2015 Level Ⅰ Mock Exam: Afternoon Session

1．Carolina Ochoa, CFA, is the chief financial officer at Pantagonia Computing. Ochoa is currently the subject of an inquiry by Pantagonia's corporate investigations department. The inquiry is the result of an anonymous complaint accusing Ochoa of falsifying travel expenses for senior management related to a government contract. According to the CFA Institute Code of Ethics and Standards of Professional Conduct, it is most appropriate for Ochoa to disclose the allegations:

A．to CFA Institute when the investigation concludes.

B．on her Professional Conduct Statement.

C．to CFA Institute if the allegations are proven correct.

【答案】B

【解析】

Members and candidates must self-disclose on the annual Professional Conduct Statement all matters that question their professional conduct, such as involvement in civil litigation or criminal investigations or being the subject of a written complaint.

CFA Level I

"Code of Ethics and Standards of Professional Conduct"

2．Ileana Inkster, CFA, was recently offered a senior management position within the trust department at a regional bank. The department is new, but the bank has plans to expand it significantly over the next few months. Inkster has been told she will be expected to help grow the client base of the trust department. She is informed that the trust department plans to conduct educational seminars and pursue the attendees as new clients. Inkster notices that recent seminar advertisements prepared by the bank's marketing department do not mention investment products will be for sale at the seminar. The ads indicate attendees can "learn how to immediately add $100,000 to their net worth." What should Inkster most likely do to avoid violating any CFA Institute Standards of Professional Conduct?

A．Decline to accept the new position

B．Accept the position and inform senior management of inadequate compliance procedures C. Accept the position and revise the marketing material

【答案】A

【解析】

The prospective supervisor's first step should be to not take the position. Accepting the position with inadequate procedures in place or improper marketing material would leave Inkster at risk of incurring a violation of Standard IV(C)-Responsibilities of Supervisors. She could agree to be hired as an interim consultant with the bank in order to implement adequate procedures before taking on any supervisory role.

CFA Level I

"Guidance for Standards I-VII"

Standard IV(C)-Responsibilities of Supervisors

3．Beth Kozniak, a CFA candidate, is an independent licensed real estate broker and a well-known property investor. She is currently brokering the sale of a commercial property on behalf of a client in financial distress. If the client's building is not sold within 30 days, he will lose the building to the bank. A year earlier, another client of Kozniak's had expressed interest in purchasing this same property. However, she is unable to contact this client, and she has not discovered any other potential buyers. Given her distressed client's limited time frame, Kozniak purchases the property herself and forgoes any sales commission. Six months later, she sells the property for a nice profit to the client who had earlier expressed interest in the property. Has Kozniak most likely violated the CFA Institute Standards of Professional Conduct?

A．No

B．Yes, she did not disclose her potential conflicts of interest to either client

C．Yes, she profited on the real estate to the detriment of her financially stressed client

【答案】A

【解析】

Kozniak does not appear to have violated any CFA Institute Standards of Professional Conduct. Because she is known in the market for investing and brokering property and both parties have worked with Kozniak in the past, both parties would know of her interests. In addition, in both cases, she acts for her own account as a primary investor, not as a broker. She buys the property for her own portfolio and then sells the property from her own portfolio. Therefore, Kozniak did not violate Standard Vl(A)-Disclosure of Conflicts. When she purchased the property for her portfolio, she saved her client from losing the building to the bank and did not charge a sales commission. Because the sale of the property to her other client did not take place until six months after her purchase, and she was unable to contact the client who had earlier expressed interest prior to her purchase, she cannot be accused of violating Standard IIl(A)-Loyalty, Prudence, and Care with either client.

CFA Level I

"Guidance for Standards I-VII"

Standard Ⅲ(A)-Loyalty, Prudence, and Care, Standard Vl(A)-Disclosure of Conflicts

4．Mariam Musa, CFA, head of compliance at Dunfield Brokers, questions her colleague Omar Kassim, a CFA candidate and a research analyst, about his purchase of shares in a company for his own account immediately before he publishes a "buy" recommendation. He defends his actions by stating he has done nothing wrong because Dunfield does not have any personal trading policies in place. The CFA Institute Standards of Professional Conduct were most likely violated by:

A．only Kassim.

B．both Musa and Kassim.

C．only Musa.

【答案】B

【解析】

Both Musa and Kassim violated the Standards of Professional Conduct. Musa violated Standard IV(C)-Responsibilities of Supervisors by not ensuring policies were in place to prevent violations of the Standards of Professional Conduct (in this case, Standard Vl(B)-Priority of Transactions) by someone subject to her supervision. As the head of compliance, Musa supervised Kassim and must meet her supervisory responsibilities outlined in the Standards of Professional Conduct. Kassim violated Standard Vl(B)-Priority of Transactions because he did not give sufficient priority to Dunfield's clients before trading on his recommendation.

CFA Level I

"Guidance for Standards I-VII"

Standard IV(C)-Responsibilities of Supervisors, Standard Vl(B)-Priority of Transactions

5．Which of the following statements does not accurately represent the objectives of Global Investment Performance Standards (GIPS)? The GIPS standards:

A．ensure consistent, accurate investment performance data in the areas of reporting, records, marketing, and presentations.

B．obtain global acceptance of calculation and presentation standards in a fair, comparable format with full disclosure.

C．promote fair competition among investment management firms in all markets by requiring common fee structures.

【答案】C

【解析】

One of the objectives of the GIPS standards is to promote fair competition among investment management firms in all markets; this objective does not require unnecessary entry barriers or hurdles for new firms, such as common fee structures.

CFA Level I

"The GIPS Standards," CFA Institute

Fundamentals of Compliance

6．James Simone, CFA, the chief financial officer of a publicly listed company, seeks to improve the quality of his company's communication with institutional fund managers. He holds an investor briefing with this group the evening before the company earnings are announced. The company's quarterly earnings are broadcast in a press release the next day before the market opens. Theearnings information in the investor briefing is identical to that in the press release.Did Simone most likely violate the CFA Institute Standards of Professional Conduct?

A．Yes

B．No, because the company releases information while the market is closed

C．No, because investor briefing and press release information are identical

【答案】A

【解析】

Simone violated Standard I I(A)-Material Nonpublic Information by giving institutional fund managers access to material nonpublic information prior to public dissemination (i.e., the press release). By releasing earnings results to a select group of institutional fund managers prior to a public press release, Simone allows the institutional fund managers a time advantage over other investors not invited to the investor briefing.

CFA Level I

"Guidance for Standards I-VII"

Standard II(A)-Material Nonpublic Information

7．Diana Fairbanks, CFA, is married to an auditor who is employed at a large accounting firm. When her husband mentions that a computer firm he audits will receive a qualified opinion, she thinks nothing of it. Later that week, when she reviews a new client account, she notices there are substantial holdings of this computer firm. When she does a thorough internet search for news on the company, she does not find anything about its most recent audit or any other adverse information. Which of the following actions concerning the computer stock should Fairbanks most likely take to avoid violating the CFA Institute Standards of Professional Conduct?

A．Complete a thorough and diligent analysis of the company and then sell the stock.

B．Sell the stock immediately because she has a reasonable basis for taking this investment action.

C．Take no investment action.

【答案】C

【解析】

The information concerning the qualified opinion is material. It is also nonpublic because it has not been released and is not available online, so the mosaic theory would not hold up in this case. As a result, she would be in violation of Standard II(A)-Material Nonpublic Information if she took investment action based on this information. She should also make reasonable efforts to achieve public dissemination of the information.

CFA Level I

"Guidance for Standards I-VII"

Standard II(A) Material Nonpublic Information

8．Margie Germainne, CFA, is a risk management consultant who has been asked by a small investment bank to recommend policies to prevent bank employees from front running client orders. These clients generally invest in one or more of the bank's large cap equity unit trusts. To ensure compliance with the CFA Institute Standards of Professional Conduct, Germainne should least likely recommend which of the following? Employees should be restricted from trading:

A．equity-related securities.

B．without prior permission.

C．during established time periods.

【答案】A

【解析】

Although Standard VⅠ(B)-Priority of Transactions is designed to prevent any potential conflict of interest or the appearance of a conflict of interest with respect to personal transactions, it does not ban employees from trading securities. A ban on all equity-related securities could be excessively restrictive to employees and unnecessary if appropriate personal transaction policies and procedures are in place.

CFA Level I

"Guidance for Standards I-VII"

Standard VⅠ(B)-Priority of Transactions

9．Molly Burnett, CFA, is a portfolio manager for a fund that only invests in environmentally friendly companies. A multinational utility company recently acquired one of the fund's best-performing investments, a wind power company. The wind power company's shareholders received utility company shares as part of the merger agreement. The utility has one of the worst environmental records in the industry, but its shares have been one of the top performers over the past 12 months. Because the utility pays a high dividend every three months, Burnett holds the utility shares until the remaining two dividends are paid for the year then sells the shares. Burnett most likely violated the CFA Institute Standard of Professional Conduct concerning:

A．Disclosure of Conflicts.

B．Suitability.

C．Independence and Objectivity.

【答案】B

【解析】

The utility is not a suitable investment for a fund that only invests in companies with good environmental records. Continuing to hold this investment, therefore, was a violation ofStandard

Ⅲ(C)-Suitability.

CFA Level I

"Guidance for Standards I-VII"

Standard I(B)-Independence and Objectivity, Standard IIl(C)-Suitability, Standard VⅠ(A)-Disclosure of Conflicts

10．Johannes Meir, CFA, is a compliance officer for Family Estate Planning, LLC, a private wealth consulting firm. Many of his colleagues have family members who have started their own retail businesses. Some of Meir's colleagues have been asked by relatives to serve as non-executive directors or advisers to their companies. Meir should most likely recommend which of the following policies to ensure compliance with the CFA Institute Standards of Professional Conduct?

A．Require employees to declare all income sources annually

B．Require employees to declare all outside business interests

C．Prohibit employees from becoming directors or advisers

【答案】B

【解析】

Standard VⅠ(A)-Disclosure of Conflicts requires the disclosure of conflicts. For Meir to understand what potential conflicts of interest employees may have with the firm and with their clients, he would need to know the outside interests of each staff member. The staff members themselves may not know enough about the company and its clients to disclose those interests that would present a potential conflict. Therefore, it may be best to have all employees declare their outside business interests on an annual basis so Meir can make the determination as to what outside business interests need to be disclosed to clients.

CFA Level I

"Guidance for Standards I-VII"

Standard Ⅵ(A)-Disclosure of Conflicts

11．Which of the following statements concerning requirements under Standard V(B)-communication with Clients and Prospective Clients is least likely accurate? This standard requires members and candidates to:

A．divulge the number of investment related personnel responsible for external communication.

B．distinguish between fact and opinion in the presentation of investment analysis and recommendations.

C．disclose the basic format and general principles of the investment process.

【答案】A

【解析】

Standard V(B)-Communication with Clients and Prospective Clients does not limit the type or number of staff responsible for external communication.

CFA Level I

"Standards of Professional Conduct," CFA Institute

Standard V(B)-Communication with Clients and Prospective Clients

12．Gabrielle Gabbe, CFA has been accused of professional misconduct by one of her competitors. The allegations concern Gabbe's personal bankruptcy filing 10 years ago when she was a college student and had a large amount of medical bills she could not pay. By not disclosing the bankruptcy filing to her clients, did Gabbe most likely violate any CFA Institute Standards of Professional Conduct?

A．No

B．Yes, related to Misconduct

C．Yes, related to Misrepresentation

【答案】A

【解析】

A personal bankruptcy does not necessarily constitute a violation of Standard I(C)-Misrepresentation or Standard I(D)-Misconduct. If the circumstances of the bankruptcy involved fraudulent or deceitful business conduct, then failing to disclose it may constitute a violation of the Standards of Professional Conduct.

CFA Level I

"Guidance for Standards I-VII"

Standard I(C)-Misrepresentation, Standard I(D)-Misconduct

13．Chan Liu, CFA, is the new research manager at the Pacific MicroCap Fund. Liu observed the following activities after she published a research report on a thinly traded micro-cap stock that included a "buy" recommendation:

·Pacific traders purchased the stock for Pacific's proprietary account and then purchased the same stock for all client accounts;

·And Pacific marketing department employees disseminated positive, but false, information about the stock in widely read internet forums.

Liu notes the stock's price increased more than 50% within a period of two days and was then sold for Pacific's account. Which of the following steps is most appropriate for Liu to take to avoid violating the CFA Institute Standards of Professional Conduct?

A．Remove her name from the micro-cap stock research report.

B．Publicly refute the false information posted on internet forums.

C．Report the observed activities to her employer.

【答案】C

【解析】

Certain staff at Liu's employer appear to be engaged in front running, a violation of Standard VⅠ(B)- Priority of Transactions, and market manipulation, a violation of Standard II(B)-Market Manipulation. If Liu observes these violations without taking steps to notify her employer, she will be in violation of Standard I(A)-Knowledge of the Law. Liu should know that the conduct observed is likely a violation of applicable laws, rules, and regulations as well as a violation of the CFA Institute Standards of Professional Conduct. Her first step, therefore, should be to attempt to stop the behavior by bringing it to the attention of the employer through a supervisor or the firm's compliance department. Inaction may be construed as participation or assistance in the illegal or unethical conduct.

CFA Level I

"Guidance for Standards I-VII"

Standard I (A)-Knowledge of the Law, Standard II(B)-Market Manipulation, Standard VI (B)-Priority of Transactions

14．Francesca Ndenda, CFA, and Grace Rutabingwa work in the same department for New Age Managers, with Rutabingwa reporting to Ndenda. Ndenda learns that Rutabingwa received a Notice of Enquiry from the Professional Conduct Program at CFA Institute regarding a potential cheating violation when she sat for the CFA exam in June. As Rutabingwa's supervisor, Ndenda is afraid that Rutabingwa's behavior will be seen as a violation of the Code and Standards. Does Ndenda most likely have cause for concern?

A．No, not until Rutabingwa is found guilty of cheating

B．Yes

C．No, because her responsibilities do not apply

【答案】C

【解析】

A supervisor's responsibilities relate to detecting and preventing violations by anyone subject to their supervision or authority regarding activities they supervise. Ndenda had no way of detecting and/or preventing Rutabingwa from cheating during the CFA exam, if in fact that is what she did, because it was an event she did not attend.

CFA Level I

"Guidance for Standards I-VII," CFA Institute

Standard IV(C)

15．According the GIPS standards, for periods beginning on or after 1 January 2011, the aggregate fair value of total firm assets most likely includes all:

A．fee-paying discretionary accounts.

B．fee- and non-fee-paying discretionary accounts.

C．fee- and non-fee-paying discretionary and non-discretionary accounts.

【答案】C

【解析】

For periods beginning on or after 1 January 2011, total firm assets must include the aggregate fair value of all discretionary and non-discretionary assets managed by the firm. This includes both fee-paying and non-fee-paying portfolios.

CFA Level I

"Global Investment Pen~ormance Standards (GIPS)"

GIPS Requirement 0.A.13

16．Which of the following statements concerning why the Global Investment Performance Standards (GIPS) were created is least likely correct? The GIPS standards were created to:

A．provide clients certainty in what is presented and allow them to make reasonable comparisons.

B．establish a standardized, industry wide approach for investment firms to follow.

C．identify a set of ethical principles for firms to follow in calculating and presenting historical investment results.

【答案】A

【解析】

The GIPS standards were created to ensure fair representation and full disclosure of investment performance, not to provide certainty in what is presented.

CFA Level I

"Introduction to the Global Investment Performance Standards (GIPS)," CFA Institute

Why Were the GIPS Standards Created?

17．Jan Loots, CFA, quit his job as a portfolio manager at an investment firm with whom he had a non- solicitation agreement he signed several years ago. Loots received permission to take his investment performance history with him and also took a copy of the firm's software-trading platform. Subsequently, Loots sent out messages on social media sites announcing he was looking for clients for his new investment management firm. Access to Loots's social media sites is restricted to friends, family, and former clients. Loots least likely violated the CFA Institute Standards of Professional Conduct concerning his:

A．non-solicitation agreement.

B．investment performance history.

C．trading software.

【答案】B

【解析】

The portfolio manager received permission to use his investment performance history from his prior employer. The member violated his non-solicitation agreement by indicating his availability to new clients on several social media sites accessible by clients of his former employer. This action is a violation of Standard IV(A)-Loyalty because he did not act for the benefit of his former employer. In this case, the member may cause harm to his former employer if his messages result in clients moving to his new business from his former employer. The member also violated Standard IV(A) by taking his employer's property, the trading software.

CFA Level I

"Guidance for Standards I-VII"

Standard IV(A)-Loyalty

18．Sergio Morales, CFA, believes he has found evidence that his supervisor is engaged in fraudulent activity involving a client's account. When Morales confronts his supervisor, he is told the client is fully aware of the issue. Later that day, Morales contacts the client and after disclosing the fraudulent activity, he is told by the client to mind his own business. Following the requirements of local law, Morales provides all of his evidence, along with copies of the client's most recent account statements, to a government whistleblower program. Has Morales most likely violated the CFA Institute Standards of Professional Conduct?

A．No

B．Yes, concerning Duties to Employers

C．Yes, concerning Preservation of Confidentiality

【答案】A

【解析】

Because Morales believes his supervisor and potentially the client are engaged in fraudulent activity and following the requirements of local law, he has not violated Standard I Il(E)-Preservation of Confidentiality or Standard (V)-Duties to Employers.

CFA Level I

"Guidance for Standards I-VII"

Standard Ⅲ(E) Preservation of Confidentiality, Standard (IV) Duties to Employers, Standard (V)

Duties to Employers

19．For a positively skewed unimodal distribution, which of the following measures is most accurately described as the largest?

A．Median

B．Mean

C．Mode

【答案】B

【解析】

For a positively skewed unimodal distribution, the mode is less than the median, which is less thanthe mean.

CFA Level I

"Statistical Concepts and Market Returns," Richard A. DeFusco, Dennis W. McLeavey, Jerald E.

Pinto, and David E. Runkle

Section 8

20．A technical analyst observes a head and shoulders pattern in a stock she has been following. She notes the following information:

Based on this information, her estimate of the price target is closest to:

A．$59.50.

B．$48.00.

C．$44.50.

【答案】B

【解析】

Price target = Neckline - (Head - Neckline).

In this example, Price target =

CFA Level I

"Technicai Analysis,"Barry M.Sine and Robert AStrong

Section 3.3.1.321.

21．The following sample of 10 items is selected from a populatian. The population variance is unknow.

The standard error of the sample mean is closest to:

A．10.84

B．3.43

C．3.60

【答案】B

【解析】

When the populatian variance is unkown, the standard error of the sample mean is calculated as , where s is the sample standard deviation and n is the size of the sample. The sample standard deviation is

.In this problem,

The standard error of the sample mean is therefore 10.844/10^0.5 = 3.429≈3.43.

CTA Level I

"Sampling and Estimation ,"Richard A DeFusco ,Dennis W.McLeavey,Jerald E Pinto,and David E. Runkle

Section 3.1

22．A portfolio manager estimates the probabilities of the following events for a mutual fund:

·Event A: the fund will earn a return of 5%.

·Event B: the fund will earn a return below 5%

The least appropriate description of the events is that they are:

A．dependent.

B．exhaustive.

C．mutually exclusive.

【答案】B

【解析】

Events are exhaustive when they cover all possible outcomes. Mutually exclusive means that only one event can occur at a time. Two events are dependent if the occurrence of one event does affect the probability of occurrence of the other event. In this situation, Event A and B are both mutually exclusive (because they cannot occur at the same time) and dependent (because if one event occurs, the probability of the other becomes zero). However, the two events are not exhaustive because they do not cover the event that the fund will eam a retum above 5%.

CFA Level I

"Probability Concepts," Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, and David E.

Runkle

Section 2

23．The following chart is best described as an example of which type of technical analysis chart?

A．A candlestick chart

B．A bar chart

C．A point and figure chart

【答案】A

【解析】

The chart is an example of a candlestick chart. A candlestick chart provides four prices per data point entry: the opening and closing pdces and the high and low prices dudng the period (i.e., during a week). In a candlestick chart, a vertical line represents the range through which the security price traveled during the time period. The line is known as the wick or shadow. The body of the candle is shaded if the opening price was higher than the closing price, and the body is clear if the opening price was lower than the closing price.

CFA Level I

"Technical Analysis," Barry M. Sine and Robert A. Strong

Section 3.1.3

24．In setting the confidence interval for the population mean of a normal or approximately normal distribution, and given that the sample size is small, Student's t-distribution is the most appropriate approach when the variance is:

A．unknown.

B．large.

C．known.

【答案】A

【解析】

When the sample size is small (and the population is normally or approximately normally distributed), the Student's t-distribution is preferred if the variance is unknown.

CFA Level I

"Sampling and Estimation," Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, and David E.

Runkle

Section 4.2

25． A stock is declining in price and reaches a price range wherein buying activity is sufficient to stop the decline. This range is best described as the:

A．change in polarity point.

B．resistance level.

C．support level.

【答案】C

【解析】

The support level is defined to be a low price range in which buying activity is sufficient to stop the decline in price.

CFA Level I

"Technical Analysis," Barry M. Sine and Robert A. Strong

Section 3.2

26．An analyst collects data relating to five commonly used measures of financial leverage and interest coverage for a randomly chosen sample of 300 firms. The data come from those firms' fiscal year 2013 annual reports. These data are best characterized as:

A．time series.

B．longitudinal.

C．cross sectional.

【答案】C

【解析】

Data on some characteristics of companies at a single point in time are cross-sectional data.

CFA Level I

"Sampling and Estimation," Richard A. Defusco, DennisW. McLeavey, Jerald E. Pinto, and David E. Runkle

Section 2.3

27．A sample of 25 observations has a mean of 8 and a standard deviation of 15. The standard error of the sample mean is closest to:

A．1.60.

B．3.00.

C．3.06.

【答案】B

【解析】

The standard error of the sample mean, when the sample standard deviation is known, is:

CFA Level I

"Sampling and Estimation," Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, and David E. Runkle

Section 3.1

28．If a stock's continuously compounded return is normally distributed, then the distribution of the future stock price is best described as being:

A．a Student's t.

B．Iognormal.

C．normal.

【答案】B

【解析】

If a stock's continuously compounded return is normally distributed, then the future stock price is necessarily Iognormally distributed.

CFA Level I

"Common Probability Distributions," Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, and David E. Runkle

Section 3.4

29．Independent samples drawn from normally distributed populations exhibit the following

characteristics:

Assuming that the variances of the underlying populations are equal, the pooled estimate of the common variance is 2,678.05. The t-test statistic appropriate to test the hypothesis that the two population means are equal is closest to:

A．1.90.

B．0.29.

C．0.94.

【答案】C

【解析】

The t-statistic for the given information (normally distributed populations, population variances assumed equal) is calculated as:

In this case, we have:

CFA Level I

"Hypothesis Testing," Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, and David E Runkle

Section 32

30．The following information is available for a portfolio:

The return on the portfolio is closest to:

A．10.0%.

B．82%

C．10.8%.

【答案】C

【解析】

The portfolio return is the weighted mean return and is calculated as follows:

CFA Level I

"Statistical Concepts and Market Returns," Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, and David E. Runkle

Section 5.4.1

31．A sample of 240 managed portfolios has a mean annual return of 0.11 and a standard deviation of returns of 0.23. The standard error of the sample mean is closest to:

A．0.00096.

B．0.00710.

C．0.01485.

【答案】C

【解析】

For a sample, the standard error of the mean is  where s is the sample standard deviation and n is the sample size), which here is:

CFA Level I

"Sampling and Estimation," Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, and David E. Runkle

Section 3.1

32．A two-tailed t-test of the hypothesis that the population mean differs from zero has a p-value of 0.0275. Using a significance level of 5%, the most appropriate conclusion is:

A．to accept the null hypothesis.

B．to reject the null hypothesis.

C．that the chosen significance level is too high.

【答案】B

【解析】

The p-value is the smallest level of significance at which the null hypothesis can be rejected. In this case, the given p-value (0.0275) is less than the given level of significance (0.05); therefore, the null hypothesis is rejected.

CFA Level I

"Hypothesis Testing," Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, and David E. Runkle

Section 2

33．Which of the following is the least likely outcome when a monopolist adopts first-degree price discrimination because of customers' differing demand elasticities?

A．The monopolist shares the total surplus with consumers.

B．The output increases to the point at which price equals the marginal cost.

C．The price for a marginal unit decreases to less than the price for other units.

【答案】A

【解析】

In a monopoly, perfect price discrimination results in the total surplus being kept by the producer, the monopolist.

CFA Level I

"The Firm and Market Structures," by Richard G. Fritz and Michele Gambera

Section 6.4

34．The primary monetary policy goal of most major central banks is best characterized as:

A．maintaining price stability.

B．stimulating economic growth.

C．maintaining low interest rates.

【答案】A

【解析】

The primary monetary policy goal of most major central banks is to maintain price stability.

CFA Level I

"Monetary and Fiscal Policy," Andrew Clare and Stephen Thomas

Section 2.3

35．Which of the following is least likely to be a valid function/characteristic of money? Money:

A．requires a double coincidence of wants.

B．acts as a unit of account.

C．provides a store of wealth.

【答案】A

【解析】

The functions of money include being a means of payment, acting as a medium of exchange and acting as a unit of account. It does not require a double coincidence of wants, as barter does since it easily divisible and can act as a medium of exchange.

CFA Level I

"Monetary and Fiscal Policy," Andrew Clare and Stephen Thomas

Section 2.1

36．Six companies in an industry have the following market shares:

If Companies D and F merge into a new Company, G, the industry's three-company concentration ratio would be closest to:

A．72%.

B．74%.

C．71%.

【答案】B

【解析】

The concentration ratio for the top three companies would be 74%:

CFA Level I

"The Firm and Market Structures," Richard G. Fritz and Michele Gambera

Section 7.2

37．Which of the following will most likely cause the short-run aggregate supply (SRAS) curve to shift to the right?

A．Increase in business taxes

B．Increase in the supply of human capital

C．Increase in nominal wages

【答案】B

【解析】

An increase in the supply of human capital will increase the resource base and cause the SRAS to shift to the right.

CFA Level I

"Aggregate Output, Prices, and Economic Growth," Paul R. Kutasovic and Richard G. Fritz

Sections 3.3.2,3.3.3

38．A country's international transactions accounts data for last year are presented in its domestic currency:

The current account balance is closest to:

A．-4,216.

B．-4,345.

C．-4,087.

【答案】C

【解析】

CFA Level I

"International Trade and Capital Flows," Usha Nair-Reichert and Daniel Robert Witschi

Sections 4.1,4.2

39．The unemploym ent rate is best described as the ratio of unemployed to:

A．total population of people who are of working age.

B．labor force.

C．labor force minus frictionally unem ployed.

【答案】B

【解析】

The unemployment rate is the ratio of unem ployed to labor force.

CFA Level I

"Understanding Business Cycles," by Michele Gambera, Milton Ezrati, and Belong Cao

Section 4.1

40．Assume that two firms in a duopoly enter into a collusive agreement in an attempt to form a cartel and restrict output, raise prices, and increase profits. According to the Nash equilibrium, a low price is most likely charged by:

A．only one firm.

B．both firms.

C．neither firm.

【答案】C

【解析】

CFA Level I

The Firm and Market Structures," Richard G. Fritz and Michele Gambera

Section 5.1

41．First-degree price discrimination is best described as pricing that allows producers to increase their econom ic profit while consumer surplus:

A．increases.

B．decreases.

C．is eliminated.

【答案】C

【解析】

In first-degree price discrimination, the entire consumer surplus is captured by the producer; the consumer surplus falls to zero.

CFA Level I

"The Firm and Market Structures," Richard G. Fritz and Michele Gambera

Section 6.4

42．Which characteristic is a firm least likely to exhibit when it operates in a market with a downward sloping demand curve, many competitors, and zero economic profits in the long run?

A．Differentiated product

B．Low barriersto entry

C．No pricing power

【答案】C

【解析】

The characteristics of monopolistic competition include a large number of competitors, low pricing power, and the production of differentiated products (through advertising and other non-price strategies), but these still result in some pricing power. The ease of entry results in zero economic profits in the long run.

CFA Level I

"The Firm and Market Structures," Richard G. Fritz and Michele Gambera

Sections 2.1,2.2,4

43．An expansionary fiscal policy is least likely to include an increase in:

A．tax rates.

B．budget deficit.

C．government expenditures.

【答案】A

【解析】

An expansionary fiscal policy means that the government increases its purchases of goods and services and/or cuts tax rates to increase aggregate demand. Furthermore, an increase in the budget deficit would be associated with an expansionary fiscal policy.

CFA Level I

"Monetary and Fiscal Policy," by Andrew Clare and Stephen Thomas

Sections 3.1.1-3.1.2

44．The total output in units and average selling prices in a hypothetical economy producing only two products, X and Y, is provided:

If the implict it price deflator for GDP in Year 1 was 100,for Year 2,it is closest to

A．113.4

B．106.2

C．106.8

【答案】A

【解析】

CFA Level I

"Aggregate output,Prices,and Economic Growth,"Paul R.Kutasovic and Richard G.Fritz

Section2.1.2

45．Information about the coupon rates on the various long-term fixed-rate debt issue of a company can most likely be found in the:

A．non-current liabilities section of the balance sheet.

B．Management Discussion & Analysis(MD&A)

C．notes to the finacial statements

【答案】C

【解析】

Information about the coupon on rates on the various long-term fixed-rate debt issue can usually be found in the notes to the financial statements. The MD&A is more likely to discuss interest rate trends and/or current financing cosys but not specific information on individual debt issues.

CFALevel I

"Non-Current(Long-Term)Liabilities,"Elizabeth A Gordon and Elaine Henry

Section2.6

46．A company is purchasing a customer list that it expects will provide economic benefits for the next 5years.The company chooses to use an accelerated amortization method.The choice will most likely resultin:

A．the highest amortization expense in the first year.

B．the highest amortization expense in the fifth year.

C．an equal amortization expense in all 5 year.

【答案】A

【解析】

With accelerated amortization,first year amortization expense should be the highest.

CFA Level I

"Long-lived Assets," Elaine Henry and Elizabeth A. Gordon

Sections 3.1,3.2

47．The following information (in millions) on a company is available:

The amount of cash (in millions) that the company paid to its suppliers is closest to:

A．$505.

B．$495.

C．$445.

【答案】B

【解析】

CFA Level I

"Understanding Cash Flow Statements," Elaine Henry, Thomas R. Robinson, Jan Hendrik van

Greuning, and Michael A. Broihahn

Section 3.2.1.2

48．Which of the following is most likely a benefit of the direct method for reporting cash flow from operating activities? Compared with the indirect method, the direct method:

A．mirrors the forecasting approach normally used by analysts.

B．provides insight on differences between net income and operating cash flows.

C．provides details on the specific sources of operating receipts and payments.

【答案】C

【解析】

The primary benefit of the direct method is that it provides information on the specific sources of operating cash receipts and payments.

CFA Level I

"Understanding Cash Flow Statements,"Elaine Henry, Thomas R. Robinson, Jan Hendrik van Greuning, and Michael A. Broihahn

Section 2.3

49．On 1 January, a company that prepares its financial statements according to International Financial Reporting Standards (IFRS) arranged financing for the construction of a new plant. The company:

·borrowed NZ$5,000,000 at an interest rate of 8%,

·issued NZ$5,000,000 of preferred shares with a cumulative dividend rate of 6%, and

·temporarily invested NZ$2,000,000 of the loan proceeds during the first six months of construction and earned 7% on that amount

The amount of financing costs to be capitalized to the cost of the plant in the first year is closest to:

A．NZ$330,000.

B．NZ$400,000.

C．NZ$630,000.

【答案】A

【解析】

The interest costs can be capitalized, but under IFRS, any amounts earned by temporarily investing the funds are deducted from the capitalized amount. The costs related to the preferred shares cannot be capitalized.

CFA Level I

"Long-Lived Assets," Elaine Henry and Elizabeth A. Gordon

Section 2.1

50．The following information for the current year is available for a company that prepares its financial statements in accordance with US GAAP.

The company's operating profit(inthousands) is closest to:

A．$2,050.

B．$2,300.

C．$1,850.

【答案】A

【解析】

CFA Level I

"Understanding Income Statements," Elaine Henry and Thomas R. Robinson

Sections 5.3,5.5

51．For a company that prepares its financial statements under International Financial Reporting Standards (IFRS), for which of the following assets is it most likelythat the company could report using the fair value model?

A．Houses built by the company for sale to customers

B．A building owned by the company and leased out to tenants

C．A building the company owns and uses to house its administrative activities

【答案】B

【解析】

Under IFRS, a building owned for the purpose of earning rentals or capital appreciation--in this case, the one owned by the company and leased out to tenants--is an investment property and can be reported under either the cost model or fair value model.

CFA Level I

"Inventories," Michael A. Broihahn

Section 4

"Long-Lived Assets," Elaine Henry and Elizabeth A. Gordon

Section 8

52．The method a high end custom-built motorcycle manufacturer uses to value its inventory results in the matching of the physical flow of the particular items sold, and the items remaining in inventory, to their actual cost. Which of the following inventory valuation methods is the manufacturer most likely using?

A．FIFO

B．Weighted average cost

C．Specific identification

【答案】C

【解析】

Specific identification is the inventory method that results in the matching of the physical flow of the particular items sold and would be most suitable for high-end custom-built motorcycles that are not ordinarily considered interchangeable.

CFA Level I

"Inventories," Michael A. Broihahn

Section 3.1

53．An analyst is reviewing the property, plant, and equipment disclosure related to a company's warehouse. The company uses the International Financial Reporting Standards (IFRS) revaluation model. The analyst would least likely be able to determine:

A．the carrying amount under the cost model.

B．the original date of acquisition.

C．how the fair value was obtained.

【答案】B

【解析】

IFRS does not require disclosure of the original date of acquisition.

CFA Level I

"Long-Lived Assets," Elaine Henry and Elizabeth A. Gordon

Section 7

54．Selected information from a company's comparative income statement and balance sheet is presented below:

The cash collected from customers in 2013 is closest to:

A．$111,500.

B．$96,100.

C．$88,500.

【答案】C

【解析】

Cash collected from customers = Revenues - Increase in accounts receivable = $100 - (25 - 13.5) =$88.5 thousand.

CFA Level I

"Understanding Cash Flow Statements," Elaine Henry, Thomas R. Robinson, Jan Hendrik van Greuning, and Michael A. Broihahn

Section 3.2.1.1

55．The following information applies to a capital asset of a company:

This company uses the straight line depreciation method for this capital asset.

At the end of 2014, the expected remaining life of the capital asset, in years, is closest to: A.17.

B.20.

C.6.

【答案】A

【解析】

Based on the annual increase in accumulated depreciation, annual depreciation expense is $125 and the asset was acquired in 2012.

Total useful life of the capital asset = 2,500/125 = 20 years.

Remaining useful life three years later = 20 years - 3 years = 17 years.

CFA Level I

"Long-Lived Assets," Elaine Henry and Elizabeth A. Gordon

Section 3.1

"Financial Statement Analysis: Applications," Thomas R. Robinson, Jan Hendrik van Greuning, Elaine Henry, and Michael A. Broihahn

Section 6.4

56．Assume a company has the following portfolio of marketable securities, which were acquired at the end of last year:

If the company reports under IFRS compared with US GAAP, its net income in the current year will most likely be:

A．€500,000 lower.

B．the same.

C．€500,000 higher.

【答案】B

【解析】

Whether securities are classified as held for trading or available for sale, they are measured at their fair value on the balance sheet. All gains/losses on held-for-trading securities are reported on the income statements, whereas the unrealized gains/losses on available-for-sale securities are reported in equity. This treatment is the same for both IFRS and US GAAP reporting.

CFA Level I

"Understanding Income Statements," Elaine Henry and Thomas R. Robinson

Section 8

"Understanding Balance Sheets," Elaine Henry and Thomas R. Robinson

Section 4.5

57．Other comprehensive income is least likely to include gains or losses on:

A．the sale or disposal of discontinued operations.

B．the translation of foreign currency-denominated subsidiary financial statements.

C．derivative contracts accounted for as hedges.

【答案】A

【解析】

Gains or losses on the disposal of discontinued operations are reported separately near the bottom of the income statement and are included in net income, not other comprehensive income.

CFA Level I

"Understanding Income Statements," Elaine Henry and Thomas R. Robinson

Sections 5.1,8

58．A company that reports in accordance with International Financial Reporting Standards (IFRS) does not use the cost model to value its investment properties and property, plant, and equipment.

Information related to an investment property and a plant is as follows:

On its income statement for the year, the company will most likely recognize a gain (in thousands) of:

A．€200.

B．€300.

C．€100.

【答案】C

【解析】

The fair value model would be used for the investment property and the €100 thousand gain should be recognized on the company's income statement. The revaluation model would be used for the plant, and the €200 thousand gain should be recognized in the revaluation surplus account on the balance sheet with no impact on net income. Therefore, only the €100 thousand will affect net income.

CFA Level I

"Long-Lived Assets," Elaine Henry and Elizabeth A. Gordon

Section 8

59．A company that uses International Financial Reporting Standards (IFRS) entered into a three-year construction project with a total contract price (all figures in thousands) of $5,300 and expected costs of $4,400. At inception, the outcome of the contract could not be reliably measured, but the company did expect to recover its costs. Actual results are shown in the following table:

The amount of revenue (inthousands) the companyrecognizedin Year2 was closest to:

A．$0.

B．$2,409.

C．$2,000.

【答案】C

【解析】

Under IFRS, if the outcome of the contract cannot be reliably measured, but the company expects to recover its costs, then revenue may be recognized to the extent of the contract costs incurred. In Year 2, the costs incurred were $2,000 thousand, thus, the revenue would also be $2,000 thousand and the gross profit would be $0.

CFA Level I

"Understanding Income Statements," Elaine Henry and Thomas R. Robinson

Section 3.2.1

60．Under IFRS, the costs incurred in the issuance of bonds are most likely:

A．deferred as an asset and amortized on a straight-line basis.

B．included in the measurement of the bond liability.

C．expensed when incurred.

【答案】B

【解析】

Under IFRS, debt issuance costs are included in the measurement of the bond liability.

CFA Level I

"Non-Current (Long-Term) Liabilities," by Elizabeth A. Gordon and Elaine Henry

Section 2.1

61．A company values its ending inventory using the prices of its most recent purchases. The inventory valuation method that the company is most likely using is:

A．FIFO.

B．Weighted average cost.

C．LIFO.

【答案】A

【解析】

FIFO values ending inventory using the most recent costs of goods purchased.

CFA Level I

"Inventories," Michael A. Broihahn

Sections 3.2,3.3,3.4

62．Income statements for two companies (A and B) and the common-size income statement for the industry are provided in the following table:

The best conclusion an analyst can make is that:

A．both companies' tax rates are higher than the industry average.

B．Company B's interest rate is lower than the industry average.

C．Company A earns a higher gross margin than both Company B and the industry.

【答案】C

【解析】

Common-sized analysis of the income statements shows that Company A has a lower percentage cost of goods sold and thus a higher gross margin than the industry and Company B.

The tax rates for the companies are not higher than the industry. The interest rate is not a function of sales and cannot be analyzed on a common-size income statement. Tax rates are determined based on Taxes/Pretax earnings, not as a percentage of sales (as shown in common-size analysis).

CFA Level I

"Understanding Income Statements," Elaine Henry and Thomas R. Robinson

Section 7

"Financial Analysis Techniques," Elaine Henry, Thomas R. Robinson, and Jan Hendrik van Greuning

Sections 3.1,3.2.2

63．If a company has a deferred tax asset reported on its statement of financial position and the tax authorities reduce the tax rate, which of the following statements is most accurate concerning the effect of the change? The existing deferred tax asset will:

A．not be affected.

B．decrease in value.

C．increase in value.

【答案】B

【解析】

A decrease in the tax rate will result in a decrease in the previously repo~ted amounts of deferred tax assets. That is, the value of the future tax assets, based on the new lower rate, is reduced for offsetting future tax payments.

CFA Level I

"Income Taxes," Elbie Antonites and Michael A. Broihahn

Section 3.3

64．The following common-size income statement data and tax rates are available on a company.

The profitability ratio that had the largest absolute increase in value in the current year is the:

A．operating profit margin.

B．net profit margin.

C．gross profit margin.

【答案】C

【解析】

The gross profit margin increased the most in the current year:

CFA Level I

"Understanding Income Statements," Elaine Henry and Thomas R. Robinson

Sections 5.5,7.2

"Financial Analysis Techniques," Elaine Henry, Thomas R. Robinson, and Jan Hendrik van Greuning

Section 4.5

65．The following data are available for a company's first year of operations:

The company's end-of-year balance sheet will most likely include (in thousands) a deferred tax

A．liability of￡733.

B．liability of ￡460.

C．asset of￡73.

【答案】B

【解析】

Deferred tax balances result from temporary differences between a company's income as reported for tax purposes and income reported for financial statement purposes. The temporary difference in this case arises from the difference between the depreciation for accounting purposes and the depreciation for tax purposes. Because of this difference, the company would report more income tax expense than would actually be paid in taxes. The difference is a deferred tax liability.

CFA Level I

"Understanding Balance Sheets," Elaine Henry and Thomas R. Robinson

Section 5.2

"Income Taxes," Elbie Antonites and Michael A. Broihahn

Sections 2.2,4

66.The following data are available on a company:

The value of the company's liquidity ratio that decreased the most in the current year, compared with the prior year, is the:

A．cash ratio.

B．quick ratio.

C．current ratio.

【答案】C

【解析】

CFA Level I

"Understanding Balance Sheets," Elaine Henry and Thomas R. Robinson

Section 7.2

"Financial Analysis Techniques," Elaine Henry, Thomas R. Robinson, and Jan Hendrik van Greuning

Section 4.3

67．Because of significant changes in the marketplace, the demand for a company's product has fallen and is not expected to recover to previous levels. The following information is related to the patent under which the product is produced:

Which of the following statements is most accurate? The patent is impaired under:

A．IFRS only.

B．both IFRS and US GAAP.

C．US GAAP only.

【答案】A

【解析】

Under IFRS (International Financial Reporting Standards), first determine the recoverable amount, which is the higher of

1. value in use (the present value of the expected future cash flows) = $32,000 or

2. fair value minus costs to sell = $34,000 - 4,000 = $30,000

The recoverable amount ($32,000) is lower than the carrying value ($36,000). Therefore, the asset is impaired and should be written down to that amount.

Under US GAAP, to assess impairment, the carrying value ($36,000) is compared with the undiscounted expected future cash flows ($38,000). In this case, the carrying value is lower so the patent is not impaired.

CFA Level I

"Long-Lived Assets," Elaine Henry and Elizabeth A. Gordon

Sections 5.1,5.2

68．A compary is selling a Iong-lived asset with a carrying amount of $?0,000 for $50,000. The original cost of this asset was $120,000. In the year of sale, this event is most likely to be reported on the income statement as:

A．revenues of $80,000.

B．a gatn of $10,000.

C．a loss of $40,000.

【答案】B

【解析】

When a long lived asset is sold only the net gain or loss is reported on the income statement. The gain or loss on a sale = sales proceeds - carrying amount = $80,000 - ST0,000 = $10,000 gain.

CFA Level I

"Long-lived Assets," Elaine Henry and Elizabeth A. Gordon

Section 6.1

69．The unit contribution margin for a product is $20. A firm's fixed costs of production up to 300,000 units is $500,000. The degree of operating leverage (DOL) is most likely the lowest at which of the following production levels (in units):

A.200,000.

B.100,000.

C.300,000.

【答案】C

【解析】

The DOL is lowest at the 300,000 unit production level.

CFA Level I

"Measures of Leverage," Pamela Peterson Drake, Raj Aggarwal, Cynthia Harrington, and Adam Kobor

Section 3.3

70．A firm's price-to-earnings ratio (P/E) is 12.5. The firm has decided to repurchase shares using external funds that have an after-tax cost of 9%. After the repurchase, the earnings per share (EPS) will most likely:

A．decrease.

B．increase.

C．remain unchanged.

【答案】A

【解析】

Convert the P/E to the earnings yield, which is the earnings-to-price ratio (E/P): 1/12.5 = 8%. Because the after-tax cost of the external funds is higher than the earnings yield (i.e.,9% > 8%), the EPS will decrease after the repurchase.

CFA Level I

"Dividends and Share Repurchases: Basics," George H. Troughton and Gregory Noronha

Section 4.2.1

71．A company's optimal capital budget most likely occurs at the intersection of the:

A．marginal cost of capital and investment opportunity schedule.

B．marginal cost of capital and net present value profiles.

C．net present value and internal rate of return profiles.

【答案】A

【解析】

The point at which the marginal cost of capital intersects the investment opportunity schedule is the optimal capital budget.

CFA Level I

"Capital Budgeting," John D. Stowe and Jacques R. Gagné

Section 4.7

"Cost of Capital," Yves Courtois, Gene C. Lai, and Pamela Peterson Drake

Section 2.3

72．The per unit contribution margin for a product is $12. Assuming fixed costs of $12,000, interest costsof $3,000, and taxes of $2,000, the operating breakeven point (in units) is closestto:

A.1,000.

B.1,250.

C.1,417.

【答案】A

【解析】

The operating breakeven point is:

CFA Level I

"Measures of Leverage," Pamela Peterson Drake,Raj Aggarwal,Cyntthia Harrington,and Adam Kobor

Section3.6

73．For a 90-day US I reasury bill selling at a discount, which of the following methods most likely results in the highest yield?

A．Momey market yield(MMY)

B．Bond equiv alent yield(BEY)

C．Discount-bast yield(DBY)

【答案】B

【解析】

The face value is greater than the purchase price because the T-bill sells at a discount.

CFA Level I

"Working Capital Management,"Edgar A.Norton,Jr,Kenneth L.Parkinson,and Pamela Peterson Drake

Section4.1.1

74．A firm's estimated costs of debt,preferred stock,and comman stock are 12%,17%.and20%, respectively.Assuming equal funding from each source and a marginal tax rate of 40%,the weighted average cost of capital(WAAC)is closest to:

A．16.3%

B．13.9%

C．14.7%

【答案】C

【解析】

CFA Level I

"Cost of Capital," Yves Courtois,Gene C.Lai, and Pamela Peterson Drake

Section 2.2.1

75．After a two-for-one stock split, which of the following will most likely change relative to its pre-split value?

A．Earnings per share (EPS)

B．Price-to-earnings ratio (P/E)

C．Dividend payout ratio

【答案】A

【解析】

A two-for-one stock split will double the amount of shares, thus reducing the EPS to half of its pre-split value. P/E will remain unchanged because the price also reduces by half and exactly cancels out the effect of the reduced EPS. The dividend payout ratio remains unchanged because the same proportion of earnings will still be used after the split.

CFA Level I

"Dividends and Share Repurchases: Basics," George H. Troughton and Gregory Noronha

Section 2.5

76．A company decides to repurchase 5 million of its outstanding 20 million shares with debt funding.

After the repurchase, the company's after-tax earnings decline by 20%. The new earnings per share (EPS) is most likely:

A．equal to the pre-repurchase EPS.

B．less than the pre-repurchase EPS.

C．greater than the pre-repurchase EPS.

【答案】C

【解析】

The pre-repurchase EPS is Net income (NI)/20 million. The EPS after the repurchase is [NI x (1 - 20%)/15 million]. To connect the two values algebraically:

(NIl20 million) × X= [NI × (1 - 20%)/15 million]

X= (1 -20%) × (20 million/15 million) = 1.067

Because X is greater than 1, the EPS has increased after the repurchase.

CFA Level I

"Dividends and Share Repurchases: Basics," George H. Troughton and Gregory Noronha

Section 4.2.1

77．The market price of a company's stock is $5 per share with 50 million shares outstanding. The company decides to use its cash reserves to undertake a $10 million share buyback. Just prior to the buyback, the company reports total assets of $650 million and total liabilities of $450 million. The company's book value per share after the share buyback is closest to:

A．$3.96.

B．$4.17.

C．$3.80.

【答案】A

【解析】

CFA Level I

"Dividends and Share Repurchases: Basics," George H. Troughton, and Gregory Noronha

Section 4.2.2

78．A trader buys 500 shares of a stock on margin at $36 a share using an initial leverage ratio of 1.66. The maintenance margin requirement for the position is 30%. The stock price at which the margin call will occur is closestto:

A．$25.20.

B．$30.86.

C．$20.57.

【答案】C

【解析】

Initial equity (%) in the margin transaction = 1/Leverage ratio = 1/1.66 = 0.60;

Initial equity per share at the time of purchase = $36×0.60 = $21.60;

Price (P) at which margin call occurs:

Equity per share/Price per share = Maintenance margin (%)

= ( $21.60 + P-$36)/P = 0.30;

0.7P = $14.40;

P = $20.57

CFA Level I

"Market Organization and Structure," Larry Harris

Section 5.2

79．After the public announcement of the merger of two firms, an investor makes abnormal returns by going long on the target firm and short on the acquiring firm. This most likely violates which form of market efficiency?

A．Semi-strong form only

B．Semi-strong and strong forms

C．Weak and semi-strong forms

【答案】B

【解析】

In a semi-strong efficient market, prices adjust quickly and accurately to new information. In this case, prices would quickly adjust to the merger announcement, and if the market is a semi-strong efficient market, investors acting after the merger announcement would not be able to earn abnormal returns. Therefore, the market is not semi-strong-form efficient. A market that is not semi-strong-form efficient is also not strong-form efficient. Thus, violating the semi-strong-form efficiency also implies violating the strong-form efficiency. However, the market could still be weak-form efficient because past prices are not being used to make abnormal profits. Thus, we cannot say that the weak-form market efficiency has been violated.

CFA Level I

"Market Efficiency," W. Sean Cleary, Howard J. Atkinson, and Pamela Peterson Drake

Section 3.2

80．The data for two stocks in an index are as follows:

Assuming the beginning value of the float-adjusted market-capitalization-weighted equity index is100, the ending value is closestto:

A．102.68.

B．102.06.

C．103.80.

【答案】B

【解析】

In float-adjusted market-capitalization weighting, the weight on each constituent security is determined by adjusting its market capitalization for its market float. As the following computations show, the ending value of the index equals 102.06 (322,500/316,000)

CFA Level I

"Security Market Indices," Paul D. Kaplan and Dorothy C. Kelly

Section 3.2.3.1

81．Which of the following statements is moat accurate in an efficient market?

A．Securities market prices fully reflect their fundamental values.

B．Active strategies will lead to excess risk adjusted portfolio returns.

C．Securities market prices respond over time to changes in economic information.

【答案】A

【解析】

In an efficient market, market participants will process available information and those with opposite views will trade among each other until securities market prices fully reflect their fundamental values An efficient market is thus a market in which asset prices reflect all past and present information.

CFA Level I

"Market Efficiency," W. Sean Cleary, Howard J. Atkinson and Pamela Peterson Drake

Section 2.1

82．Participating preference shares are least likely to entitle the shareholders to participate in:

A．additional distribution of the company's assets upon liquidation.

B．corporate decisions through voting rights.

C．additional dividends if the company's profits exceed a predetermined level.

【答案】B

【解析】

Participating preference shares do not entitle the shareholders to participate in corporate decisions through voting rights. But they do entitle them to (1) an additional dividend if the company's profits exceed a prespecified level and (2) additional distribution of the company's assets upon liquidation, above the par.

CFA Level I

"Overview of Equity Securities," by Ryan C. Fuhrmann and Asjeet S. Lamba

Section 3.2

83．Which of the following statements regarding a commodity index is most accurate?

A．Commodity index returns differ from the changes in the prices of their underlying commodities.

B．Commodity indices commonly use an equal weighting method.

C．Commodity indices in the same markets will share similar risk and return profiles.

【答案】A

【解析】

The performance of commodity indices can be different from their underlying commodities because the indices consist of futures contracts on the commodities rather than the actual commodities. Commodity index returns reflect the risk-free interest rate, the changes in future prices, and the roll yield.

CFA Level I

"Security Market Indices," Paul D. Kaplan and Dorothy C. Kelly

Section 7.1

84．Compared with public equity markets, which of the following statements is most accurate about private equity markets? Operating in the private market:

A．offers stronger incentives to improve corporate governance.

B．allows more opportunities to raise capital.

C．allows management to better adopt a long-term focus.

【答案】C

【解析】

The management of a public firm is under pressures to meet shorter-term demands, such as meeting quarterly sales and earnings projections from analysts. Private owners are thus better able to focus on longer-term value creation opportunities.

CFA Level I

"Overview of Equity Securities," Ryan C. Fuhrmann, and Asjeet S. Lamba

Section 4

85．An internal evaluation of the trading behavior of three fund managers of a mutual fund company during the past year has revealed the following:

Which of the three managers most likely displayed the disposition effect bias?

A．Manager X

B．Manager Y

C．Manager Z

【答案】B

【解析】

The disposition effect relates to the behavioral bias in which investors tend to avoid realizing losses but, rather, seek to realize gains. Manager Y has displayed this bias.

CFA Level I

"Market Efficiency," W. Sean Cleary, Howard J. Atkinson, and Pamela Peterson Drake

Section 5.3

86．An equity analyst follows two industries with the following characteristics:

Based on the above information, the analyst will most appropriately conclude that, compared with the firms in Industry 2, those in Industry 1 would potentially have:

A．over-capacity problems.

B．larger economic profits.

C．high bargaining power of customers.

【答案】B

【解析】

The economic profit (the spread between the return on invested capital and the cost of capital) tends to be larger in industries with differentiated products, greater pricing power, and high switching costs to customers. Industry 1 has these features. In contrast, firms in Industry 2 have little pricing power (undifferentiated products and rapid shifts in market shares, indicating intense rivalry), which is indicative of potentially smaller economic profits.

CFA Level I

"Introduction to Industry and Company Analysis," Patrick W. Dorsey, Anthony M. Fiore, and lan Rossa O'Reilly

Section 5.1

87．Which of the following statements concerning companies in different industry environments is most accurate?

A．Companies in mature industries tend to focus on efficiency gains and gain market share through superior products.

B．An industry's experience curve declines with a decrease in the utilization of capital equipment and spreading overhead over a fewer number of units.

C．Companies in fragmented industries would not be highly price competitive because they tend to think individualistically, making coordination difficult.

【答案】A

【解析】

Companies in mature industries are likely to pursue replacement demand rather than new buyers and are probably focused on extending successful product lines rather than introducing revolutionary new products. Therefore, they tend to focus on cost rationalization and efficiency gains rather than on taking a lot of market share. Furthermore, companies with superior products or services are likely to gain market share.

CFA Level I

"Introduction to Industry and Company Analysis," Patrick W. Dorsey, Anthony M. Fiore, and lan Rossa O'Reilly

Sections 5,5.1.2,5.1.5

88．For a US investor, which of the following statements concerning investing in depository receipts (DRs) is least accurate?

A．Investors in unsponsored DRs would have the same voting rights as the direct owners of common shares.

B．Investing in DRs could provide arbitrage opportunities and entail currency risk.

C．Sponsored DRs are subject to greater reporting requirements than unsponsored DRs.

【答案】A

【解析】

Investors of unsponsored DRs would not have the same voting rights as the direct owners of common shares because the depository bank retains the voting rights.

CFA Level I

"Overview of Equity Securities," Ryan C. Fuhrmann and Asjeet S. Lamba

Section 5.2

89．Firms with which of the following characteristics are most likely candidates for a management buyout (MBO)?

A．Firms with low levels of cash flow

B．Firms with high dividend payout ratios

C．Firms with large amounts of undervalued assets

【答案】C

【解析】

Companies with large amounts of undervalued assets (which can be sold to reduce debt) that

generate high levels of cash flow (which are used to make interest and principal payments on the debt) are likely candidates for MBO transactions.

CFA Level I

"Overview of Equity Securities," Ryan C. Fuhrmann and Asjeet S. Lamba

Section 4

90．Consider a $100 par value bond, with an 8% coupon paid annually, maturing in 20 years. If the bond currently sells for $96.47, the yield to maturity is closest to:

A．8.37%.

B．8.29%.

C．7.41%.

【答案】A

【解析】

A security with a present value of 96.4719 interest payments of 8, and a 20th payment of principal plus interest (108) has a yield to maturity of 8.37%.

CFA Level I

"Introduction to Fixed-Income Valuation James F. Adams and Donald J. Smith

Section 3

91．Which of the following terms in a bond issue most likely helps to reduce credit risk?

A．Term maturity structure

B．Sinking fund arrangement

C．Floating rate note

【答案】B

【解析】

A sinking fund arrangement is a way to reduce credit risk by making the issuer set aside funds over time to retire the bond issue.

CFA Level I

"Fixed-Income Markets: Issuance, Trading, and Funding," Moorad Choudhry, Steven V. Mann, and Lavone F. Whitmer

Section 6.3.3

92．The duration and convexity of an option-free bond priced at $90.25 are 10.34 and 151.60,

respectively. If yields increase by 200 bps, the percentage price change is closest to:

A．-23.71%.

B．-17.65%.

C．-20.68%.

【答案】B

【解析】

It is calculated as duration effect:

and convexity effect:

Total perentage change is the sum of duration effect and convexity effect:

CFA Level I

"Understanding Fixed-Income Risk and Return," by James F. Adams and Donald J. Smith

Sections 3.5-3.6

93．Using the "Four Cs of Credit Analysis" framework, which of the following is the least likely factor to be considered under the category of "capacity"?

A．History of fraud or malfeasance

B．Level of competition

C．Industry fundamentals

【答案】A

【解析】

Any history of fraud or malfeasance is a major warning flag to credit analysis under the category of "character."

CFA Level I

"Fundamentals of Credit Analysis," Christopher L. Gootkind

Section 5.2

94．A portfolio manager holds the following three bonds, which are option free and have the indicated durations.

The portfolio's duration is closest to:

A．4.75.

B．5.20.

C．5.33.

【答案】A

【解析】

The portfolio's duration is a weighted average of the durations of the individual holdings, computed as: (12/24)×(3.0)+(6/24)×(7.0)+(6/24)×(6.0)=4.75.

CFA Level I

"Understanding Fixed-Income Risk and Return," James F. Adams and Donald J. Smith

Section 3.4

95．Duration is most accurate as a measure of interest rate risk for a bond portfolio when the slope of the yield curve:

A．stays the same.

B．increases.

C．decreases.

【答案】A

【解析】

Duration measures the change in the price of a portfolio of bonds if the yields for all maturities change by the same amount; that is, it assumes the slope of the yield curve stays the same.

CFA Level I

"Understanding Fixed-Income Risk and Return," James F. Adams and Donald J. Smith

Section 3

96．The following table provides information about a pot[folio of three bonds.

Based on this intormatlon the duration ot the portfolio is closest to

A．9.74

B．9.48

C．9.35

【答案】C

【解析】

The market values of the bonds (Price x Par amount) are $17479376 $4O18928 and $677/4/6 respectively for a portfolio valu e of $2826972O Therefore th e duration of the portfolio is

CFA Level I

"Understanding Fixed Income Risk and Return" James F Adams and Donald J Smith

Section 3.4

97．Consider a $/00 par value bond with a 7% coupon paid annually and 5 years to maturity At a discount rate of 65% the value of the bond today is $102.08 One day later the discount rate increases to 75% Assuming the discount rate remains at 75% over the remaining life of the bond what is most likely to occur to the price of the bond between today and maturity?

A．Decreases then remain s un changed

B．Decreases then increases

C．Increases then decreases

【答案】B

【解析】

If the discount rate increases to 75% from 65% th e price of a bond decreases At a discount rate of 75% the bond sells at a discount to face value As a discount bond approaches maturity it will increase in price over time until it reaches par at maturity

CFA Level I

"Introduction to Fixed Income Valuation "James F Adams and Donald J Smith

Section 2.3

98．Using the following US Treasury/forward rates the value of a 21/2year $/00 par value Treasury/bond with a 5% coupon rate is closest to:

A．$101.52

B．$104.87

C．$106.83

【答案】C

【解析】

The value of the bond is

CFA Level I

"Introduction to Fixed Income Valuation" James F Adams and Donald J Smith

Section 4

99．A bond with a par value of $/00 matures in /0 years with a coupon of 45% paid semiannually; it is priced to yield 583% and has a modified duration of 78/ If the yield of the bond declines by 025% the approximate percentage price change for the bond is closest to:

A．0.98%

B．1.95%

C．3.91/%

【答案】B

【解析】

Approximate percentage price change = - [7.81×(-0.0025)]=0.01953 or 1.95%.

CFA Level I

"Understanding Fixed-Income Risk and Return," James F. Adams and Donald J. Smith

Section 4.1

100．Compared with investment-grade bonds, the spread movements on high-yield bonds are influenced:

A．less by interest rate changes and exhibit a greater correlation with movements in equity markets.

B．more by interest rate changes and exhibit a greater correlation with movements in equity markets.

C．less by interest rate changes and exhibit a lower correlation with movements in equity markets.

【答案】A

【解析】

High-yield bonds can be thought of as a hybrid between investment-grade bonds and equity securities. Their spread movements are less influenced by interest rate changes than are investment-grade bonds and they exhibit greater correlation with movements in equity markets.

CFA Level I

"Fundamentals of Credit Analysis", Christopher L. Gootkind

Section 7.1

101．Which of the following is most likely a limitation of the yield to maturity measure?

A．It does not consider the capital gain or loss the investor will realize by holding the bond to maturity.

B．It assumes coupon payments can be invested at the yield to maturity.

C．It does not reflect the timing of the cash flows.

【答案】B

【解析】

Yield to maturity does consider reinvestment income; however, it assumes that the coupon payments can be reinvested at an interest rate equal to the yield to maturity. This is one of the limitations for the yield to maturity measure because the investor is facing reinvestment risk (future interest rates will be less than the yield to maturity at the time the bond is purchased).

CFA Level I

"Introduction to Fixed-Income Valuation," James F. Adams and Donald J. Smith

Section 2.2

102．An investor notices that the price of an American call option is above the price of a European call option with otherwise identical features. What is the most likely reason for this difference?

A．The options are deep-in-the-money.

B．The underlying will go ex-dividend.

C．The options are close to expiration.

【答案】B

【解析】

American call prices can differ from European call prices only if there are cash flows on the underlying.

CFA Level I

"Basics of Derivative Pricing and Valuation," Don M. Chance

Section 4.3

103．Which of the following statements is least accurate concerning differences in the pricing of forwards and futures?

A．Pricing differences can arise if futures prices and interest rates are uncorrelated

B．Interest rate volatility can explain pricing differences.

C．Differences in the pattern of cash flows of forwards and futures can explain pricing differences.

【答案】A

【解析】

If futures prices and interest rates are uncorrelated, the prices of forwards and futures will be identical.

CFA Level I

"Basics of Derivative Pricing and Valuation," Don M. Chance

Section 3.2

104．Which statement best describes the early exercise of American options? Early exercise may be advantageous for:

A．both deep-in-the-money calls and deep-in-the-money puts.

B．deep-in-the-money puts.

C．deep-in-the-money calls.

【答案】B

【解析】

Only deep-in-the-money put options may be exercised early. The price cannot fall below zero and thus the additional upside of such an option is limited.

CFA Level I

"Basics of Derivative Pricing and Valuation," Don M. Chance

Section 4.3

105．When valuing a call option using the binomial model, an increase in the probability that the underlying will go up, most likely implies that the current price of the call option:

A．remains unchanged.

B．decreases.

C．increases.

【答案】A

【解析】

The probability that the underlying will go up is not part of the binomial model for pricing options. This probability is irrelevant, since the options are priced using risk-neutral probabilities. These are derived by constructing a hedged portfolio in the absence of arbitrage opportunities.

CFA Level I

"Basics of Derivative Pricing and Valuation," Don M. Chance

Section 4.2

106．Valuation of a swap during its life will leastlikely involve the:

A．use of replication.

B．investor's risk aversion.

C．application of the principle of no arbitrage.

【答案】B

【解析】

Risk neutrality, not risk aversion, is a key element of derivatives pricing, including swaps.

CFA Level I

"Basics of Derivative Pricing and Valuation," Don M. Chance

Section 1

107．An investor purchases ABC stock at $71 per share and executes a protective put strategy. The put

option used in the strategy has a strike price of $66, expires in two months, and is purchased for $1.45. At expiration, the protective put strategy breaks even when the price of ABC is closest to:

A．$64.55.

B．$67.45.

C．$72.45.

【答案】C

【解析】

To break even, the underlying stock must be at least as high as the amount expended up front to establish the position. To establish the protective put, the investor would have spent $71 + $1.45 =$72.45.

CFA Level I

"Risk Management Applications of Option Strategies," Don M. Chance

Section 2.2.2

108．Concentrated portfolio strategies are attractive because of their:

A．ability to track market indices.

B．low risk.

C．potentialto generate alpha.

【答案】C

【解析】

Concentrated portfolio strategies focus on only a few securities, strategies, or managers. This focus reduces diversification but may enable investors to achieve alpha.

CFA Level I

"Introduction to Alternative Investments," Terri Duhon, George Spentzos, and Scott D. Stewart

Section 2.2

109．Which of the following is most likely a private equity strategy?

A．Merger arbitrage

B．Quantitative directional

C．Venture capital

【答案】C

【解析】

Venture capital is a private equity strategy in which private equity companies invest and get actively involved in the management of portfolio companies.

CFA Level I

"Introduction to Alternative Investments," Terri Duhon, George Spentzos, and Scott D, Stewart

Section 4,2,2

110．Which of the following is most likely a private real estate investment vehicle?

A．Real estate limited partnership

B．Collateralized mortgage obligation

C．Real estate investment trust

【答案】A

【解析】

Real estate limited partnerships are a form of private real estate investment.

CFA Level I

"Introduction to Alternative Investments," Terri Duhon, George Spentzos, and Scott D, Stewart

Section 5.1

111．If the price of a commodity futures contract is below the spot price, it is most likely that the:

A．convenience yield exceeds storage costs,

B．cost of carry exceeds the convenience yield,

C．roll yield is negative,

【答案】A

【解析】

The convenience yield must exceed the cost of carry to arrive at a futures price below the spot price because the futures price is approximately equal to the spot price [(1 + r) + Storage cost -Convenience yield] and the cost of carry is defined as interest cost plus storage cost, Given that interest cost is always positive, the convenience yield must also exceed storage costs to arrive at a　  futures price below the spot price.

CFA Level I

"Introduction to Alternative Investments," Terri Duhon, George Spentzos, and Scott D, Stewart

Section 6.4.1

112．A hedge fund that implements trades based on a top-down analysis of expected movements in economic variables most likely uses a(n):

A．macro strategy.

B．event-driven strategy.

C．relative value strategy.

【答案】A

【解析】

Macro strategies emphasize a top-down approach, and trades are made based on expected movements of economic variables.

CFA Level I

"Introduction to Alternative Investments," Terri Duhon, George Spentzos, and Scott D. Stewart

Section 3.1

113．In a strategic asset allocation, assets within a specific asset class are least likely to have:

A．low paired correlations.

B．low correlations with other asset classes.

C．similar risk and return expectations.

【答案】A

【解析】

In a strategic asset allocation, assets within a specific asset class have high paired correlations and low correlations with other asset classes.

CFA Level I

"Basics of Portfolio Management and Construction," Alistair Byrne and Frank E. Smudde

Section 3.2

114．Which of the following is least likely an assumption of the capital asset pricing model (CAPM)?

A．Security prices are not affected by investor trades.

B．An investor can invest as much as he or she desires in any asset.

C．Investors are different only with respect to their unique holding periods.

【答案】C

【解析】

One of the assumptions of the CAPM is that investors plan for the same single holding period.

CFA Level I

"Portfolio Risk and Return: Part I1," Vijay Singal

Section 4.1

115．The following table shows data for the stock of JKU and a market index.

Based on the capital asset pricing model (CAPM), JKU is mostlikely:

A．overvalued.

B．fairly valued.

C．undervalued.

【答案】C

【解析】

The required rate of return of JKU is 12%, and the expected return of JKU is 15%. Therefore, JKU is undervalued relative to the security market line (SML); the risk-return relationship lies above the SML.

CFA Level I

"Portfolio Risk and Return: Part I1," Vijay Singal

Section 4

116．A portfolio with equal parts invested in a risk-free asset and a risky portfolio will most likely lie on:

A．the security market line.

B．a capital allocation line.

C．the efficient frontier.

【答案】B

【解析】

A capital allocation line shows possible combinations of a risky portfolio and the risk-free asset.

CFA Level I

"Portfolio Risk and Return: Part I1," Vijay Singal

Section 2.1

117．A stock has a correlation of 0.45 with the market and a standard deviation of returns of 12.35%. If the market has a standard deviation of returns of 8.25%, then the beta of the stock is closest to:

A．0.67.

B．1.50.

C．0.30.

【答案】A

【解析】

CFA Level I

"Portfolio Risk and Return: Part I1," Vijay Singal

Section 3.2.4

118．An investor's transaction in a mutual fund and the fund's returns over a four-year period are provided in the following table：

based on this data,the money-weighted return(or internal rate of return)for the investor is closest to:

A．7.50%

B．2.15%

C．3.96%

【答案】C

【解析】

The money weighted return is calculated by solving for/in the following equation：

CFA Level I

"Portfolio Risk and Return:Part I,"Vijay Singal

Section 2.1.4

119．A portfolio contains equal weights of two securities having the same standard deviation.If the correlation between the returns of the two securities was to decrease, the portfolio risk would most likely:

A．remain the same.

B．increase.

C．decrease.

【答案】C

【解析】

The formula for the return standard deviation(risk)of a two asset portfolio is

The formula for porttolio risk shows that porttolio risk decreases as the corrrlation decreases.

CFA Level I

"Portfolio Risk and Return:Part I,"Vijay Singal

Section4.1.3

120．Last year, a portfolio manager earned a return of 12%. The portfolio's beta was 1.5. For the same period, the market return was 7.5%,and the average risk-free rate was 2.7%. Jensen's alpha for this portfolio is closest to:

A．2.10%

B．4.50%

C．0.75%

【答案】A

【解析】

CFA Level I

Portfolio Risk and Return:PartⅡ,"Vijay Singa

Section4.3.2