CFA LEVEL 1 - QUANTITATIVE METHODS - Practice
Test with Fully Worked Solutions
30 original practice questions, each with a step-by-step worked
explanation
For candidates preparing for the CFA Level 1 Quantitative Methods topic area. This is
ORIGINAL practice material written for study purposes. It is NOT a copy of real CFA exam
questions, and it is not affiliated with, endorsed by, or sponsored by CFA Institute. No result is
promised; your score improves with the practice you put in.
How to use this document
• Answer all 30 questions on paper first, without looking at the solutions. Each question has 4
options (A-D), in the style of the Quantitative Methods section.
• Then check yourself in the Worked Solutions section, where every question is solved step by
step with the formula shown.
• A quick answer grid and a self-scoring guide are included at the end.
• Topics covered, following the CFA Level 1 Quantitative Methods curriculum: time value of
money, discounted cash flow applications, organizing and describing data, probability
concepts, common probability distributions, sampling and estimation, hypothesis testing, and
introduction to linear regression.
QUESTIONS
1. You invest $5,000 at an annual interest rate of 6%, compounded quarterly. What will the
investment be worth after 5 years?
A) $6,703.28
B) $6,734.28
C) $6,750.00
D) $6,690.49
2. You want to have $50,000 in 10 years. If you can earn 7% per year, compounded annually,
how much must you invest today?
A) $25,834.92
B) $24,182.65
C) $25,417.46
, D) $26,100.10
3. You deposit $2,000 at the end of each year for 15 years into an account earning 8%
annually. What is the future value of this ordinary annuity?
A) $54,304.23
B) $51,725.50
C) $47,206.73
D) $58,649.38
4. A bank quotes a nominal annual rate of 12%, compounded monthly. What is the effective
annual rate?
A) 12.00%
B) 12.36%
C) 12.68%
D) 13.00%
5. A perpetuity pays $800 at the end of each year. If the appropriate discount rate is 10%, what
is the present value of the perpetuity?
A) $7,200
B) $8,000
C) $8,800
D) $9,000
6. What is the present value of an annuity due that pays $1,000 at the beginning of each year
for 5 years, discounted at 9%?
A) $4,239.72
B) $3,889.65
C) $4,567.10
D) $3,568.14
7. A project costs $10,000 today and returns $4,000 at the end of each of the next 3 years. If
the required rate of return is 10%, the project's NPV is closest to:
A) $486
B) -$53
C) $1,240
D) -$1,120
8. For two mutually exclusive projects, the NPV rule and the IRR rule give conflicting
recommendations. According to CFA curriculum guidance, which project should be selected?
Test with Fully Worked Solutions
30 original practice questions, each with a step-by-step worked
explanation
For candidates preparing for the CFA Level 1 Quantitative Methods topic area. This is
ORIGINAL practice material written for study purposes. It is NOT a copy of real CFA exam
questions, and it is not affiliated with, endorsed by, or sponsored by CFA Institute. No result is
promised; your score improves with the practice you put in.
How to use this document
• Answer all 30 questions on paper first, without looking at the solutions. Each question has 4
options (A-D), in the style of the Quantitative Methods section.
• Then check yourself in the Worked Solutions section, where every question is solved step by
step with the formula shown.
• A quick answer grid and a self-scoring guide are included at the end.
• Topics covered, following the CFA Level 1 Quantitative Methods curriculum: time value of
money, discounted cash flow applications, organizing and describing data, probability
concepts, common probability distributions, sampling and estimation, hypothesis testing, and
introduction to linear regression.
QUESTIONS
1. You invest $5,000 at an annual interest rate of 6%, compounded quarterly. What will the
investment be worth after 5 years?
A) $6,703.28
B) $6,734.28
C) $6,750.00
D) $6,690.49
2. You want to have $50,000 in 10 years. If you can earn 7% per year, compounded annually,
how much must you invest today?
A) $25,834.92
B) $24,182.65
C) $25,417.46
, D) $26,100.10
3. You deposit $2,000 at the end of each year for 15 years into an account earning 8%
annually. What is the future value of this ordinary annuity?
A) $54,304.23
B) $51,725.50
C) $47,206.73
D) $58,649.38
4. A bank quotes a nominal annual rate of 12%, compounded monthly. What is the effective
annual rate?
A) 12.00%
B) 12.36%
C) 12.68%
D) 13.00%
5. A perpetuity pays $800 at the end of each year. If the appropriate discount rate is 10%, what
is the present value of the perpetuity?
A) $7,200
B) $8,000
C) $8,800
D) $9,000
6. What is the present value of an annuity due that pays $1,000 at the beginning of each year
for 5 years, discounted at 9%?
A) $4,239.72
B) $3,889.65
C) $4,567.10
D) $3,568.14
7. A project costs $10,000 today and returns $4,000 at the end of each of the next 3 years. If
the required rate of return is 10%, the project's NPV is closest to:
A) $486
B) -$53
C) $1,240
D) -$1,120
8. For two mutually exclusive projects, the NPV rule and the IRR rule give conflicting
recommendations. According to CFA curriculum guidance, which project should be selected?
