CFA Level 1 - Equity Investments Comprehensive Questions (Frequently Tested) with Verified Answers Graded A+

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CFA Level 1 - Equity
Investments
Comprehensive
Questions (Frequently
Tested) with Verified
Answers Graded A+






, Contact for further consultation




1. Financial System FunctionsAnswer: • Allowing entities to borrow, save, issue equity,

manage risk, exchange assets, utilize info

• Determine the returns that equate savings and borrowing across the economy

• Allocate capital eflciently (to the highest valued uses)

2. Classification of AssetsAnswer: • Financial vs real assets

• Debt vs equity securities

• Public vs private securities

• Physical derivatives vs financial derivatives

• Spot markets (immediate delivery) vs future markets

• Primary markets vs secondary markets

• Call vs continuous markets

• Money markets vs capital markets

• Traditional markets vs alternative investment markets

3. Type Of AssetsAnswer: • Securities

• Currencies

• Contracts



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• Commodities

• Real assets

4. SecuritiesAnswer: • Equity

• Fixed Income

• Pooled Investments

-Mutual Funds

-ETFs

-Asset backed securities

-Hedge funds

5. Fixed Income SecuritiesAnswer: Typically refer to debt securities that are promises to

repay borrowed money in the future.

6. Equity SecuritiesAnswer: Represent ownership in a firm and include common stock, preferred

stock, and warrants.

7. WarrantsAnswer: Similar to options in that they give the holder the right to buy a firm's equity

shares (usually common stock) at a fixed exercise price prior to the warrant's expiration.

8. A Call OptionAnswer: Gives the option buyer the right (but not the obligation) to buy an asset