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CFA Level 1 Test
Comprehensive
Questions (Frequently
Tested) with Verified
Answers Graded A+
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1. Allen Jabber invested $400 at the beginning of the last 12
months in the shares of a mutual fund that paid no dividends. Which
Method will he correctly choose to calculate his average price per
share from the monthly share prices?
a) Arithmetic Mean
b) Harmonic Mean
c)Geometric Mean Answer: Harmonic Mean - The harmonic mean of the 12 purchase prices will
be his average price paid per share.
2. Colonia has 2 political parties, the Wigs and the Wags. If the Wags
are elected there is a 32% probability of a tax increase over the next
4 years. If the Wigs are elected there is a 60% probability of a tax
increase. There is a 20% probability the that the Wags will be
elected. The sum of the (unconditional) probability of a tax increase
and the joint probability that the wigs will be elected and there will
be no tax increase is closest to Answer:
a) 55%
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b) 70%
c)85% Answer: 86.4% = C
The unconditional probability of a tax increase is Answer: 0.2(0.32) + 0.8(0.6) = 54.4%.
The joint probability that the Wigs will be elected and there will be no tax increase is Answer: 0.8(0.4) =
32%. The sum is Answer: 54.4
+ 32 = 86.4%.
3. An analyst who wants to display the relationship between two
variables graphically is most likely to use Answer:
a) a histogram
b) a scatterplot
c)a frequency polygon Answer: B = Scatterplot
Scatterplots illustrate the relationship between two variables.
Histograms and frequency polygons show the distribution of observations for a single variable.
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4. Ralph will retire 15 years from today and has saved $121,000 in his
investment account for retirement. He believes he will need 37,000 at
the beginning of each year for 25 Years of retirement, with the first
withdrawal on the day he retires. Ralph assumes his account will
earn 8%. The amount he needs to deposit at the beginning of this year
and each of the following 14 Years (15 in all) is closest to Answer:
a) 1350
b) 1450
c)1550 Answer: B = 1450
Step 1 Answer:
Calculate the amount needed at retirement at t = 15, with your calculator in
BGN mode. N = 25, FV = 0, I/Y = 8, PMT = 37,000, CPT PV = -426,564
Step 2 Answer:
Calculate the required deposits at t = 0,1,. ,14 to result in a time 15 value of 426,564, with your
calculator still in BGN
CFA Level 1 Test
Comprehensive
Questions (Frequently
Tested) with Verified
Answers Graded A+
, Contact for further consultation
1. Allen Jabber invested $400 at the beginning of the last 12
months in the shares of a mutual fund that paid no dividends. Which
Method will he correctly choose to calculate his average price per
share from the monthly share prices?
a) Arithmetic Mean
b) Harmonic Mean
c)Geometric Mean Answer: Harmonic Mean - The harmonic mean of the 12 purchase prices will
be his average price paid per share.
2. Colonia has 2 political parties, the Wigs and the Wags. If the Wags
are elected there is a 32% probability of a tax increase over the next
4 years. If the Wigs are elected there is a 60% probability of a tax
increase. There is a 20% probability the that the Wags will be
elected. The sum of the (unconditional) probability of a tax increase
and the joint probability that the wigs will be elected and there will
be no tax increase is closest to Answer:
a) 55%
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b) 70%
c)85% Answer: 86.4% = C
The unconditional probability of a tax increase is Answer: 0.2(0.32) + 0.8(0.6) = 54.4%.
The joint probability that the Wigs will be elected and there will be no tax increase is Answer: 0.8(0.4) =
32%. The sum is Answer: 54.4
+ 32 = 86.4%.
3. An analyst who wants to display the relationship between two
variables graphically is most likely to use Answer:
a) a histogram
b) a scatterplot
c)a frequency polygon Answer: B = Scatterplot
Scatterplots illustrate the relationship between two variables.
Histograms and frequency polygons show the distribution of observations for a single variable.
, Contact for further consultation
4. Ralph will retire 15 years from today and has saved $121,000 in his
investment account for retirement. He believes he will need 37,000 at
the beginning of each year for 25 Years of retirement, with the first
withdrawal on the day he retires. Ralph assumes his account will
earn 8%. The amount he needs to deposit at the beginning of this year
and each of the following 14 Years (15 in all) is closest to Answer:
a) 1350
b) 1450
c)1550 Answer: B = 1450
Step 1 Answer:
Calculate the amount needed at retirement at t = 15, with your calculator in
BGN mode. N = 25, FV = 0, I/Y = 8, PMT = 37,000, CPT PV = -426,564
Step 2 Answer:
Calculate the required deposits at t = 0,1,. ,14 to result in a time 15 value of 426,564, with your
calculator still in BGN
