FORMULA DOMINANCE: CFA LEVEL 1 HIGH-YIELD EQUATION GUIDE (2026/2027 | A+ GUARANTEED)

FINANCE PART 2 UNLOCKED: A+
STRATEGIES FOR TIME VALUE, RISK &
VALUATION – 2026/2027 READY




investing in a variety of assets; used to manage or reduce risk -
THE CORRECT ANSWER-diversification



states that if all information is equal, an investor cannot
outperform an efficient marketplace over the long haul - THE
CORRECT ANSWER-efficient market hypothesis



a 1999 Congressional act giving banks the authority to engage
in diverse financial activities (this includes securities trading
and real estate); is cited as creating the conditions leading to
the poor mortgage banking decisions and the 2007 economic
collapse from mortgage-backed securities; also known as the
Gramm-Leach-Bliley Act - THE CORRECT ANSWER-Financial Services
Modernization Act


fundamental analysis - THE CORRECT ANSWER-the process of
evaluating an investment to determine if it is a good value or
what actions needs to be taken


a fund open to new investors and issues; it redeems shares at
net asset value - THE CORRECT ANSWER-open-end fund

,the idea that more return is also linked to higher risk; the term
"trade-off" is related and means the investor trades safety for
the potential for a greater return - THE CORRECT ANSWER-risk-return
trade-off


capital appreciation - THE CORRECT ANSWER-growth in the value of
the stock


annual report - THE CORRECT ANSWER-required by the SEC to be
available to the public


Marco is an investor in a mutual fund. He has just sold half of
his shares and is paying an exit fee. Jack is also an investor in
this fund and is selling half of his shares. Marco is paying a
higher exit fee. That is most likely because _____. - THE CORRECT
ANSWER-Jack held the shares longer than Marco



Open-end mutual funds are more liquid than close-end mutual
funds. - THE CORRECT ANSWER-true


front end load - THE CORRECT ANSWER-Terry pays $50 in transaction
fees when his investment is purchased


back-end load - THE CORRECT ANSWER-Edna pays $75 in transaction
fees when she sells her investment


Fundamental Analysis - THE CORRECT ANSWER-Terry and Edna are
researching financial data before purchasing an investment

, risk-return trade-off - THE CORRECT ANSWER-Terry and Edna bet
that their investment will have a high yield


When comparing the rate of return of one bond with a similar
bond with the same time period, first create a line graph. Plot
the market rate return first, as the _____. - THE CORRECT ANSWER-
midpoint


The total value of all of the 2,000 mutual fund shares in Dion's
portfolio is $260,000. He has liabilities of $10,000. The per-
share dollar amount of the securities in his portfolio is $
_____. - THE CORRECT ANSWER-125.00


Researching financial and other data on a potential investment,
and comparing this information with other possible
investments, is the process known as _____. - THE CORRECT
ANSWER-fundamental analysis



Which of the following has the lowest risk? - THE CORRECT ANSWER-
junk bonds


Andres bought 100 shares of ABC Corporation stock at
$45/share, then a week later bought another 100 shares at
$45/share, and shortly after that bought 100 shares at
$42/share. Just now, he bought 100 shares at $36/share. The
mean price of the ABC stock is _____. - THE CORRECT ANSWER-
42.00