CFA Institute CFA-Level-I Exam Practice Test Instant Access

Question 1

Which of the following are considered basic characteristics of a security and must be included in research reports?

Abusiness risk

Bdegree of uncertainty

Cannual expected income

Dyield-to-maturity

Eall of these answers

Fboth degree of liquidity and yield-to-maturity

Gexpected annual rate of return

Answer : E

Question 2

An investor buys a 25-year, 10 percent annual pay bond for $900 planning to sell the bond in 5 years when he estimates yields will be 9 percent. What is the estimate of the future price of this bond?

A$964.

B$1,000.

C$1,122.

D$1,091.

Answer : D

Question 3

The disclosures for retroactive compliance apply to composites formulated prior to ________.

AJanuary, 1989

BJanuary, 1992

CJanuary, 1991

DJanuary, 1993

EJanuary, 1990

Answer : D

Question 4

Standard IV (B.7) deals with ________.

APriority of Transactions

BNone of these answers

CDisclosure of Referral Fees

DPerformance Presentation

EProhibition against Misrepresentation

FDisclosure of Conflicts to Clients and Prospects

GPreservation of Confidentiality

HProhibition against Use of Material Nonpublic Information

Answer : F

Question 5

If a firm uses non-discretionary leverage, it must present performance using:

Aboth actual returns and all-cash basis.

Ball-cash basis i.e. removing leverage effects.

Cactual returns.

Dnone of these answers.

Answer : B

Question 6

Andy Pilling is a bond trading specialist who recently started a special fund, the "Structured Bond Fund." The strategy behind this fund is quite complex, involving a mix of highly speculative, high-yield bonds and various tax-free municipal bonds for some stability. Andy has a strong view that the economy will remain vibrant and bullish over the next two years and hence, is not worried about the risky bonds. Assuming a falling rate scenario in this case allows the fund to project an expected return 130 basis points above the S&P 500 return. In his special report, Pilling does not disclose such assumptions nor does he reveal any details about the bond strategy. He does analyze the state of the economy and the future outlook in the report. Based on his reputation and his association with some big name academics, Pilling is able to obtain capital of close to 75 million dollars on this fund alone. Andy has:

Anot violated any standards in the AIMR Code of Ethics.

Bviolated Standard IV (B.6) - Prohibition Against Misrepresentation.

Cviolated Standard IV (A.2) - Research Reports - by not revealing the assumptions and details about the strategy.

Dviolated Standard IV (B.1) - Fiduciary Duties - by not disclosing the nature of the strategy.

Answer : C

Question 7

Edward Witten works for Princeton Investments and has registered to take Level III exam next year. He had taken the Level III exam 3 years ago but was not successful. In his firm's promotional material, he has stated that he is a candidate in the CFA program and has successfully passed Level II . Edward has:

Aviolated Standard II (A) - Use of Professional Designation. He cannot claim to be in the CFA program without having completed Level III exam.

Bviolated Standard II (A) - Use of Professional Designation. He cannot claim to be in the CFA program since he failed the Level III exam.

Cnot violated any standards.

Dviolated Standard II (A) - Use of Professional Designation. He cannot claim to be CFA - Level II .

Answer : C

CFA Institute CFA Level I Chartered Financial Analyst CFA-Level-I Exam Practice Test