GWI CFA Mock Exams Questions And
Answers With Verified Solutions 100%
Correct!!!
Proprietary trading is most likely carried out by: - ANSWER✔✔dealers
Globalisation in the investment industry is associated with the growing tendency of
investors: - ANSWER✔✔to look outside their local market for investment
opportunities.
The goal of all economic systems is to: - ANSWER✔✔efficiently allocate scarce
resources to their most productive uses.
An individual who helps buyers and sellers find and trade with one another is a(n):
- ANSWER✔✔broker
Securities regulations are created by: - ANSWER✔✔government agencies
The CFA Institute Code of Ethics requires members to: - ANSWER✔✔encourage
competitors to increase their levels of competence.
An employee is assigned a complicated task by her supervisor but believes she
does not have the technical skills to carry it out. The employee should: -
ANSWER✔✔refuse to carry out the assignment.
Investment advisers have an ethical obligation to: - ANSWER✔✔exercise
independent judgment.
,Based on the CFA Institute Standards of Practice, investment advisers should
manage a client's investment portfolio the same way they would manage: -
ANSWER✔✔their own assets.
During a job interview, a potential employer described the CFA Institute Code of
Ethics as "a set of principles establishing rules governing ethical behaviour
required of investment professionals toward their clients and employers". Does this
description fully capture the Code of Ethics' requirement to act in an ethical
manner?
A. Yes
B. No, the Code of Ethics also requires ethical behaviour when dealing with
potential clients
C. No, the Code of Ethics also requires ethical interaction with all capital market
participants - ANSWER✔✔C. No, the Code of Ethics also requires ethical
interaction with all capital market participants
Regulators often seek public consultation prior to the implementation of new
regulations in order to: - ANSWER✔✔improve the final rules by undertaking a
cost-benefit analysis.
Regulations prohibiting front running are types of: - ANSWER✔✔trading rules
Regulators help capital markets do all of the following except:
A. reduce investment risk.
B. allocate capital to productive use.
,C. ensure investors are treated equally. - ANSWER✔✔C. ensure investors are
treated equally.
Net capital rules are put in place to prevent all of the following except:
A. global financial contagion.
B. losses experienced by firms.
C. the use of excessive leverage. - ANSWER✔✔B. losses experienced by firms.
The processes by which regulations are developed: - ANSWER✔✔vary widely
from informal to formal.
A store owner recently turned down a substantial cash offer for his store and the
land on which the store is located. Although the store owner considered the offer to
be fair, he wanted to continue running the business. This year, his business has
incurred costs for merchandise sold; wages paid to workers, including his own
salary; utilities; and property taxes. When determining the business's accounting
profit for the period, he is most likely to correctly exclude which of the following:
- ANSWER✔✔the opportunity cost of the land and store.
A company is in the large shipbuilding industry with most of its operating costs
fixed. The company has not used any debt to finance its operations. The operating
leverage for such a firm is most likely: - ANSWER✔✔high
Operating leverage refers to the extent to which fixed costs are used in production.
Companies with very high fixed costs relative to variable costs have high operating
leverage.
, The notion of scarce economic resources: - ANSWER✔✔gives rise to choices
determined by opportunity costs.
The crowding out effect will most likely lead to higher: - ANSWER✔✔interest
rates.
Which of the following actions taken by a central bank is best described as
expansionary? - ANSWER✔✔Purchasing government bonds
A government implements a policy that encourages consumers and businesses to
increase spending and investment. Those who benefit from this additional
spending, in turn, increase their own spending. The mechanism by which the initial
increase in spending increases total spending by a greater amount is -
ANSWER✔✔multiplier effect.
An obstacle to the alignment of international business cycles is the existence of
international: - ANSWER✔✔restrictions on capital flows.
The broadest-based measure of a nation's inflation rate is provided by the: -
ANSWER✔✔implicit GDP deflator.
The US dollar is currently the world's most dominant reserve currency. If the US
dollar was not a reserve currency, the competitive position of US exporters would
most likely be: - ANSWER✔✔stronger.
As a reserve currency, the US dollar is held in significant quantities by many
governments and financial institutions as part of their foreign exchange reserves.
The US dollar also acts as the pricing currency for many international transactions,
which means demand for US financial assets and US dollars is higher than it would
Answers With Verified Solutions 100%
Correct!!!
Proprietary trading is most likely carried out by: - ANSWER✔✔dealers
Globalisation in the investment industry is associated with the growing tendency of
investors: - ANSWER✔✔to look outside their local market for investment
opportunities.
The goal of all economic systems is to: - ANSWER✔✔efficiently allocate scarce
resources to their most productive uses.
An individual who helps buyers and sellers find and trade with one another is a(n):
- ANSWER✔✔broker
Securities regulations are created by: - ANSWER✔✔government agencies
The CFA Institute Code of Ethics requires members to: - ANSWER✔✔encourage
competitors to increase their levels of competence.
An employee is assigned a complicated task by her supervisor but believes she
does not have the technical skills to carry it out. The employee should: -
ANSWER✔✔refuse to carry out the assignment.
Investment advisers have an ethical obligation to: - ANSWER✔✔exercise
independent judgment.
,Based on the CFA Institute Standards of Practice, investment advisers should
manage a client's investment portfolio the same way they would manage: -
ANSWER✔✔their own assets.
During a job interview, a potential employer described the CFA Institute Code of
Ethics as "a set of principles establishing rules governing ethical behaviour
required of investment professionals toward their clients and employers". Does this
description fully capture the Code of Ethics' requirement to act in an ethical
manner?
A. Yes
B. No, the Code of Ethics also requires ethical behaviour when dealing with
potential clients
C. No, the Code of Ethics also requires ethical interaction with all capital market
participants - ANSWER✔✔C. No, the Code of Ethics also requires ethical
interaction with all capital market participants
Regulators often seek public consultation prior to the implementation of new
regulations in order to: - ANSWER✔✔improve the final rules by undertaking a
cost-benefit analysis.
Regulations prohibiting front running are types of: - ANSWER✔✔trading rules
Regulators help capital markets do all of the following except:
A. reduce investment risk.
B. allocate capital to productive use.
,C. ensure investors are treated equally. - ANSWER✔✔C. ensure investors are
treated equally.
Net capital rules are put in place to prevent all of the following except:
A. global financial contagion.
B. losses experienced by firms.
C. the use of excessive leverage. - ANSWER✔✔B. losses experienced by firms.
The processes by which regulations are developed: - ANSWER✔✔vary widely
from informal to formal.
A store owner recently turned down a substantial cash offer for his store and the
land on which the store is located. Although the store owner considered the offer to
be fair, he wanted to continue running the business. This year, his business has
incurred costs for merchandise sold; wages paid to workers, including his own
salary; utilities; and property taxes. When determining the business's accounting
profit for the period, he is most likely to correctly exclude which of the following:
- ANSWER✔✔the opportunity cost of the land and store.
A company is in the large shipbuilding industry with most of its operating costs
fixed. The company has not used any debt to finance its operations. The operating
leverage for such a firm is most likely: - ANSWER✔✔high
Operating leverage refers to the extent to which fixed costs are used in production.
Companies with very high fixed costs relative to variable costs have high operating
leverage.
, The notion of scarce economic resources: - ANSWER✔✔gives rise to choices
determined by opportunity costs.
The crowding out effect will most likely lead to higher: - ANSWER✔✔interest
rates.
Which of the following actions taken by a central bank is best described as
expansionary? - ANSWER✔✔Purchasing government bonds
A government implements a policy that encourages consumers and businesses to
increase spending and investment. Those who benefit from this additional
spending, in turn, increase their own spending. The mechanism by which the initial
increase in spending increases total spending by a greater amount is -
ANSWER✔✔multiplier effect.
An obstacle to the alignment of international business cycles is the existence of
international: - ANSWER✔✔restrictions on capital flows.
The broadest-based measure of a nation's inflation rate is provided by the: -
ANSWER✔✔implicit GDP deflator.
The US dollar is currently the world's most dominant reserve currency. If the US
dollar was not a reserve currency, the competitive position of US exporters would
most likely be: - ANSWER✔✔stronger.
As a reserve currency, the US dollar is held in significant quantities by many
governments and financial institutions as part of their foreign exchange reserves.
The US dollar also acts as the pricing currency for many international transactions,
which means demand for US financial assets and US dollars is higher than it would
