CFA Level 1 Sample Questions- -Complete
Exam Study Guide with Verified Answers |
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The feature of a well-functioning investment industry that gives investors the ability to quickly
buy and sell a significant amount of an investment without having a material impact on the
price is described as:
A liquidity
B competitive markets
C risk transfer ------- ✔ CORRECT ANSWER ✓✓A
According to fundamental ethical and professional principles applicable to the investment
industry, which group should have its interests ranked first?
A Clients
B Employers
C Co-workers ------- ✔ CORRECT ANSWER ✓✓A
Regulators often seek public consultation prior to the implementation of new regulations in
order to:
A ensure the new rules are favorable to those likely to be affected
B educate consumers and service providers on the new rules
C improve the final rules by undertaking a cost-benefit analysis ------- ✔ CORRECT ANSWER ✓✓C
A financial advisory firm that implements internal policies regarding information barriers,
suitability standards, and restrictions on self-dealing is addressing issues related to which of the
following types of regulation?
,A Sales practices rules
B Trading rules
C Disclosure rules ------- ✔ CORRECT ANSWER ✓✓A
The best financial statement to use to find information about what a company owns and owes
others is called the:
A income statement
B balance sheet
C cash flow statement ------- ✔ CORRECT ANSWER ✓✓B
If two variables do not have a strong (linear) relationship, the correlation coefficient between
the two variables will be closest to:
A0
B -1
C +1 ------- ✔ CORRECT ANSWER ✓✓A
In contrast to forward contracts, futures contracts:
A trade on organized exchanges
B have contract sizes tailored to investor needs
C have negotiable expiration dates ------- ✔ CORRECT ANSWER ✓✓A
Which type of private equity strategy is most likely used to finance a start-up company?
A Growth equity
B Buyout
C Venture capital ------- ✔ CORRECT ANSWER ✓✓C
,In commercial real estate investment, the amount derived from discounting future cash flows
of lease and rental payments plus capital appreciation represents the value of the:
A asset
B equity
C liability ------- ✔ CORRECT ANSWER ✓✓A
The type of bank that is exclusively owned by its members is a:
A savings and loan bank
B commercial bank
C mutual bank ------- ✔ CORRECT ANSWER ✓✓C
A form of pension plan in which the participant has some ability to determine how pension
contributions are invested is described as a(n):
A defined contribution plan
B endowment plan
C defined benefit plan ------- ✔ CORRECT ANSWER ✓✓A
An investor attempting to replicate a price-weighted index would hold an equal:
A percentage of outstanding shares of each security in the index
B amount invested in each security in the index
C number of units (shares) of each security in the index ------- ✔ CORRECT ANSWER ✓✓C
From the standpoint of taxes, investors will benefit from:
A deferring taxes to the future if tax rates will be higher in the future
B realizing gains via stock repurchases as opposed to receiving the same gains as dividends
, C selling appreciated shares to meet cash needs instead of borrowing against them ------- ✔
CORRECT ANSWER ✓✓B
If a decrease in the selling price of a company's only product results in an increase in the
company's total revenue, the demand for the company's product is:
A elastic
B unit-elastic
C inelastic ------- ✔ CORRECT ANSWER ✓✓A
Which of the following actions taken by a central bank is expansionary?
A Increasing the reserve requirement
B The purchase of government bonds
C Increasing its policy rate ------- ✔ CORRECT ANSWER ✓✓B
Which of the following government actions will most likely lead to an increase in the level of
aggregate demand? A reduction in:
A transfer payments
B public spending on social goods and infrastructure
C the capital gains tax ------- ✔ CORRECT ANSWER ✓✓C
If Mexico is running a large current account deficit with Canada, which of the following will
most likely occur?
A Canada will reduce its imports from Mexico
B The Mexican peso will depreciate relative to the Canadian dollar
C There will be an increase in Canadian exports to Mexico ------- ✔ CORRECT ANSWER ✓✓B
If a company is liquidated, proceeds from asset sales are distributed to common shareholders:
Exam Study Guide with Verified Answers |
Guaranteed A+
The feature of a well-functioning investment industry that gives investors the ability to quickly
buy and sell a significant amount of an investment without having a material impact on the
price is described as:
A liquidity
B competitive markets
C risk transfer ------- ✔ CORRECT ANSWER ✓✓A
According to fundamental ethical and professional principles applicable to the investment
industry, which group should have its interests ranked first?
A Clients
B Employers
C Co-workers ------- ✔ CORRECT ANSWER ✓✓A
Regulators often seek public consultation prior to the implementation of new regulations in
order to:
A ensure the new rules are favorable to those likely to be affected
B educate consumers and service providers on the new rules
C improve the final rules by undertaking a cost-benefit analysis ------- ✔ CORRECT ANSWER ✓✓C
A financial advisory firm that implements internal policies regarding information barriers,
suitability standards, and restrictions on self-dealing is addressing issues related to which of the
following types of regulation?
,A Sales practices rules
B Trading rules
C Disclosure rules ------- ✔ CORRECT ANSWER ✓✓A
The best financial statement to use to find information about what a company owns and owes
others is called the:
A income statement
B balance sheet
C cash flow statement ------- ✔ CORRECT ANSWER ✓✓B
If two variables do not have a strong (linear) relationship, the correlation coefficient between
the two variables will be closest to:
A0
B -1
C +1 ------- ✔ CORRECT ANSWER ✓✓A
In contrast to forward contracts, futures contracts:
A trade on organized exchanges
B have contract sizes tailored to investor needs
C have negotiable expiration dates ------- ✔ CORRECT ANSWER ✓✓A
Which type of private equity strategy is most likely used to finance a start-up company?
A Growth equity
B Buyout
C Venture capital ------- ✔ CORRECT ANSWER ✓✓C
,In commercial real estate investment, the amount derived from discounting future cash flows
of lease and rental payments plus capital appreciation represents the value of the:
A asset
B equity
C liability ------- ✔ CORRECT ANSWER ✓✓A
The type of bank that is exclusively owned by its members is a:
A savings and loan bank
B commercial bank
C mutual bank ------- ✔ CORRECT ANSWER ✓✓C
A form of pension plan in which the participant has some ability to determine how pension
contributions are invested is described as a(n):
A defined contribution plan
B endowment plan
C defined benefit plan ------- ✔ CORRECT ANSWER ✓✓A
An investor attempting to replicate a price-weighted index would hold an equal:
A percentage of outstanding shares of each security in the index
B amount invested in each security in the index
C number of units (shares) of each security in the index ------- ✔ CORRECT ANSWER ✓✓C
From the standpoint of taxes, investors will benefit from:
A deferring taxes to the future if tax rates will be higher in the future
B realizing gains via stock repurchases as opposed to receiving the same gains as dividends
, C selling appreciated shares to meet cash needs instead of borrowing against them ------- ✔
CORRECT ANSWER ✓✓B
If a decrease in the selling price of a company's only product results in an increase in the
company's total revenue, the demand for the company's product is:
A elastic
B unit-elastic
C inelastic ------- ✔ CORRECT ANSWER ✓✓A
Which of the following actions taken by a central bank is expansionary?
A Increasing the reserve requirement
B The purchase of government bonds
C Increasing its policy rate ------- ✔ CORRECT ANSWER ✓✓B
Which of the following government actions will most likely lead to an increase in the level of
aggregate demand? A reduction in:
A transfer payments
B public spending on social goods and infrastructure
C the capital gains tax ------- ✔ CORRECT ANSWER ✓✓C
If Mexico is running a large current account deficit with Canada, which of the following will
most likely occur?
A Canada will reduce its imports from Mexico
B The Mexican peso will depreciate relative to the Canadian dollar
C There will be an increase in Canadian exports to Mexico ------- ✔ CORRECT ANSWER ✓✓B
If a company is liquidated, proceeds from asset sales are distributed to common shareholders:
