CFA

Economics Correct Answer - The study of production, distribution and consumption of goods and services - The principles of the allocation of scarce resources among competing uses - Can be divided into two broad areas of study: micro and macro Macroeconomics Correct Answer - The branch of economics that deals with aggregate economic quantities, such as national output and national income Microeconomics Correct Answer - The branch of economics that deals with markets and decision making of...

Product Markets (Goods Markets) Correct Answer Markets for goods and services to consumers Factor Markets Correct Answer Markets for factors of production (raw material, goods and services used in production) Intermediate Goods Correct Answer Good and services used in the production of final goods and services. Demand Function Correct Answer Provides the quantity demanded as a function of price of the good or service, the prices of related goods or services, and some measure of income. ...

Money multiplier Correct Answer 1/reserve requirement Macroeconomic equilibrium Correct Answer where the IS and LM curves intersect. IS curve shows equilibrium between income and expenditure. LM curve shows equilibrium between the real money supply and the real interest rate M/P Correct Answer the money supply National income Correct Answer the total value of all income in a nation (wages and profits and interest and rents and pension payments) during a given period (usually 1 yr) GD...

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 occu...

In situations where the laws of a member or candidate's country of residence, the local laws of regions where the member or candidate does business, and the Code and Standards specify different requirements, the member or candidate must abide by: A. local law or the Code and Standards, whichever is stricter. B. the Code and Standards or his country's laws, whichever are stricter. C. the strictest of local law, his country's laws, or the Code and Standards Correct Answer C To comply with...

Default Risk Correct Answer Risk that a borrower will not make promised payments Liquidity Risk Correct Answer Risk of recieving less than fair value for an investment if it must be sold for cash quickly Required Interest Rate on A Security Correct Answer = Nominal Interest Rate + Default Risk Premium + Liquidity Premium + Maturity Risk Premium Real Risk Free Rate / Nominal Risk Free Rate Correct Answer - Single period interest rate for a completely risk-free security with no inflati...

Current Ratio Correct Answer Current Assets divided by current liabilities Quick Ratio Correct Answer Cash plus marketable securities plus receivables divided by current liabilities Cash Ratio Correct Answer Cash plus marketable securities divided by current liabilities Defensive Interval Ratio Correct Answer Cash plus marketable securities plus receivables divided by average daily expenditures Cash Conversion cycle Correct Answer days in inventory plus days in accounts receivables m...

Faithful representation, substance over form, prudence, neutrality, completeness Correct Answer According to the IFRS what are the 5 qualities of financial information that improve reliability Costs can be reliably measured Correct Answer According to IFRS what condition must be met for revenue recognition to occur? Current ratio will decrease. Accruing wages increases both current liabilities and expenses, but collecting receivables has no effect on current assets or sales therefore the...

A priori probability Correct Answer A probability based on logical analysis rather than on observation or personal judgment. Abnormal profit Correct Answer Equal to accounting profit less the implicit opportunity costs not included in total accounting costs; the difference between total revenue (TR) and total cost (TC). Absolute advantage Correct Answer A country's ability to produce a good or service at a lower absolute cost than its trading partner. Absolute dispersion Correct Answer...

This document explains the concepts of time value of money in a very easy language.