CFA Level 1: Quant| 221 QUESTIONS| WITH COMPLETE SOLUTIONS
nominal risk free rate equals... correct answer: real risk free rate + expected inflation required interest rate on a security correct answer: nominal risk free rate + default risk premium + liquidity premium + maturity risk premium EAR or APY correct answer: (1+periodic rate)^m - 1 always higher than annual percentage rates (not compounded) ordinary annuity correct answer: cash flows that occur at the end of each compounding period annuity due correct answer: payments or receipts occur at the beginning of each period PV of Perpetuity correct answer: Payment/interest rate Effect of increase in the frequency of compounding rates correct answer: increases FV, decreases PV amortization schedule correct answer: interest component = interest rate * beginning balance principal component = payment - interest component ending balance = period's beginning balance (last period's ending balance) - principal component holding period return correct answer: (ending value-beginning value) / beginning value OR (Ending value / beginning value
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cfa level 1 quant| 221 questions| with complete solutions
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