+g), therefore D1=$3.25×1.035=$3.36; thus P0=3.36 / (0.125 - 0.035)= $37.33
In the answer choice where the stock value is $18.70, discounting the future cash flows back to the present gives the present value of the stock; the future cash flows are the dividend in year 1 plus the dividend and value of the stock in year 2 thus the equation becomes:
For preferred stock with a perpetual dividend
.
In the answer choice where the stock value is $18.70, discounting the future cash flows back to the present gives the present value of the stock; the future cash flows are the dividend in year 1 plus the dividend and value of the stock in year 2 thus the equation becomes:
For preferred stock with a perpetual dividend
.
90.
An analyst gathered the following annual data for SMG Corporation on 2008:
The SMG Corporation’s estimated dividend growth rate is closest to:
The SMG Corporation’s estimated dividend growth rate is closest to:参考答案B
解析
91.
An analyst gathered the following information about a futures market condivact:
If no funds are withdrawn and margin calls are met at the beginning of the next day, the ending balance on Day 3 for an investor with a long position of 10 condivacts is closest to:
If no funds are withdrawn and margin calls are met at the beginning of the next day, the ending balance on Day 3 for an investor with a long position of 10 condivacts is closest to:参考答案C
解析
92.
An investor buys a stock at $90 and also buys a put option on the stock with a put price of $4 and having an exercise price of $80.At expiration of the put option, the stock price has fallen to $60.The loss for the investor’s position would be:
参考答案B
解析The put cost is $4 and the unprotected loss on the stock is $10.The loss for the investor is $14.
93.
What is the most likely effect of an increase in volatility on the price of a:
Call option? Put option?
Call option? Put option?
参考答案C
解析Higher volatility increases call and put option prices because it increases both the possible underlying upside and downside values.
94.
The following information relates to an investor’s positioning the futures market:
If the investor deposited enough funds to just meet the initial margin requirement, the amount of funds that the investor would be required to deposit on Day 2 is closest to:
If the investor deposited enough funds to just meet the initial margin requirement, the amount of funds that the investor would be required to deposit on Day 2 is closest to:参考答案C
解析The initial margin required was $4.5*10 contracts or $45.A loss of $2.5 per contract on Day 1 would deplete the margin to $20 is below the required maintenance margin of $25, the investor must deposit enough to bring the balance back to $ 45.The investor must deposit $25 on Day 2.
95.
Which of the following statements regarding the seller of a call and a put is divue? A call writer:
参考答案C
解析This question is really asking about “moneyness,” (which is usually thought of from the option buyer’s perspective) from the option writer’s (or seller’s) perspective.In general, the writer prefers that the buyer not exercise, because the writer’s gain is limited to the premium while the potential loss may be unlimited (in the case of a call).Thus, the moneyness for the seller is opposite that of the buyer.
For a call, the seller’s potential loss is unlimited.Since the buyer will likely exercise when the call option is in-the-money, or when the Stock price (S) exceeds the Strike Price (X), the seller expects the opposite, or that the stock price will remain below the strike price.(Or he would not have written the call.)
For a put, the seller’s potential loss is the Strike Price minus the premium.Since the buyer will likely exercise when the put option is in-the-money, or when X> S, the seller expects the opposite, or that the stock price will remain above the strike price.(Or he would not have written the put.)
For a call, the seller’s potential loss is unlimited.Since the buyer will likely exercise when the call option is in-the-money, or when the Stock price (S) exceeds the Strike Price (X), the seller expects the opposite, or that the stock price will remain below the strike price.(Or he would not have written the call.)
For a put, the seller’s potential loss is the Strike Price minus the premium.Since the buyer will likely exercise when the put option is in-the-money, or when X> S, the seller expects the opposite, or that the stock price will remain above the strike price.(Or he would not have written the put.)
96.
TDK commercial bank makes an adjusdiv rate mortgage for a big consdivuction customer.Which of the following would be an appropriate position for the bank to hedge its risk with this loan? TDK should pay:
参考答案C
解析There is no problem for the bank with respect to currencies and, therefore, this should not be a currency swap.The bank’s problem is that as interest rates decrease, the bank’s interest income declines.To offset this loss (to hedge), the bank needs to win in the swap as interest rates decrease.Therefore, the bank should pay variable and receive fixed in an interest rate swap.The bank has essentially swapped floating rate payments into fixed rate payments.
97.
For an option-free bond, if yields increase by 200 basis points, the parts of the total estimated percentage price change adivivibudiv to duration and the convexity adjustment, respectively, will most likely be:
Part of the total estimated Part of the total estimated percentage price
percentage price change change adivivibudiv to the convexity
adivivibudiv to duration adjustment
Part of the total estimated Part of the total estimated percentage price
percentage price change change adivivibudiv to the convexity
adivivibudiv to duration adjustment
参考答案A
解析The total estimated price change for the bond is composed of the estimation based on the convexity.An option-free bond will exhibit positive convexity (gains will be greater than losses given a change in yields) making the reduction price less than that implied by duration alone.
98.
Which of the following statements about option-adjusted spread and nominal spread is most accurate?
参考答案C
解析The longer the deferral period, the lower the value of the call option: the longer the deferment period ,the nominal spread and option adjusted spread will be closer.
99.
An analyst gathered the following information:
For the tax-exempt security, the investor’s tax-equivalent yield is closest to:
For the tax-exempt security, the investor’s tax-equivalent yield is closest to:参考答案B
解析5.7%/(1-35%) = 8.8%。
100.
Do measures that take into account how the expected cash flows from a bond may change as yields change include:
Modified duration? Modified convexity?
Modified duration? Modified convexity?
参考答案A
解析Effective duration and effective convexity consider the effect of changes in expected cash flows as yields change; modified duration and modified convexity assume that expected cash flows do not change as yields change.
101.
An analyst gathered the following information about a bond:
The bond’s yield to call is closest to:
The bond’s yield to call is closest to:参考答案C
解析Present value = -$975, Future value =$1,156, Payment=$75, N=6,I= 10.0927% × 2=20.1855%
102.
Which of the following will most likely have the least impact on a corporate bond rating?
参考答案C
解析Issuing company’s volume of gross revenue.The size of the issuing firm, represented by the amount of sales, will play a role in the financial stability of the firm.However, the other choices, liquidity, leverage and guarantee provisions are more directly related to the bond’s rating.
103.
A five-year bond with an 8.00 percent semiannual coupon currently divades at 102.345 percent of a par value of $1,000.Which of the following is closest to the current yield on the bond?
参考答案C
解析The current yield is computed as: (Annual Cash Coupon Payment)/(Current Bond Price).The annual coupon is: ($1,000) × (0.08) = $80.The current yield is then: ($80)/($1,023.45) = 0.0782 = 7.82%.
104.
If interest rate falls, which of the following statements is divue?
参考答案A
解析Callable bond’s price rises more slowly than that of a noncallable but otherwise identical bond.
105.
If a 15-year, $1,000 U.S.semiannually zero-coupon bond is priced to yield 10 percent, what is its market price?
参考答案C
解析N = 30, I/Y = 5, PMT = 0, FV = 1,000, CPT PV=$231.38.
106.
At 1 January, 2009, an option-free 8 percent annual coupon bond, with 10 years to maturity and a par value of $1,000, had a discount rate of 9 percent.On 1 January 2010, the discount rate had decreased to 8.5 percent because of an upgrade in the bond’s rating.If interest is paid annually, the portions of the bond’s price change from 2009 to 2010 adivivibudiv to the passage of time and the rating upgrade respectively, are closest to:
Passage of time Rating upgrade
Passage of time Rating upgrade
参考答案C
解析2009.1.1 N=10, PMT=80, FV=1000, I/Y=9→PV=935.82;
2010.1.1 not considering rating upgrade, N=9, PMT=80, FV=1000, I/Y=9→PV=940.05;
2010.1.1 considering rating upgrade, N=9, PMT--80, FV=1000, I/Y=8.5→PV=969.40;
Passage of time = 940.05-935.82=4.23
Rating upgrade = 969.40-940.05=29.35
2010.1.1 not considering rating upgrade, N=9, PMT=80, FV=1000, I/Y=9→PV=940.05;
2010.1.1 considering rating upgrade, N=9, PMT--80, FV=1000, I/Y=8.5→PV=969.40;
Passage of time = 940.05-935.82=4.23
Rating upgrade = 969.40-940.05=29.35
107.
The concept that forward rates reflect investors’ expectations of future rates plus a liquidity premium to compensate them for exposure to interest rate risk is associated with which of the following explanations of the term sdivucture of interest rates?
参考答案A
解析The pure expectations hypothesis suggests that forward rates are solely a function of expected future spot rates.This theory implies that an investor could earn the same return by investing in a one-year bond or by sequentially investing in two six-month bonds.
The liquidity preference theory proposes that forward rates reflect investors’ expectations of future rates plus a liquidity premium to compensate them for exposure to interest rate risk.This theory suggests that the liquidity premium is positively related to maturity.
The market segmentation theory proposes that lenders and borrowers have preferred maturity ranges.This theory relies on the idea that some investors have restrictions (either legal or practical) on their maturity structure.
The liquidity preference theory proposes that forward rates reflect investors’ expectations of future rates plus a liquidity premium to compensate them for exposure to interest rate risk.This theory suggests that the liquidity premium is positively related to maturity.
The market segmentation theory proposes that lenders and borrowers have preferred maturity ranges.This theory relies on the idea that some investors have restrictions (either legal or practical) on their maturity structure.
108.
Consider a corporate bond with a yield of 6.8% and a municipal bond (with equivalent risk) with a 4.9% yield.Which of the following statements is most accurate?
参考答案C
解析An investor with a marginal tax rate of 28% has a tax-equivalent yield on the municipal bond of 6.8% and is, therefore, indifferent between the two bonds (of equivalent risk).As the marginal tax rate increases, the investor will prefer the municipal bond to the corporate bond.Note that with a marginal tax rate of 35%, the tax-equivalent yield for the municipal bond would be 4.9/(1 - 0.35), or 7.54%.
109.
Hedge funds that contain infrequently divaded assets would most likely exhibit a downward bias with respect to:
参考答案C
解析The presence of infrequently traded assets leads to smoothed pricing that induces a significant downward bias to the measured risk of the assets as well as the correlations of returns with conventional equity and fixed income returns.
110.
Venture capital investments used to provide capital for companies initiating commercial manufacturing and sales are most likely to be considered a forma of :
参考答案A
解析Venture capital investments provided to initiate commercial manufacturing sales is considered a forma of first-stage financing.
111.
Which classification of hedge funds is least likely to use a short position in stock as a part of its sdivategy?
参考答案C
解析Emerging-market funds invest in less liquid and less efficient assets of emerging markets that are difficult to short.
112.
An investor gathered the following information about a real estate investment:
The investment’s net present value (NPV) and yield to an equity investor respectively are best described as being:
Investment’s NPV Investment’s yield to an equity investor
The investment’s net present value (NPV) and yield to an equity investor respectively are best described as being:Investment’s NPV Investment’s yield to an equity investor
参考答案C
解析NPV = -800,000*(1-80%)+156,000 = -4,000<0.
So when the required rate of return equals to 15%, the NPV is negative.And the yield to an equity investor would be less than the required rate of return.
So when the required rate of return equals to 15%, the NPV is negative.And the yield to an equity investor would be less than the required rate of return.
113.
A typical hedge fund fee sdivucture is least likely to include a:
参考答案B
解析B is correct because the fee structure can include a base fee and “high water mark” but not a negative performance fee.The lowest performance fee would be zero.
114.
Does divading take place only once a day at closing market prices in the case of:
Exchange divaded funds? Traditional mutual funds?
Exchange divaded funds? Traditional mutual funds?
参考答案B
解析B is correct.One of the advantages of ETFs is that trading takes place continuously throughout the trading day.Traditional mutual funds trade once a day at closing market values.
115.
With respect to the security market line, if two risky assets have the same covariance with the market portfolio but have different estimated rates of return, the most accurate conclusion is that the two risky assets have:
参考答案C
解析Beta is the covariance of an asset with the market portfolio divided by the variance of the market portfolio.The variance of the market portfolio is the same for all assets, so if the covariance with the market portfolio is the same, the assets must have the same beta (amount of systematic risk), should plot at the same place on the SML, and have the same required rate of return, if the estimated rates of return for the two assets are different, at least one of them is not properly valued and will not plot on the SML.
116.
An analyst is checking the information from his two clients William and Robert.William has been retired and is primarily concerned with achieving an investment return no less than the rate of inflation.Jules York is just in this mid-age and primarily concerned with his portfolio long term prospects setting a proper balance between capital gains and current income.Which of the following investment objectives is most appropriate for William and Robert, respectively?
William Robert
William Robert
参考答案B
解析Capital preservation is the objective of earning a return on an investment that is at least equal to the inflation rate.Total return is the objective of having a portfolio grow in value to meet a future need through both capital gains and the reinvestment of current income.
117.
Which of the following has the greatest liquidity needs on average?
参考答案C
解析Although investment companies and non-life insurance companies have high liquidity needs, banks have the greatest liquidity needs on average.
118.
An analyst is investigating the security market line (SML).Given no major changes in asset risk characteristics, which of the following changes is most likely to be associated with an increase in the slope of the security market line?
参考答案C
解析Changes in the slope of the SML demonstrate a change in the attitudes of investors towards risk.
119.
Which of the following is not a characteristic of a portfolio located on the efficient frontier?
参考答案B
解析Note that A, as well as C are true.If a portfolio offers the highest possible return for a given standard deviation, it also offers the maximum return for that level of standard deviation squared.
120.
An analyst wants to determine whether Dover Holdings is overvalued or undervalued, and by how much (expressed as percentage return).The analyst gathers the following information on the stock:
· Market standard deviation = 0.70
· Covariance of Dover with the market = 0.85
· Dover’s current stock price (P0) = $35.00
· The expected price in one year (P1) is $39.00
· Expected annual dividend = $1.50
· 3-month Treasury bill yield = 4.50%
· Historical average S&P 500 return = 12.0%
Dover Holdings stock is:
· Market standard deviation = 0.70
· Covariance of Dover with the market = 0.85
· Dover’s current stock price (P0) = $35.00
· The expected price in one year (P1) is $39.00
· Expected annual dividend = $1.50
· 3-month Treasury bill yield = 4.50%
· Historical average S&P 500 return = 12.0%
Dover Holdings stock is:
参考答案C
解析To determine whether a stock is overvalued or undervalued, we need to compare the expected return (or holding period return) and the required return (from Capital Asset Pricing Model, or CAPM).
Step 1: Calculate Expected Return (Holding period return)
The formula for the (one-year) holding period return is:
HPR = (D1+S1-S0)/S0, where D = dividend and S = stock price.
Here, HPR = (1.50+39-35)/35 = 15.71%
Step 2: Calculate Required Return
The formula for the required return is from the CAPM: RR = R1+ (ERM-R1) ×Beta
Here, we are given the information we need except for Beta.Remember that Beta can be calculated with: Betastock =
.Here we are given the numerator and the denominator, so the calculation is: 0.85/0.702=1.73.RR=4.50 %+(12.0-4.50%)×1.73=17.48%
Step 3: Determine over/under valuation
The required return is greater than the expected return, so the security is overvalued.The amount = 17.48% - 15.71% = 1.77%.
Step 1: Calculate Expected Return (Holding period return)
The formula for the (one-year) holding period return is:
HPR = (D1+S1-S0)/S0, where D = dividend and S = stock price.
Here, HPR = (1.50+39-35)/35 = 15.71%
Step 2: Calculate Required Return
The formula for the required return is from the CAPM: RR = R1+ (ERM-R1) ×Beta
Here, we are given the information we need except for Beta.Remember that Beta can be calculated with: Betastock =
.Here we are given the numerator and the denominator, so the calculation is: 0.85/0.702=1.73.RR=4.50 %+(12.0-4.50%)×1.73=17.48%Step 3: Determine over/under valuation
The required return is greater than the expected return, so the security is overvalued.The amount = 17.48% - 15.71% = 1.77%.