CFA 4 Question And Answer.

if you were fired from a previous job and fail to tell your new employer is that a violation and if so of what? - correct answer yes, misconduct. this information could potentially harm your new employer and he needs to know man! degress of price discrimination - correct answer 1st degree-- know price that every consumer is willing to pay. 2nd degree-- price varies according to quanity demanded. sellers aren't able to distinguish classes or consumers. third degree-- charging different prices to different consumer groups. charging kids and adults differently. peak and off peak rates for electricity. disposition bias - correct answer loss aversion if you get offered a senior position with a new department at a bank that has bad compliance procedures and/or bad marketing materials what should you do? - correct answer not accept the position. possibly agree to be hired as an interim consultant until proper procedures are taken. why would a multinational financial services holding company be unlikely to be able to claim GIPS compliance? - correct answer GIPS standards require that firms be defined as an investment firm, subsidiary, or division held out to clients as a distinct business entity. multinational finance firm unlikely to be operating solely as an investment firm. to claim compliance with GIPS, who do you have to make a reasonable effort to provide a compliant presentation to? - correct answer prospective investors only. it is reccomended to do so also for existing investors, but you don't have too. the primary monetary goal of most major central banks is... - correct answer maintaining price stability. is it though?? a motor scooter rental shop charges $90 per day. owner is considering a Wed special of 75 per day. at current price, shop rents 40 scooters and expects rentals to increase to 60 at lower price. - correct answer $45. Change in TR/Change in quantity. This is technically incorrect!!!!! deadweight loss problems from price ceilings/floors - correct answer draw it out and think of lost surplus to identify... how is a building owned for the purpose of leasing out to tenants treated by under IFRS - correct answer as an investment property, can be reported at either cost or fair value. only prior losses that are reversed are shown as profit in income statement. gains above prior value are recorded in shareholders equity. under IFRS, how are deferred tax liabilities and warranties classified as current or non-current - correct answer DTL are non-current and warranties are current. income tax expense equals... - correct answer income tax payable (income tax rate times by taxable income) plus increase in deferred tax liabilities. look at 174. redo #179. repeat #237 and 238!! - correct answer Elliot Wave Theory - correct answer wave 1 is a large gain, wave 2 gives back much of gains from Wave 1, but not all. the lost proportion is usually a percentage equal to a fibonaccci ratio, and consists of three smaller waves. three main sources of return for a commodities future contract... - correct answer 1. collateral yield, roll yield, and spot price return. i think the reason why convience yield isn't factored in is that it probably doesn't change very much... can early exercise of deep in the money american call be advantageous - correct answer apparently not. remember early exercise of call's can be good if it has cashflows like dividends etc. if future prices and interest rates are negatively correlated.. - correct answer the forwards will be more desirable than futures (for long positions) the voting rights of an unsponsored depository receipt belong to the... - correct answer depository bank. be able to estimate value of stock using forward P/E!!!! - correct answer a bond with the greatest reinvestment risk out of one selling at a premium/discount/par - correct answer premium.... has the highest coupon rate and therefore highest risk of not being able to reinvest at that rate... CAPM assumes that investors plan for the same single holding period!! - correct answer having a higher risk aversion coefficient means... - correct answer you have a lower risk tolerance! how do you solve for the macaulay duration of a non-callable perpetual bond with a yield in perpetuity? - correct answer (1+r)/r justified forward P/E ratio - correct answer dividend payout ratio/(r-g) why were the GIPS standards created? - correct answer to help prevent misleading practices such as "representative accounts", where a firm picks a top performaing account to represent overall investmment results Teresa Avila, CFA, is a micro-cap investment analyst at a hedge fund. The fund requires Avila to hold any securities she recommends for the fund in her own account as well. Because Avila has such a small account, whenever she trades for her own portfolio, she combines the transactions with those of the hedge fund so she is sure to have her account aligned with the fund. Has Avila most likely violated any CFA Institute Standards of Professional Conduct? - correct answer Standard VI(B)-Priority of Transactions requires that investment transactions for clients and employers take priority over transactions in which members have beneficial ownership. By executing her own transactions with those of the hedge fund, the analyst has violated this standard because micro-cap securities can be thinly traded and easily influenced by changes in the volume of activity. So, the analyst may benefit when she combines her