[Jan 30, 2022] Powerful CFA-Level-I PDF Dumps for CFA-Level-I Questions
Authentic CFA-Level-I Dumps - Free PDF Questions to Pass
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NEW QUESTION 732
The journal entry to record the sale or disposition of a depreciable plant asset always includes:
- A. A debit to the Accumulated Depreciation account for the related accumulated depreciation.
- B. A debit to the asset account for the book value of the asset.
- C. Recognition of a gain or a loss.
Answer: A
NEW QUESTION 733
The following data pertains to the Megatron company: Net income equals $15,000 5,000 shares of common stock issued on January 1 10 percent stock dividend issued on June 1 1000 shares of common stock were repurchased on July 1 1000 shares of 10 percent, par $100 preferred stock each convertible into 8 shares of common were outstanding the whole year How many common shares should be used in computing the company's basic earnings per share (EPS)?
- A. 5000.
- B. 5500.
- C. 4500.
Answer: A
Explanation:
1/1 5,500 shares issued (includes 10% stock dividend on 6/1) x 12 = 66,000 7/1 1,000 shares repurchased x6 months = -6,000 = 60,000 60,000 shares/12 months = 5,000 average shares
NEW QUESTION 734
The quantity of real money that people plan to hold depends on these factors:
I). The price level.
II). The nominal interest rate.
III). Real GDP.
IV). Financial innovation.
- A. I and II.
- B. All of them.
- C. II, III and IV.
Answer: C
Explanation:
All of the 4 factors affect the quantity of nominal money people hold. However, the price level does not affect the real money people hold.
NEW QUESTION 735
The following figure shows Bobby's indifference map for soda and juice. B1 indicates his original budget line. B2 indicates his budget line resulting from an increase in the price of soda. From the graph, one can conclude that
- A. the income elasticity of demand for soda is 1.
- B. Bobby views soda as an inferior good.
- C. Bobby views soda as a normal good.
Answer: C
Explanation:
Bobby will consume more soda if his income increases.
NEW QUESTION 736
For the hypothesis test shown below, the conclusion should be _______.
- A. There is no evidence that the population proportion is less than 0.42.
- B. The population proportion is less than 0.42.
- C. There is no evidence that the population proportion is greater than or equal to 0.42
Answer: B
Explanation:
Because the test value (-1.7) is in the critical region (less than -1.645) we reject H . Thus, we
0
conclude H - The population proportion is less than 0.42.
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NEW QUESTION 737
Which of the following components of risk is most relevant in terms of determining required return?
- A. Unsystematic risk
- B. Systematic risk
- C. Total risk
Answer: B
Explanation:
Systematic risk: risk inherent in an investment related to movements in the market that cannot be diversified away.
NEW QUESTION 738
An investor wishes to liquidate their position in an investment company. They do so by selling their shares on the NYSE. They were most likely invested in:
- A. an open-end fund
- B. a closed-end fund
- C. a 12-b fund
Answer: B
Explanation:
Investors in closed-end funds liquidate their position by selling their shares in the secondary market.
NEW QUESTION 739
Paul spends $100 per month on books whether their price rises or falls. His price elasticity of demand for books is (in absolute value):
- A. 0
- B. 1
- C. infinity.
Answer: B
Explanation:
His spending does not change with price. That means that if price rises, he buys fewer books, but still spends $100; if price falls, he buys more books, but still spends $100. A 1% change in price leads to a 1% change in quantity demanded, the definition of unitary elasticity.
NEW QUESTION 740
Peter Chairly is a energy analyst with Tableless Brokers. He is invited by Vrich Energy to visit their oil fields in Siberia. Chairly stays at accommodation owned by Vrich adjacent to their oil fields, there being no other place to stay within hundreds of miles. Chairly visits the oil fields and chats with production supervisors. The accommodation and meals provided by Vrich are modest. Chairly returns from the trip and writes a report in which he gives a 'buy' rating to Vrich Energy.
- A. Peter is in violation of the Standards as he has accepted benefits from Vrich.
- B. Peter is in violation of the Standards as during his trip he put himself in a situation where he may have received non-material public information.
- C. Peter is not in violation of the Standards if after using his judgment he feels that the modest hospitality offered by Vrich did not compromise his independence.
Answer: C
Explanation:
As there is no other accommodation available, and the services provided modest, Chairly hasn't violated the Standards.
NEW QUESTION 741
When a company listed in the Russell 2000 index simply becomes too big to be included in that index, it then moves up to the Russell 1000 index and the Russell MidCap Index. This is called:
- A. Reindexing.
- B. Reconstitution.
- C. Rebalancing.
Answer: B
Explanation:
Reconstitution is the process of changing the constituent securities in an index.
NEW QUESTION 742
Which of the following would be recorded as a credit in the U.S. balance of payments accounts?
- A. European travel expenditures of an American college student.
- B. the purchase of a U.S. Treasury bond by a French investment company.
- C. the purchase of a German business by a U.S. investor.
Answer: B
Explanation:
Since the purchase of a bond by a French company decreases the supply of U.S. dollars on the foreign exchange market, this transaction is accounted for as a credit on the U.S. balance of payments account.
NEW QUESTION 743
According to CFA Institute's Standards of Professional Conduct, the following is procedure for compliance for one of the Standards of Professional Conduct:
Members should report any beneficial interest that they may have in any corporate directorships, trustee positions, or any other relationships that could pose a conflict of interest with their responsibilities to their employers.
Which Standard of Professional Conduct do these compliance procedures relate to?
- A. Standard I (A) - Professionalism - Independence and Objectivity.
- B. Standard VI (A) - Conflicts of Interest - Disclosure of conflicts.
- C. Standard IV (B) - Duties to Employers - Additional Compensation Arrangements.
Answer: B
NEW QUESTION 744
The goal of an investor following a risk management strategy is to:
- A. control or reduce risk even though doing so will decrease expected return
- B. increase risk because doing so will increase expected return
- C. control or reduce risk even though doing so will increase expected return
Answer: A
Explanation:
Risk management or hedging seeks to reduce risk. In a well-functioning market, decreased risk is associated with decreased expected return.
NEW QUESTION 745
Technical analysts assume the markets are ______ while fundamental analysts assume the markets are ______.
- A. weak-form inefficient; semi-strong-form efficient.
- B. weak-form inefficient; semi-strong-form inefficient.
- C. weak-form efficient; weak-form efficient.
Answer: B
Explanation:
Technical analysts use past prices and volume to predict future prices. This is against the weak-form efficient EMH. Fundamental analysts use public available information to estimate a security's intrinsic value to determine if the security is mispriced. This is against the semi-strong-form efficient EMH
NEW QUESTION 746
The following table gives the stock price, dividend, and percentage return for 10 months.
If one were to construct a frequency histogram for the stock prices using 3 classes, what percentage of stocks fall in the second stock price interval?
- A. 40%
- B. 20%
- C. 30%
Answer: C
Explanation:
Using 3 intervals, the second interval would be stock prices from $70.70 up to $73.5 of which there are 3, so the relative frequency is or 30%.
NEW QUESTION 747
Which of the following is not a typical example of non-recurring items?
- A. Sale of a subsidiary or a building.
- B. An extremely large loss on operations.
- C. Lawsuits
Answer: B
Explanation:
Gains or losses from the sale of corporate fixed assets, lawsuits, or similar events that would not be expected to occur often, if ever again.
NEW QUESTION 748
The overnight repurchase rate for general collateral is 6.50%. For a dealer seeking financing using special collateral, the repurchase rate agreed to:
- A. will be greater than or equal to 6.50%
- B. will be less than 6.50%
- C. The dealer will not be able to borrow using special collateral
Answer: B
Explanation:
Because special collateral is desirable for other uses, lenders will bid lower repurchase rates to lend to borrowers in possession of special collateral.
NEW QUESTION 749
A company has undertaken a construction contract for 6,700,000, spread over three years with a projected gross profit of 40%. In the first quarter of the first year, the firm will book the following revenue and cost on the basis of percentage of completion method:
- A. revenues of 558,333 and production costs of 335,000.
- B. revenues of 558,333 and production costs of 223,333.
- C. revenues of 2,233,333 and 893,333.
Answer: A
Explanation:
According to the percentage of completion method, a firm books revenue in proportion to work completed. On a three year contract, 1/12th of the work would be completed in the first quarter of the first year assuming uniform production. On this basis, the company will book a revenue of 558,333 (=
6 ,700,000/12) and a cost of 60% of this amount or 335,000 ( = 558,333 x 0.6). Cost of 60% is arrived at on the basis of 40% gross profit margin, by subtracting the latter from 100%.
NEW QUESTION 750
In a monopolistic competition,
- A. a firm will set marginal cost equal to marginal revenue and will face a downward sloping demand curve.
- B. a firm will set marginal cost equal to price and will face a downward sloping demand curve.
- C. a firm will set marginal cost equal to marginal revenue and will face a horizontal demand curve.
Answer: A
Explanation:
In a monopolistic competition firms face a downward sloping demand curve as well as a downward sloping marginal revenue curve. A firm will set its margin cost equal to marginal revenue for profit maximization.
NEW QUESTION 751
Which one of the following is least likely to be a reason why the GIPS were created?
- A. GIPS were established to compete with the European-based mandatory global investment performance standards.
- B. Clients and prospective clients reside in difference countries, and investment management firms have operations in multiple countries.
- C. Many countries have not established comprehensive investment performance standards.
Answer: A
Explanation:
GIPS were created to fill the void of a globally recognized investment performance standard, not to compete with European standards. There are no mandatory global standards.
NEW QUESTION 752
Brian takes out $200 from an ATM against his checking account at his bank. He then gives the money to Rick who deposits the whole $200 in his checking account at bank (a different from that of
Brian's). In theory after the process finishes, the bank reserves will ______ and the M1 money supply will
_ _____.
- A. remain the same, decrease.
- B. decrease, remain the same.
- C. remain the same, remain the same.
Answer: C
Explanation:
There should be no change in either bank reserves or M1. The process is just a transfer of money from one bank to another, and these two banks have the same reserve requirement and should maintain identical reserves. M1 remains the same because the total amount of deposits in the economy is the same: the money supply is affected only by injections of money by the Fed.
NEW QUESTION 753
The coefficient of variation is useful when:
I). The frequency distribution contains open-ended classes or overlapping classes.
II). The data sets being compared contain data in different measurement units.
III). The data sets being compared contain data with similar measurement units.
- A. I & II
- B. III only
- C. II only
Answer: C
Explanation:
The coefficient of variation is useful when the means of the data sets are widely different or when the observations are in different measurement units.
NEW QUESTION 754
A company is considering making material adaptations to its warehouse and equipment. These costs will be $25,000,000 and will have a benefit period of 10 years. The income tax rate during this period will be 30%. The company is considering the effects of capitalizing the costs versus expensing the cost.
Which of the following effects will occur if the costs are expensed rather than capitalized?
- A. Expensing will cause income to be greater in the years after the first year by $1,750,000 per year
- B. Expensing will cause the return on assets in later years to be lower
- C. Expensing will cause the return on equity to be lower in later years
Answer: A
Explanation:
In the years following the year the costs were incurred, there will be no expense if the costs were expensed in the first year. However, if costs were capitalized, there would be a $2,500,000 depreciation cost, which, after the tax effects (.3 x $2,500,000), would make income less by $1,750,000.
NEW QUESTION 755
A current account surplus reflects:
- A. high domestic private savings and investment, and government deficit.
- B. high domestic private savings and investment, and government surplus.
- C. high domestic private savings, low domestic investment, and government surplus.
Answer: C
Explanation:
CA = Sp + Sg - I.
NEW QUESTION 756
Which is (are) NOT defined as barriers to entry?
I). Patents
II). Monopolies
III). Government licensing
IV). Economies of scale
V. Market forces
VI). Defects
- A. I, II and V
- B. II, V and VI
- C. III, IV and V
Answer: B
Explanation:
Barriers to entry limit the ability of new firms to compete in the industry. Of the above, only patents, government licensing and economies of scale fit this description.
NEW QUESTION 757
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