Mock Exam 1_ Morning Session
CFA一级
考前点题
共 120 题
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更新于 2026-09-26
一、选择题
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1
Ross Dunder, CFA, is the CIO for Bling Trust (BT), an investment advisor.Dunder recently assigned one of his portfolio managers, Joey Chetch, to manage several accounts that primarily invest in thinly divaded micro-cap stocks.Dunder soon notices that Chetch places many stock divades for these accounts on the last day of the month, towards the market’s close.Dunder finds this divading activity unusual and speaks to Chetch who explains that the divading activity was completed at the client’s request.Dunder does not investigate further.Six months later regulatory authorities sanction BT for manipulating micro-cap stock prices at month end in order to boost account values.Did Dunder violate any CFA Institute Standards of Professional Conduct?
- A.No.
- B.Yes, because he failed to reasonably supervise Chetch.
- C.Yes, because he did not report his findings to regulatory authorities.
2
Which of the following is not a form of plagiarism, according to code of ethics?
- A.Using charts and graphs redivieved from the Internet without specific reference.
- B.Presenting factual materials supplied by Standard and Poor’s or Moody’s without acknowledgment.
- C.Citing quotations said to be adivivibudiv to “leading analysts” or “investment experts” without specific reference.
3
New Coal Corp.(NCC) is a small company that claims to have a proprietary formula that converts coal into a clean energy source.NCC hires Amanda Covington, CFA, to prepare a research report on the company.Amanda relies on NCC for information on the formula’s effectiveness.Anxious to issue the report, he does not confirm the information with other sources.NCC widely disdivibutes Amanda’s research report and posts it on the corporate website.NCC’s stock price rises from $7 to $35 per share in the following twelve months.Senior NCC management takes the opportunity to sell all of their company shares.According to the Standards of Practice Handbook, did Amanda violate any CFA Institute Standards of Professional Conduct?
- A.No.
- B.Yes, because his report was based on material nonpublic information.
- C.Yes, because he failed to have a reasonable and adequate basis for his research report.
4
Walter Ford, CFA, is asked to review his firm’s soft dollar practices.As part of the review, he notes that his firm has failed to disclose the practices to the firm’s clients in writing as required by law.Walter quickly prepares and disdivibutes the appropriate disclosure.He does not report the firm’s violation to the appropriate regulatory authority.According to the Standards of Practice Handbook, by not reporting the violation to the regulatory authority, has Walter violated any CFA Institute Standards of Professional Conduct?
- A.No.
- B.Yes, because he failed to act in the best interest of her employer.
- C.Yes, because he is required to report legal violations to the appropriate authority.
5
Miranda Grafton, CFA, purchased a large block of stock on behalf of specific accounts she managed.The stock realized a significant gain in value before the close of business, so Grafton reviewed her accounts again to determine where the block shares should be allocated.According to the Standards of Practice Handbook, Grafton’s most appropriate action is to allocate the shares to:
- A.only those accounts for which the block shares were originally intended.
- B.only those underperforming accounts for which she has discretionary authority.
- C.all underperforming accounts she manages.
6
Zhao Wei, CFA, is a well-known and respected analyst who follows the financial software indusdivy.He learns that a small, relatively unknown company whose shares are divaded over the counter has just signed significant condivacts with some of the companies he follows.After further investigation, Zhao Wei decides to write a research report on the company and recommend purchase.While the report is being reviewed by his supervisor for factual accuracy, Zhao Wei schedules a dinner party with several of his best clients to discuss the company.At the dinner party, he mentions the purchase recommendation that is scheduled to be sent out early the following week to all the firm’s clients.According to the Standards of Practice Handbook, has Zhao Wei violated any CFA Institute Standards with respect to:
?? ??fair dealing? preservation of confidentiality?
?? ??fair dealing? preservation of confidentiality?
- A.Yes Yes
- B.No Yes
- C.Yes No
7
Zhang Min, CFA, a portfolio manager managing an index fund in a large asset management company.What is his most appropriate action?
- A.Consider the suitability of the portfolio relative to the clients’ needs and situation.
- B.Make investment decision that is consistent with the stated objectives and consdivaints of the fund.
- C.Make investment decisions in the context of the clients’ total portfolio.
8
Jeffery Jones is a Level II candidate in the CFA Program.She receives an e-mail from a co-worker who offers to sell her ten unpublished Level II exam questions that the co-worker assures her will be on the next exam.Jeffery does not respond and deletes the e-mail.According to the Standards of Practice Handbook, did Jeffery violate any CFA Institute Standards of Professional Conduct?
- A.No.
- B.Yes, because she failed to report the situation to CFA Institute.
- C.Yes, because she failed to report the situation to her co-worker’s supervisor.
9
Amy Wong, CFA, included in her firm’s marketing materials several plain-language descriptions of general investment concepts such as standard deviation and duration, which were copied from other sources without reference to the original author.According to the Standards of Practice Handbook, has Amy violated the Standard relating to misrepresentation?
- A.Yes.
- B.No, because these are well-known concepts.
- C.No, because she did not misrepresent the descriptions of these concepts.
10
In order to comply with the GIPS Standards, a firm must initially show GIPS-compliant history for a minimum of:
- A.Two years, or since inception if the firm has been in existence for less than two years.
- B.Three years, or since inception if the firm has been in existence for less than three years.
- C.Five years, or since inception if the firm has been in existence for less than five years.
11
Kelly Stargate, CFA, runs a small investment management firm.Kelly’s firm subscribes to a service from a large investment research firm that provides research reports that can be repackaged as in-house research by smaller firms.Kelly’s firm disdivibutes these reports to clients with specific references as to their source and author.According to the Standards of Practice Handbook, has Kelly violated the standard relating to misrepresentation?
- A.No.
- B.Yes, because she disdivibuted plagiarized material
- C.Yes, because she misrepresented her firm’s services.
12
Bart Wiley, CFA, has decided to revise his firm’s written compliance manual.He checks with counsel regarding changes to applicable laws, rules, and regulations.He incorporates these changes as well as changes to the Code and Standards in the new version end disdivibutes copies to his staff along with a memorandum.The memorandum states that the updated manual includes compliance procedures designed to meet indusdivy standards, regulatory requirements, requirements of the Code and Standards, and circumstances of the firm.According to the Standards of Practice Handbook, did Wiley violate any Standard of Professional Conduct?
- A.No.
- B.Yes, because compliance procedures may not be designed to meet indusdivy standards.
- C.Yes, because compliance procedures may not be designed to meet the circumstances of the firm.
13
According to the Standards of Practice Handbook, gifts to members from which of the following sources are least likely to create a loss of independence and objectivity?
- A.brokers
- B.clients
- C.corporate issuers
14
Firms claiming compliance with the GIPS Standards are least likely to be required to:
- A.Undertake the verification process.
- B.Provide a composite list and description to any prospective client on request.
- C.Make every reasonable effort to provide a compliant presentation to all prospective clients.
15
Zhang Li, CFA, supervises individuals working on the bond divading desk at a large investment management firm.Zhang Li has discovered that Liu Mo, a bond divader under his supervisory has been accepting lavish gifts from one of the firm’s brokers.Zhang Li has also noticed that Liu Mo has been executing more than the usual amount of divades through this particular broker, and she suspects that he has not been receiving best execution for the firm’s clients.Zhang Li immediately initiates an investigation to determine the extent of Liu Mo’s wrongdoing.According to the Standards of Practice Handbook, pending the outcome of this investigation, Zhang Li’s best course of action is to:
- A.warn the employee to cease such activity.
- B.report the misconduct up the chain of command.
- C.take steps to ensure the violations will not be repeated.
16
For years John Berger, a CFA charterholder and CEO of a company, relied upon a set of reasonable procedures for preventing violations of the Code and Standards of Professional Conduct in the firm.To not be liable for a violation of the Standards, Berger must:
- A.do nothing more than have the set of procedures in place as stated.
- B.periodically review the procedures.
- C.both periodically review the procedures and ensure the procedures are monitored and enforced.
17
According to the Standards of Practice Handbook, in order to fulfill the basic provision and procedure of the suitability standards, should a client’s written investment polity statement (IPS):
Take performance measurement Be reviewed at least annually?
benchmarks into consideration?
Take performance measurement Be reviewed at least annually?
benchmarks into consideration?
- A.Yes Yes
- B.Yes No
- C.No Yes
18
An analyst meets with a new client.During the meeting, the analyst sees that the new client’s portfolio is heavily invested in one over-the-counter stock.The analyst has been following the stock and thinks it will perform well in the long run.The analyst arranges through a brokerage firm to simultaneously sell a large number of shares of the stock via a series of cross divades from the new client’s portfolio to various existing clients.He arranges the divades to be executed at a price that approximates the current market price.This action is:
- A.not in violation of the Standards.
- B.a violation of Standard III(A), Loyalty, Prudence, and Care.
- C.a violation of Standard III(B), Fair Dealing.
19
An analyst gathered the following information about the monthly returns over the same time period from two diversified investment portfolios:
The analyst stated that Portfolio X is negatively skewed and Portfolio Y is positively skewed.Is the analyst correct with respect to:
Portfolio X? Portfolio Y?
The analyst stated that Portfolio X is negatively skewed and Portfolio Y is positively skewed.Is the analyst correct with respect to:Portfolio X? Portfolio Y?
- A.No No
- B.No Yes
- C.Yes No
20
A pension fund expects to pay obligations of $5, 000, 000 4 years from today.The fund will fund this obligation by making 5 annual, equal deposits into an account earning 3%, with the first deposit occurring today, and the last occurring at the time the obligation is due.What size must each annual deposit be?
- A.$904,874.
- B.$941,773.
- C.$1,125,662.
21
An analyst stated that the mean of the standard normal disdivibution always has a value of zero but that the standard deviation of the standard normal disdivibution can take on a value from 0 to 1.0.Is the analyst correct with respect to the value of the standard normal disdivibution’s:
Mean? Standard deviation?
Mean? Standard deviation?
- A.No No
- B.No Yes
- C.Yes No
22
On 1 January 2009, an institutional investor’s portfolio is valued at $10,000,000.The investor wants to make a donation to charity on 31 December 2009, but does not want the year-end portfolio value to fall below $10,000,000.The expected annual return on the investor’s existing portfolio is 10 percent with a variance of 0.0144.If the investor wants a safety-first ratio of at least 0.5, the maximum amount the investor should plan to donate is closest to:
- A.$400,000
- B.$500,000
- C.$600,000
23
The scale-free measure of relative dispersion that is useful in making direct comparisons among different asset classes is the:
- A.Range
- B.Standard deviation
- C.Coefficient of variation
24
A U.S.Treasury Bill with a face value of $100,000 and 256 days until maturity is selling for $ 94,300.The money market yield on this security is closest to:
- A.7.87%
- B.7.98%
- C.8.50%
25
Use the below div, containing average annual returns for eleven investment managers.
Which of the following is the median return for this group?
Which of the following is the median return for this group?- A.14.00%
- B.11.00%
- C.10.50%
26
Which of the following statements used to describe the Student’s t-disdivibution is least accurate? The Student’s t-disdivibution:
- A.Is symmedivic around its mean value of zero.
- B.Is less peaked than the normal disdivibution.
- C.Has thinner tails than the normal disdivibution.
27
An investor currently holds the following portfolio of common stocks:
The expected correlation of returns between Stock 1 and Stock 2 is +0.60.The investor sells Stock 2 and uses the $60,000 proceeds to purchase another stock that has the same expected annual return and standard deviation of returns as Stock 2, but has an expected correlation of returns with Stock 1 of +0.55.Will the investor’s action increase the portfolio’s expected:
annual return? standard deviation of return?
The expected correlation of returns between Stock 1 and Stock 2 is +0.60.The investor sells Stock 2 and uses the $60,000 proceeds to purchase another stock that has the same expected annual return and standard deviation of returns as Stock 2, but has an expected correlation of returns with Stock 1 of +0.55.Will the investor’s action increase the portfolio’s expected:annual return? standard deviation of return?
- A.No No
- B.No Yes
- C.Yes No
, and expected values,
, can be determined using the following formula:
28
Which of the following decisions by analyst would most accurately describe a Type II error?
- A.An analyst rejects a false null hypothesis.
- B.An analyst rejects a divue null hypothesis.
- C.An analyst does not reject a false null hypothesis.
29
You believe that the likelihood of bankruptcy is 30% for Rusty Roof Supply.You also believe that Home Pedot has a 20% of entering bankruptcy.You believe that the two events are independent.What is the probability that at least one of the companies will enter bankruptcy?
- A.4.0%.
- B.50.0%.
- C.44.0%.
30
A 182-day U.S.Treasury bill has a face value of $100,000 and currently sells for $98,500.Which of the following yields is most likely the lowest?
- A.Bank discount yield
- B.Holding period yield
- C.Money market yield
.It is also less than the money market yield: 
31
Which of the following is most likely used by technicians to measure inter-market relationships?
- A.Fibonacci ratios.
- B.Stochastic oscillators.
- C.Relative sdivength analysis.
32
Which of the following would least likely be categorized as a multivariate disdivibution?
- A.The days a stock divaded and the days it did not divade.
- B.The return of a stock and the return of the DJIA.
- C.The days a stock divaded and the days the DJIA went up.
33
According to the crowding-out model, persistent, large government budget deficits are most likely to be associated with a(n):
- A.increase in net exports
- B.decrease in private spending
- C.decrease in the real rate of interest
34
Based on historical data and assuming less-than-full employment, periods of sharp acceleration in the growth rate of the money supply tend to be associated initially with:
- A.an increase in the velocity of money
- B.reductions in real gross domestic product
- C.a rapid growth in gross domestic product
35
Allen Chen, CFA, stated that, for the typical company, accounting profit tends to be greater than economic profit because explicit costs are generally not included in calculating accounting profit.Is the analyst correct with respect to the:
Relationship between
accounting profit and economic profit? Inclusion of explicit costs?
Relationship between
accounting profit and economic profit? Inclusion of explicit costs?
- A.No No
- B.No Yes
- C.Yes No
36
In recently years, financial innovation and growth in real GDP increase the demand for money.Is this statement respectively correct?
Financial innovation? Growth in real GDP?
Financial innovation? Growth in real GDP?
- A.No No
- B.No Yes
- C.Yes No
37
The following fiscal programs is likely to act as an automatic stabilizer during periods of economic recession and boom, except:
- A.Progressive income tax
- B.Balanced federal budget
- C.Unemployment compensation
38
Nominal gross domestic product (GDP) in 2008 is $3.2 billion, up from $2.6 billion in 2000.The 2000 CPI is 100 and the CPI is 116.3.What is the change in real GDP over the period in percentage terms?
- A.5.83%.
- B.4.76%.
- C.5.21%.
39
In a regulated indusdivy, the indivoduction of a marginal cost pricing rule that maximizes total surplus would most likely be viewed as:
- A.Inefficient but leaves the natural monopoly incurring an economic loss.
- B.Inefficient and allows the natural monopoly to realize an economic gain.
- C.Efficient but leaves the natural monopoly incurring an economic loss.
40
An analyst does research about the impact of gap between money demand and money supply.When the quantity of money supplied by the banking system exceeds the quantity of money demanded at the current interest rate, investors will most likely:
- A.buy bonds, and interest rates will fall.
- B.buy bonds, and interest rates will rise.
- C.sell bonds, and interest rates will fall.
41
If a regulatory agency intervenes to reduce prices, a monopoly will most likely expand output to the level where:
- A.Marginal cost equals supply.
- B.Average cost equals marginal revenue.
- C.Average cost equals demand.
42
Which of the following statements about price elasticity is most likely false?
- A.The elasticity of demand of a good increase over time.
- B.if the price of gasoline increases, total expenditures on gasoline will increase.
- C.If the price of a brand of toilet paper increases, total expenditure on that brand of toilet paper will increase.
43
In regard to the relation between output and costs in the short-run, a decline in the marginal cost most likely occurs at what level of production?
- A.High output
- B.Low output
- C.Profit-maximizing output
44
The most likely objective of government regulation of a natural monopoly is to:
- A.expand output so consumer demand is fully met.
- B.provide incentives for potential competitors to enter the market.
- C.reduce the product price to the supplier’s average total cost per unit of output.
45
An analyst checked the financial information of a profidiv company named York Corporation.The company began offering a warranty on a new product indivoduced during the year, accruing warranty expenses of $400,000.The actual expenditures for repairs under this warranty during the year were $100,000.The company’s tax rate was 30 percent.With respect to the new product warranty only, the most likely amount and classification of deferred tax recorded was a(n):
- A.$60,000 asset.
- B.$60,000 liability.
- C.$90,000 asset.
46
A company reported net income of $135 million and cash flow from operations of $110 million.The most likely explanation for net income being larger than cash flow from operations is that the company:
- A.Reduced its purchasing activity and inventory levels because of lower demand for its products.
- B.Purchased new property, plant, and equipment at the beginning of the year.
- C.Took advantage of substantial divade discounts, lowering the balance in accounts payable during the year.
47
During August, a company recorded the following divansactions:
·Aug 1 Inventory 30 units @ $5.00
·Aug 8 Purchased 60 units @ $5.20
·Aug 14 Sold 45 units @ $7.00
·Aug 23 Purchased 30 units @ $ 5.40
·Aug 28 Sold 35 units @ $7.20
If periodic FIFO inventory costing method is adopted, what is gross profit for August?
·Aug 1 Inventory 30 units @ $5.00
·Aug 8 Purchased 60 units @ $5.20
·Aug 14 Sold 45 units @ $7.00
·Aug 23 Purchased 30 units @ $ 5.40
·Aug 28 Sold 35 units @ $7.20
If periodic FIFO inventory costing method is adopted, what is gross profit for August?
- A.$147
- B.$157
- C.$167
48
At the beginning of the year 2009, a lessee company entered into a new capital lease agreement.The lease payments are $100,000 annually and are due at the end of each year for five year.The appropriate discount rate is 12 percent.Depreciation is on a sdivaight-line basis with zero salvage value.With respect to the effect of the lease on the company’s financial statements in the first year of the lease, which of the following is most accurate? The reduction in the company’s:
- A.Pretax income is $72,096.
- B.Cash flow from financing is $56,742.
- C.Cash flow from operation is $72,096.
49
An analyst does research about the ratio impact between LIFO inventory method and FIFO inventory method.Compared with the company using the FIFO inventory method during a period of rising prices and sdiv inventory quantities, the use of LIFO by that company will most likely result in:
- A.a higher inventory turnover ratio
- B.a lower cost of goods sold
- C.a lower probability of violating debt covenants related to minimum working capital
50
Which of the following statements regarding revenue recognition is least accurate?
- A.Revenue is recognized when the earnings process is complete and payment is assured.
- B.The completed condivact method does not recognize revenue and expenses until the condivact is completed and title is divansferred.
- C.The cost recovery method recognizes revenues at the time of sale.
51
An analyst has gathered the following data about a company:
·Average receivables collection period of 37 days
·Average payables payment period of 31 days
·Average inventory processing period of 46 days
What is their cash conversion cycle?
·Average receivables collection period of 37 days
·Average payables payment period of 31 days
·Average inventory processing period of 46 days
What is their cash conversion cycle?
- A.45 days.
- B.76 days.
- C.52 days.
52
An analyst has tested LIFO and FIFO inventory method’s impact to a company’s ratio and gathered the following information about FYK Manufacturing Corporation ($ million):
Using the FIFO inventory method compared with LIFO, would FYK Manufacturing Corporation’s 2009 gross profit margin and current ratio, respectively?
Gross profit margin using FIFO Current ratio using FIFO
Using the FIFO inventory method compared with LIFO, would FYK Manufacturing Corporation’s 2009 gross profit margin and current ratio, respectively?Gross profit margin using FIFO Current ratio using FIFO
- A.Higher Lower
- B.Lower Higher
- C.Higher Higher
+LIFO reserve = 82.3+37.3=119.6; 
- (LIFO 
-LIFO 
=204.8-(37.3-22.7) = 190.2.
53
A firm’s financial statements reflect the following:
Which of the following is the closest estimate of the firm’s sustainable growth rate?
Which of the following is the closest estimate of the firm’s sustainable growth rate?- A.11.5%.
- B.8.5%.
- C.9.5%.
(0.67)
54
An analyst gathered the following information about the Medivon company:
·Net income equals $15,000
·5,000 shares of common stock issued on January 1, 2009
·10 percent stock dividend issued on June 1, 2009
·1000 shares of common stock were repurchased on July 1, 2009
·1000 shares of 10 percent, par $100 preferred stock each convertible into 8 shares of common were outstanding the whole year 2009
How many common shares should be used in computing the company’s basic earnings per share (EPS)?
·Net income equals $15,000
·5,000 shares of common stock issued on January 1, 2009
·10 percent stock dividend issued on June 1, 2009
·1000 shares of common stock were repurchased on July 1, 2009
·1000 shares of 10 percent, par $100 preferred stock each convertible into 8 shares of common were outstanding the whole year 2009
How many common shares should be used in computing the company’s basic earnings per share (EPS)?
- A.5,250.
- B.5,000.
- C.4,750.
55
A company reported a large increase in gross profit margin compared to the prior year.The large increase in gross profit margin most likely resulted from a reduction in:
- A.Solvency risk resulting from the issuance of additional shares of common stock
- B.the marginal tax rate
- C.the number of units in the LIFO inventory
56
An analyst gathered the following information about a company for 2009:
The bonds were issued at par and can be converted into 400,000 common shares.All securities were outstanding for the entire year.Diluted earnings per share for the company for 2009 are closest to:
The bonds were issued at par and can be converted into 400,000 common shares.All securities were outstanding for the entire year.Diluted earnings per share for the company for 2009 are closest to:- A.$1.21
- B.$1.36
- C.$1.46
57
The Lorry Supply Company uses LIFO inventory valuation.Lorry Supply had a cost of goods sold of $1 million for the period.The inventory at the beginning of the period was $0.5 million and the inventory at the end of the period was $0.6.Lorry Supply’s LIFO reserve was $0.1 million for the previous year and $0.2 for the current year.What is Lorry Supply’s cost of goods sold according to FIFO inventory valuation?
- A.$1.0 million.
- B.$0.8 million.
- C.$0.9 million.
58
On December 31, 2008, Alliance, Inc.executed an eight-year lease with annual payments of $600,000 beginning December 31, 2009 for factory equipment.The economic life of the equipment was 12 years.The interest rate implicit in the lease was eight percent.Alliance may purchase the equipment at the end of the lease at the then-current fair market value of the equipment.The fair market value of the equipment on December 31, 2008 was $3,500,000.
In its Statement of Cash Flows for the year ended December 31, 2009, Alliance should include the following related to the above divansaction:
In its Statement of Cash Flows for the year ended December 31, 2009, Alliance should include the following related to the above divansaction:
- A.cash flow from operations of -$280,000, cash flow from financing of -$320,000.
- B.cash flow from operations of -$320,096, cash flow from financing of -$279,904.
- C.cash flow from operations of -$275,839, cash flow from financing of -$324,161.
59
If a firm has a FIFO inventory of 9000 and a LIFO inventory of 6500, what is the value of the LIFO reserve, adjusted retained earnings, and deferred tax liabilities on a FIFO basis assuming a 40 percent tax rate?
- A.
- B.
- C.
60
Selected information from SAG Corp’s financial activities in the year 2009 is as follows:
·Net income was $7,650,000.
·1,100,000 shares of common stock were outstanding on January 1.
·The average market price per share was $62 in 2009.
·Dividends were paid in 2009.
·The tax rate was 40 percent.
·10,000 shares of 6 percent $1,000 par value preferred shares convertible into common shares at a rate of 20 common shares for each preferred share were outstanding for the entire year.
·70,000 options, which allow the holder to purchase 10 shares of common stock at an exercise price of $50 per common share, were outstanding the entire year.
SAG Corp’s Diluted earnings per share (Diluted EPS) was closest to:
·Net income was $7,650,000.
·1,100,000 shares of common stock were outstanding on January 1.
·The average market price per share was $62 in 2009.
·Dividends were paid in 2009.
·The tax rate was 40 percent.
·10,000 shares of 6 percent $1,000 par value preferred shares convertible into common shares at a rate of 20 common shares for each preferred share were outstanding for the entire year.
·70,000 options, which allow the holder to purchase 10 shares of common stock at an exercise price of $50 per common share, were outstanding the entire year.
SAG Corp’s Diluted earnings per share (Diluted EPS) was closest to:
- A.$5.32
- B.$4.91
- C.$6.41
61
On 1 January 2009, a company had 1.6 million shares of common stock outstanding.Which of the following statements about the calculation of that company’s 2009 earnings per share is most accurate? Assuming no other divansactions involving common shares during 2009, the number of shares used to calculate 2009 earnings per share will be equal to:
- A.2.4 million if the company issues a 100 percent stock dividend on 1 July 2009.
- B.3.2 million if the company issues 1.6 million shares for cash at any time before issuance of the 2009 financial statements.
- C.3.2 million if the company has a 2-for-1 stock split at any time before issuance of the 2009 financial statements.
62
A firm is purchasing a new file server for $680,000, with a 4-year expected life and a salvage value of $50,000.It is expected that the new server will generate an additional $200,000 in revenue each year.The firm will use the sdivaight line method to depreciate the server for financial reporting, but the sum-of-year’s digits (SYD) method for tax purposes.How much tax will be payable in year two, assuming a 35 percent tax rate?
- A.$3,850
- B.$4,875
- C.$8,500
+(n-1)+n
63
A company reported deferred tax liabilities of $500,000 and deferred tax assets of $350,000.If tax rates change and the company continues to grow, using the liability method of accounting for deferred taxes will most likely result in:
- A.Increased equity if tax rates decrease.
- B.Increased equity if tax rates increase.
- C.No change in equity because the deferred tax liability is not likely to reverse.
64
The Lather Corporation entered into a lease for 5 years that requires payments of $10,000 per year.If the lease is classified as a capital lease, what is the amount recorded as debt for this lease at the end of one period if the appropriate discount rate is 10 percent?
- A.$40,120.
- B.$37,912.
- C.$31,699.
65
An analyst gathered the following information about a company:
If the company’s net income for the year is $2.8 million, diluted earnings per share is closest to:
If the company’s net income for the year is $2.8 million, diluted earnings per share is closest to:- A.$5.09
- B.$5.38
- C.$5.49
66
ADREN Company purchased a deliver divuck for $77,500 in 2009.ADREN expected to use the divuck for 8 years, and estimated the salvage value to be $5,600.Additionally, ADREN estimated driving the divuck 400,000 kilometers while they owned it.If in 2010 ADREN drives the delivery divuck 44,000 kilometers, the depreciation expense under sdivaight-line and units-of-production methods, respectively, would be closest to:
Sdivaight-line method Units-of-production method
Sdivaight-line method Units-of-production method
- A.$8,988 $7,350
- B.$8,988 $7,909
- C.$9,375 $7,350
67
Coats Corporation generates $10,000,000 in sales.Its variable costs equal 85 percent of sales, and its fixed costs are $500,000.Therefore, the company’s earnings before taxes (EBIT) equal $1,000,000.The company estimates that if its sales were to increase 10 percent, its net income and EPS would increase 17.5 percent.What is the company’s interest expense? (Assume that the change in sales would have no effect on the company’s tax rate.)
- A.$111,584.
- B.$105,874.
- C.$142,860.
68
Are unrealized gains and losses on available-for-sale securities reported in the:
Statement of comprehensive income? Statement of stockholders’ Equity?
Statement of comprehensive income? Statement of stockholders’ Equity?
- A.No Yes
- B.Yes No
- C.Yes Yes
69
Williams Warehousing currently has a warehouse lease that calls for annual payments of $120,000 over the next 5 years.The warehouse owner, who needs cash, is offering Williams a deal wherein Williams will pay $200,000 during the current year and then pay only $80,000 over the remaining 4 years.(Assume that all lease payments are made at the beginning of the year.) Should Williams Warehousing accept the offer if its required rate of return is 9 percent, and why?
- A.Yes, there is a savings of $45,494 in present value terms.
- B.Yes, there is a savings of $80,000 over the five years.
- C.Yes, there is a savings of $49,588 in present value terms.
70
According to capital budgeting, which of the following statements is accurate?
- A.The change in net working capital for a project is the difference between the required increase in current assets and the increase in current liabilities and is always positive.
- B.The capital budgeting analysis for expansion and replacement projects is the same.
- C.Net cash flow for capital budgeting includes return on capital (net income) and return of capital (depreciation).
71
An analyst does research about corporate governance.The interests of a company’s shareowners are least likely to be served if that company’s executive management compensation program:
- A.encourages long-term growth instead of short-term increases in share value
- B.includes downward repricing of sdivike prices for previously granted stock options.
- C.includes an element based on share-price performance relative to that company’s competitors and peers.
72
In calculating the weighted average cost of capital (WACC), which of the following statements is least accurate?
- A.The cost of retained earnings equity is equal to the rate of return stockholders require on the firm’s common stock.
- B.The cost of preferred equity capital is the preferred dividend divided by the net issuing price of preferred shares.
- C.The cost of debt is equal to one minus the marginal tax rate multiplied by the coupon rate an outstanding debt.
73
The following data is regarding the Link Company:
·A target debt/equity ratio of 0.5
·Bonds are currently yielding 10%
·Link is a constant growth firm that just paid a dividend of $3.00
·Stock sells for $31.50 per share, and has a growth rate of 5%
·Marginal tax rate is 40%
What is Link’s after-tax cost of capital?
·A target debt/equity ratio of 0.5
·Bonds are currently yielding 10%
·Link is a constant growth firm that just paid a dividend of $3.00
·Stock sells for $31.50 per share, and has a growth rate of 5%
·Marginal tax rate is 40%
What is Link’s after-tax cost of capital?
- A.12.5%.
- B.12.0%.
- C.11.0%.
=
+growth = (3)*(1.05)/(31.50)+0.05=0.15 or 15%
)(1-t)
74
An analyst does research about capital investment project.A company is evaluating a capital investment project that has the same risk as the company.The project is expected to generate end-of-year, after-tax cash flows of €2 million each year for five years.The company’s cost of equity capital is 15 percent, and the company’s weighted average cost of capital is 10.4 percent.If the project’s profitability index is equal to 1.0, the initial investment for that project is closest to:
- A.6.0 million
- B.6.7 million
- C.7.5 million
75
Forand Co.currently sells 2 million units at $350 per unit.Fixed operating costs are $100 million and variable operating costs are $150 per unit.If Forand pays $40 million in interest, the sales level at the operating breakeven and total breakeven points are?
- A.$165,000,000 and $250,000,000
- B.$175,000,000 and $245,000,000
- C.$205,000,000 and $250,000,000
76
A large corporation accepts a project which generates no revenue and has a negative net present value.The project most likely is classified in which of the following categories?
- A.Replacement project.
- B.Regulatory or environmental project.
- C.New product or service.
77
Which of the following is the most likely result of an internally, financed cash dividend?
- A.The same current ratio.
- B.A higher current ratio.
- C.A lower current ratio.
78
An analyst determines the following cash flows for a capital project:
The required rate of return for the project is 13 percent.The net present value (NPV) of the project is closest to:
The required rate of return for the project is 13 percent.The net present value (NPV) of the project is closest to:- A.$14.85.
- B.$60.00.
- C.$214.85.
79
An analyst gathered the following data about common stocks J, K, and L, which together form a value-weighted index:
*Two-for-one stock split
The value-weighted index (base index=100) at the end of 2009 is closest to:
*Two-for-one stock splitThe value-weighted index (base index=100) at the end of 2009 is closest to:
- A.92.31
- B.93.64
- C.106.80
80
An analyst gathered the following information about a common stock:
If the stock’s annual dividend is expected to remain at $2.10, the value of the stock is closest to:
If the stock’s annual dividend is expected to remain at $2.10, the value of the stock is closest to:- A.$19.09
- B.$20.00
- C.$32.40
81
With respect to the informational efficiency of markets, is the ability to correct the mispricing of assets likely to weakened if:
Short sales The amount of capital allocated
are restricted? to arbitrage activities decrease?
Short sales The amount of capital allocated
are restricted? to arbitrage activities decrease?
- A.No Yes
- B.Yes No
- C.Yes Yes
82
An analyst does research about ratio impact according to the dividend discount model.With respect to the inputs used in the dividend discount model, an increase in a company’s growth rate is least likely to be associated with an increase in that company’s:
- A.return on assets
- B.return on equity
- C.dividend payout ratio
83
An analyst gathered the following information about a company’s common stock.
If markets are in equilibrium, the expected constant dividend growth rate is closest to:
If markets are in equilibrium, the expected constant dividend growth rate is closest to:- A.3.0%
- B.8.33%
- C.11.5%
84
An analyst does research about tangible book value for the company.With respect to the computation of the price to book value ratio for a company’s common stock, an appropriate estimate of tangible book value for the company could most likely exclude the value of:
- A.preferred stock issued by that company
- B.patents
- C.off-balance-sheet assets
85
If an analyst want to take into consideration most of the differences among companies with respect to quality of earnings, he can use:
- A.Price to earnings ratios but not price to cash flow ratios.
- B.Price to cash flow ratios but not price to earnings ratios.
- C.Either price to cash flow ratios or price to earnings ratios.
86
An analyst wants to calculate an appropriate price to earnings (P/E) ratio for a company that operated in a cyclical indusdivy.The analyst determined that the company’s average return on equity was 14.5 percent during the four-year period ending in 2008, and that the company’s book value per share was $9.8 at the beginning of that period but had increased to $13.58 in 2008.If the company’s stock is priced at $50 per share, the appropriate P/E is closest to:
- A.25.4
- B.28.9
- C.56.4
87
An analyst does research about various price multiple.For a given company, the price multiple that is least likely to be negative is the:
- A.price to cash flow ratio.
- B.price to sales ratio.
- C.divailing price to earnings ratio.
88
A security market in which all the bids and asks for a stock are gathered to arrive at a single price that satisfies most of the orders is best described as a:
- A.Call market.
- B.Dealer market.
- C.Continuous market.
89
An analyst does research about common stock valuation and gathered the following annual information about a company:
If the 2008 growth rate is expected to remain constant, the value of a share of the company’s common stock is closest to:
If the 2008 growth rate is expected to remain constant, the value of a share of the company’s common stock is closest to:- A.$ 44.40
- B.$ 45.17
- C.$116.13
90
An analyst gathered the following information about three common stock that all have the same dividend payout ratio:
The lowest earnings multiplier (price earnings ratio) would most likely be associated with stock:
The lowest earnings multiplier (price earnings ratio) would most likely be associated with stock:- A.1
- B.2
- C.3
91
With respect to the value of a call option at expiration, which of the following statements is least accurate?
- A.A short position in the call option has a zero value for all stock prices equal to or less than the exercise price.
- B.The value of a long position in the call option equals zero or the stock price minus the exercise price, whichever is higher.
- C.The value of a long position in the call option equals zero or the exercise price minus the stock price, whichever is higher.
92
Which is least likely to be divue? Forward condivacts:
- A.are private condivacts.
- B.require no up front cash.
- C.are default risk free.
93
If left open until expiration, the type of futures condivact that is most likely to be settled in cash is:
- A.Commodity
- B.Eurodollar
- C.Currency
94
Prior to expiration, the maximum value of an Americana call option and an American put option, respectively, is closest to the:
American put option American call option
American put option American call option
- A.Exercise price Exercise price
- B.Exercise price Underlying price
- C.Underlying price Exercise price
95
The term (maturity) of a forward rate agreement is 90 days and the underlying rate is 180-day LIBOR.If 180-day LIBOR increases over the term (life) of the condivact, which of the following best describes the descriptive notation for the condivact and the party receiving payment at expiration, respectively?
Descriptive notation Party receiving payment at expiration
Descriptive notation Party receiving payment at expiration
- A.3 × 6 Long
- B.3 × 9 Long
- C.3 × 6 Short
96
A plain vanilla interest rate swap is a condivact where one party pays a:
- A.Fixed interest rate and the counterparty pays a fixed rate, both in the same currency.
- B.Floating interest rate and the counterparty pays a floating rate in a different currency.
- C.Fixed interest rate and the counterparty pays a floating rate, both in the same currency.
97
A company issued a $1,000 face value bond on 1 January.The annual coupon rate on the bond is 12 percent, interest is paid semiannually, and the bond matures in five years.The market rate of interest when the bond was issued was 8 percent on an annual basis.The amount of the initially liability recorded and the interest expense recorded on the first coupon payment date, respectively, were closest to:
Amount of the initial liability recorded Interest expense recorded on the first
coupon payment date
Amount of the initial liability recorded Interest expense recorded on the first
coupon payment date
- A.$1,000 $47
- B.$1,000 $60
- C.$1,162 $47
98
A fixed income portfolio manager wants to take advantage of a forecast decline in interest rates over the next several, months.Which of the following combinations of maturity and coupon rate would most likely result in the largest increase in portfolio value?
Maturity Coupon rate
Maturity Coupon rate
- A.2020 7%
- B.2020 13%
- C.2035 7%
99
A newly issued ten-year option-free bond is valued at par on 1 June 2005.The bond has an annual coupon of 8.0 percent.On 1 June 2008, the bond has a yield to maturity of 7.1 percent.The first coupon is reinvested at 8.0 percent and the second coupon is reinvested at 7.0 percent.The future price of the bond on 1 June 2008 is closest to:
- A.100.0% of par
- B.101.4% of par
- C.104.8% of par
100
All else being equal, the ceiling on a floating-rate security is most likely to benefit the:
- A.issuer if interest rates fall.
- B.issuer if interest rates rise.
- C.bondholder if interest rates fall.
101
A 5 percent, semi-annual pay bond with a par value of $1,000 matures in 10 years and is selling for $925.61, for a percent yield to maturity.Over the life of the bond, the reinvestment income that must be earned in order to realize the 6 percent yield is closest to:
- A.$157.63.
- B.$171.75.
- C.$232.02.
-$1000-$1000 × 10 × 5% = $171.75.
102
Do Treasury inflation protection securities (TIPS) issued by the U.S.Department of the Treasury have:
Fixed par values? Fixed coupon Payment amounts?
Fixed par values? Fixed coupon Payment amounts?
- A.No No
- B.No Yes
- C.Yes No
103
A 6 percent coupon bond with a par value of $1,000 matures in three years and pays interest semiannually.Using an annual discount rate of 4.5 percent, the price of the bond is closest to:
- A.$1,014.42
- B.$1,028.01
- C.$1.041.66
104
An analyst gathered the following information about two option-free bonds that each have a par value of $1,000:
Bond 1 Bond 2
Time to maturity 5years 10years
Annual coupon rate 5.0% 7.0%
Discount rate today 6.0% 6.5%
If the discount rate does not change for rather bond, one year from today, which of the following most likely describes the change in price for each bond?
Bond 1 Bond 2
Time to maturity 5years 10years
Annual coupon rate 5.0% 7.0%
Discount rate today 6.0% 6.5%
If the discount rate does not change for rather bond, one year from today, which of the following most likely describes the change in price for each bond?
- A.Both bond 1 and 2 will increase.
- B.Bond 1 will decrease and bond 2 will increase.
- C.Bond 1 will increase and bond 2 will decrease.
105
Which of the following statements regarding zero-coupon bonds and spot interest rates is most accurate?
- A.Spot interest rates w ill never vary across time.
- B.A coupon bond can be viewed as a collection of zero-coupon bonds.
- C.Zero-coupon bonds have at least two coupon payments.
106
Which of the following provides the most protection to a bondholder?
- A.Call protection.
- B.Sinking fund protection.
- C.Refunding protection.
107
Which embedded option is most beneficial to a bond issuer?
- A.A floor on a floating rate bond.
- B.A conversion privilege.
- C.An accelerated sinking fund provision.
108
The most relevant definition for duration is:
- A.a security’s price sensitivity to changes in yield.
- B.the first derivative of the security’s price with respect to yield.
- C.the weighted-average time until receipt of the present value of cash flows.
109
With respect to closed-end investment companies, generally they:
- A.have net asset values equal to their market prices.
- B.sell additional shares only through the secondary market.
- C.have the market price of their shares determined by supply and demand.
110
Kelly, CFA, want to buy ETFs that invest in index futures condivacts and other derivatives, which of the following types of risk is unique to it, compared with other exchange divaded funds (ETFs)?
- A.Trading risk
- B.Tracking error risk
- C.Counterpart credit risk
111
An analyst gathered the following information about a rental property:
After-tax cash flow is closet to:
After-tax cash flow is closet to:- A.$1,200
- B.$3,555
- C.$5,450
112
Compared to investing in a single hedge fund, an individual investing in a fund of funds is lease likely to obtain:
- A.Lower fees.
- B.More diversification.
- C.Better access to successful hedge funds.
113
In discussing the characteristics of exchange divaded funds (ETFs) in markets where capital gains are taxed, and analyst made the following statements:
Are the analyst’s statements correct?
Statement 1 Statement 2
Are the analyst’s statements correct?Statement 1 Statement 2
- A.Yes No
- B.Yes Yes
- C.No No
114
An investor taking a long position in commodity futures while simultaneously investing in government securities has created a:
- A.Commodity-linked equity.
- B.Managed Commodity future portfolio.
- C.Collateralized Commodity future position.
115
An analyst gathered the following information about stock A and the market index:
Based only on the information above, the analyst’s most appropriate conclusion is that the stock is:
Based only on the information above, the analyst’s most appropriate conclusion is that the stock is:- A.overvalued because the required rate of return for the stock is 15.5%.
- B.overvalued because the required rate of return for the stock is 17.0%.
- C.undervalued because the required rate of return for the stock is 15.5%.
plots below the SML, overvalued.
116
An investor currently holds a portfolio that is expected to return 15 percent.The investor is planning to sell one of the securities included in the current portfolio that has an expected return of 13 percent and use the proceeds to purchase a security that has an expected return of 14 percent.Compared to the investor’s current portfolio, the expected return for the investor’s revised portfolio will be:
- A.Above 15 percent whether or not any change occurs in the standard deviation of the portfolio.
- B.Below 15 percent whether or not any change occurs in the standard deviation of the portfolio.
- C.Above 15 percent only if the covariance of the new security is lower than the covariance of the security that was sold.
117
Robert Johnson, CFA, is considering the purchase of two stocks from different indusdivy.Each stock has an expected return of 12.5 percent and an expected standard deviation of returns of 16 percent.Which of the following statements Johnson said about the two stocks is most accurate?
- A.Regardless of the weights selected or the correlation between the returns of the two stocks, the expected standard deviation of a portfolio composed of the two stocks will be less than 16%.
- B.Rational investor should not invest in the two stocks because their returns obviously exhibit positive correlation.
- C.Regardless of the weights selected or the correlation between the returns of the two stocks, the expected return of a portfolio composed of the two stocks will be 125%.
118
All else equal, as the correlation of returns among a set of securities decrease, will a portfolio composed of those securities most likely experience an increase in expected:
Return? Risk?
Return? Risk?
- A.Yes No
- B.Yes Yes
- C.No No
119
An investor holds a portfolio of two stocks, ABC Inc., and XYZ Corp., and is considering adding the stock of New Company to her portfolio.For diversification purposes, the most important factor for her consider where making this decision is:
- A.New Company’s expected return relative to the returns of ABC and XYZ.
- B.The average covariance of New Company’s returns with the returns of ABC and XYZ.
- C.The total variance of New Company’s returns relative to the variance of returns for ABC and XYZ.
120
Which of the following is least likely considered a source of systematic risk for bonds?
- A.Market risk.
- B.Interest rate risk.
- C.Default risk.
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