EMT Practice Test

1. Question Content...

A. Choice A

B. Choice B

C. Choice C

D. Choice D

E. Choice E

Was this helpful? Upvote!

Question List

Question1: Jackie Gold owned a bond that had a Modified duration of 19.400. If the bond had a coupon of
19.00 %, and a yield to maturity of 8.50 %, then what is the change in bond price given a change in yield of - 290 basis points?

Question2: Which of the following statements is not false?

Question3: You have received $125 today. You will invest the money at a rate of 6% per year. How much will your investment have increased to by the end of 7 years?

Question4: Which of the following is NOT a hedge fund classification?

Question5: Barklay Franton's firm is an all-equity firm that has earnings before tax of $200,000 and 20,000 shares of stock outstanding, with each share being worth $100. Assume that you own 2,000 shares, there are no taxes, and capital markets are perfect. Assume that the firm pays no dividend. How could you transact on your own initiative to pay yourself a dividend of $5 per share?

Question6: Which of the following is NOT a reason for sampling the population?

Question7: The current exchange rate between Thai bahts and US dollars is 35 baht/$1. The one year interest rate available on US treasury securities is 4.5%, and the equivalent rate on Thai debt instruments is
13.5%. According to interest rate parity, what should the one year forward Baht/$ exchange rate be?

Question8: After passing CFA level 1 exam, Frank wrote a memorandum to all his clients stating that he passed
CFA, one of the most important exams in the financial industry and that this designation becomes a stamp of approval of his superior performance. Which of the following is correct?

Question9: A cumulative frequency distribution on days absent during a calendar year by employees of a manufacturing company is shown below.

How many employees were absent more than five days?

Question10: Which financial statement would be most useful to an analyst who wants to evaluate a company's liquidity position and financial flexibility?

Question11: For the long investor, when the commodity market is in contango,

Question12: Which of the following is not included in financing activities under U.S. GAAP?

Question13: In the case of a quota, the difference between the import supply price and the domestic price is collected by the

Question14: Which institutional investor has the longest investment time horizon?

Question15: Assuming all other factors remain unchanged, which one of the following would reduce a firm's price/earnings ratio?

Question16: Which of the following industries is/are most likely to be regarded as cyclical?
I). Beer.
II). Information technology.
III). Telephone.
IV). Auto industry.

Question17: Which of the following will give rise to a deferred tax liability?

Question18: In periods of rising prices and stable or increasing inventory quantities, the impact of LIFO and FIFO on income before taxes is:

Question19: Which of the following are not addressed by CFA Institute's GIPS?

Question20: Which of the statements is/are true?
I). The less inelastic is the supply for a factor, the greater is the share of income that is comprised by opportunity cost.
II). The less elastic is the supply for a factor, the greater is the share of income that is comprised by economic rent.
III). The less inelastic is the demand for a factor, the greater is the share of income that is comprised by economic rent.
IV). The less elastic is the demand for a factor, the greater is the share of income that is comprised by opportunity cost.

Question21: A securities analyst is preparing a list of questions to ask when paying a personal visit to a company whose stock is publicly traded. Which of the following should not be on the list?
I). Does the company plan new financing, and if so, what kind?
II). What do you expect earnings per share to be for the full year?
III). Are new acquisitions being considered?
IV). What has been the firm's ratio of debt to equity over the past three years?

Question22: A firm does not want to increase it financial leverage. It may resort to all of the following actions
EXCEPT:
I). It may disguise a capital lease as an operating lease.
II). It may issue convertible bonds.
III). Sell its accounts receivables through a securitization.
IV). It may set up a subsidiary and guarantee its debt.

Question23: A sample of 1,600 MBA recruiters was used to rank the top MBA schools in the US and abroad. The resulting rankings are:

Question24: Which of the following are characteristics of good financial markets for investors?
I). Availability of timely and accurate information.
II). Liquidity.
III). Large bid-ask spreads.
IV). Rapid price adjustments to new information.

Question25: The supporters of Judge Hyde want to prove that she has the support of more than 60% of the voters in the district. To accomplish this they take a random sample of 80 voters and find that 53 support Judge
Hyde. For a hypothesis test at the 5% level of significance, the null hypothesis, H0, would be _______.

Question26: The major difference between an index mutual fund and an EFT is that:

Question27: The difference between economic profit and accounting profit is equal to:

Question28: John MacDaniel, CFA, is a trust officer for Confederation Trust Company. MacDaniel has been using
Joe Stein, a broker, almost exclusively for trust account brokerage transactions. For those stocks in which
Stein's firm makes a market, Stein has been giving MacDaniel lower prices for personal purchases and higher prices for personal sales than he has given MacDaniel's trust accounts and other investors.
John's actions violate which of the following CFA Institute's Standards of Professional Conduct:
I). Standard III (B) Fair Dealing and Standard III (C) Suitability.
II). Standard IV (B), Additional Compensation Arrangements.
III). Standard I (B), Independence and Objectivity
IV). Standard III (A), Loyalty, Prudence and Care.

Question29: Evans Company owns 4.5 million shares of stock of Frazier Company classified as available-for-sale.
During 2003, the fair value of those shares increased by $9 million. What effect did this increase have on
Evans' 2003 financial statements?

Question30: What is the Net Asset Value of a fund that has the following information?
Total Fund Shares Outstanding: 5,325,000 Total Market Value of Fund: $78,500,000 Portfolio Annual
Fund Expenses: $1,850,000

Question31: When finding a confidence interval for the population mean, when is t-score used as the critical value
(assume the population is normally distributed)?

Question32: A natural monopoly occurs when

Question33: Under a system of fixed exchange rates, an upward revaluation of a nation's currency would

Question34: The monopolistically competitive industry produces an output at which price equals

Question35: In general, when the price of the underlying stock is _______ the price of a call option will _________, and the call owner will benefit.

Question36: The change in the supply of soybeans could be due to which of the following?
I). a decrease in the price of insecticide.
II). improved equipment for soybean harvesting.
III). highly favorable weather conditions.

Question37: Assume that in Canada the opportunity cost of producing 1 television set is 2 bushels of wheat.
Assume that in the U.S. the opportunity cost of producing 1 bushel of wheat is 2 television sets. All other things being equal:

Question38: The purpose of a bond's indenture is:

Question39: Which one is the most likely reason for a current account surplus?

Question40: Two events, A and B, are independent if:

Question41: Which of the following are not correct regarding CFA Institute's GIPS?

Question42: As sample size increases,

Question43: Which of the following is the most valid argument for including venture capital investments in a traditional multi-asset class portfolio?

Question44: Creditors and investors use financial performance evaluation to judge a company's
I). past performance.
II). current position.
III). future potential and its related risk.

Question45: Henry Giuliani, CFA charterholder, publishes a monthly investment newsletter. In an article on the energy sector he writes 'The energy sector is headed for a downturn. You should believe this, I am a CFA charterholder, and that implies superior ability to predict the market'. Giuliani has most likely violated the
Standards for:

Question46: Money is valuable since:

Question47: If the quantity of Snapple's drinks demanded falls from 4.0 million to 3.0 million as the price of
Nantucket Nectar's drinks fall from $2.70 to $2.50, Snapple's drinks and Nantucket Nectar's drinks are:

Question48: In the CAPM, a beta greater than 1 means:

Question49: Consider the following information about a fund. The fund has been in existence for 3 years. Over this period it has achieved a mean monthly return of 3% with a sample standard deviation of monthly returns of 5%. It was expected to earn a 2.5% mean monthly return over the 3-year period.
You want to test a claim that the investment disciplines of the fund result in a standard deviation of monthly returns of less than 6%.
At the 0.05 level of significance:

Question50: Which of the following statements is true?

Question51: Suppose that P(A) = 0.9, P(B) = 0.8, and P(B|A) = 0.6. Find P(A|B).

Question52: Select the correct use of the Chartered Financial Analyst and CFA marks:
I). He is the only CFA in the company.
II). On his name card, Alex states "Alex Aalto, C.F.A.".
III). John has passed Japan-CFA, a CFA equivalent program.
IV). Ron Laidlaw, Chartered Financial Analyst(CFA), expected December 2011.

Question53: Shaker Chin has an 11.000%, 4 year bond that is selling for a price of $98.432 and is currently yielding 11.50%. The table below shows how the price will vary given a 235 Basis Point change in market interest rates. Assuming the duration is 3.159 and the convexity is 6.296, what is the total estimated percentage price change based on a 235 BP market rate increase?

Question54: Beresford Company leased equipment from Fisher Company on July 1, 2010, for an eight-year period expiring June 30, 2018. Equal annual payments under the lease are $100,000 and are due on July
1 of each year. The first payment was made on July 1, 2010. The rate of interest contemplated by
Beresford and Fisher is 8%. The cash-selling price of the equipment is $620,625 and the cost of the equipment on Fisher's accounting records was $550,000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Fisher, what is the amount of profit on the sale and the interest income that Fisher would record for the year ended December 31, 2010?

Question55: Coren, Inc. had 500,000 common shares issued and outstanding at December 31, 2001. On July 1,
2 002, an additional 50,000 common shares were issued for cash. Coren also had unexercised stock options to purchase 40,000 common shares at $15 per share outstanding at the beginning and end of
2 002. The average market price of Coren's common shares was $20 during 2002. What is the number of shares that should be used in calculating diluted earnings per share for the year ended December 31,
2 002?

Question56: Which trade policy will have no impact on government revenue?

Question57: A 30-day T-Bill is selling at a money market yield of 2.95%. What is its equivalent bank discount yield?

Question58: If a continuous random variable appears to have equally likely outcomes over their range of possible values, it possesses a _______ distribution.

Question59: A share repurchase may _____ EPS.
I). increase.
II). decrease.
III). have no effect on.

Question60: The main difference between a positive and negative covenant is (are):

Question61: BWT, Inc. shows the following data in its financial statements at the end of the year. Assume all securities were outstanding at the beginning of the year:
6.125% convertible bond, convertible into 33 shares of common stock. Issue price $1,000, 100
*
bonds outstanding.
6.25% convertible preferred stock, $100 par, 3,710 shares outstanding. Convertible into 3.3
*
shares of common stock, Issue price $100 8%
convertible preferred stock, $100 par, 5,604 shares outstanding. Convertible into 5 common
*
shares, Issue price $80
12,380 warrants are outstanding with an exercise price of $40. Each warrant is convertible into 1
*
share of common.
Average market price of common is $53.00 per share. Common shares outstanding at the
*
beginning of the year were 45,888.
Net Income for the period was $200,000, while the tax rate was 40%.
*
How many new shares had to be issued to facilitate warrant conversion?

Question62: To estimate the average length of their employee's telephone calls, FoneJack, Inc. randomly sampled 25 employee phone calls. If the sample mean was 1.3 minutes and the population can be assumed normal with a standard deviation of 0.3 minutes then a 90% confidence interval for the phone calls is ______.

Question63: To estimate the average weight of the red-crowned woodpecker to within 2 grams at a 95% confidence level, researchers must randomly sample how many red-crowned woodpeckers? [The population can be assumed normal with a standard deviation of 13 grams.]

Question64: In calculating the numerator for diluted Earnings per Share, the dividends on convertible preferred stock are:

Question65: Which of the following ratios, when calculated using interim financial reports, would be least questionable?

Question66: The ________ is the exchange rate at which the dealer is willing to buy a currency.

Question67: The international equivalent of the U.S. Securities and Exchange Commission (SEC) is:

Question68: 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.

Question69: The par value of a bond is

Question70: Given the following spot rates:
The arbitrage-free value of a 3-year, 10% Treasury issue would be closet to:

Question71: Which of these ratios is/are always negative?
I). The price elasticity of demand.
II The cross elasticity of demand for a complement
II). The cross elasticity of demand for a complement.
III). The income elasticity of demand for an inferior good.
IV). The price elasticity of supply.

Question72: 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?

Question73: A firm that is 100 percent stock financed with assets of $1 million is considering a stock repurchase of
1 0 percent of its shares. Assume the firm has 20,000 shares outstanding and that Net Income is $120,000.
Assume that book and market values are identical. The impact of the repurchase on the stock price would be closest to:

Question74: The state lottery you just won will make annual payments of $152,000 for the next twenty years. What is the present value of your prize at a discount rate of 8%?

Question75: A job paid $8,700 in 1970, when the CPI was 29. In 2011, the CPI was 164. How much would you have to earn in 2011 to be making the same real wage?

Question76: An import quota or tariff on Chinese crayfish tails that raises the price of crayfish tails is likely to

Question77: Suppose the quantity of x is measured on the horizontal axis. If the income consumption curve is vertical, then the income elasticity of demand for x is

Question78: A sample of 5 persons with hypertension underwent a special blood-pressure-reducing treatment program which resulted in the following values giving reduction in systolic blood pressure for these persons (i.e. the scores give SBP after treatment - SBP before treatment): -5, 10, 20, 5, 10.
Suppose for a second sample of 5 persons, the sample mean is 10, and the sample variance is 25. Then which of the following statements about this second sample is not correct?

Question79: Which of the following is true?

Question80: "Material" in the phrase "material non-public information" refers to information that:

Question81: The price range at which the technician would expect a substantial increase in demand for a stock is called:

Question82: Which of the following statements best describes the difference between financial leverage and financial risk?

Question83: What is the effect on the basic earnings per share (EPS) equation when the proceeds received from the exercise of a warrant must be used to retire debt?

Question84: Assume the nominal exchange rate (CA$/US$) increases by 10%, the inflation rate in Canada is 2%, and the inflation rate in the U.S. is 5%. The change in the real exchange rate is then:

Question85: A beginning amount of $75,000 is invested in a money market account. At the beginning of each year a withdrawal of $7,073.07 is to be made to pay insurance premiums. The money market account pays an interest rate of 8%. How many withdrawals will this account support?

Question86: Which of the following is/are not current liability as of Dec. 31, 2010?
I). Management fees collected in advance in 2010, to be earned during 2011.
II). The portion of long-term debt due in 2011.
III). Warranty liability for products carrying a two-year warranty and sold during 2010.
IV). The interest due to creditors and bond holders for 2011, to be paid in 2011.

Question87: Which of the following strategies would you advise against the most if you were expecting stock prices to appreciate significantly?

Question88: Which employment related indicator is a coincident indicator?

Question89: According to SAS 99, which of the following is least likely to be a risk factor related to opportunities to commit fraudulent accounting?

Question90: A capital lease:

Question91: Rachael Hirshliefer, CFA manages accounts of various clients from differing demographics and risk tolerances. Her firm purchases third party research and she follows up the recommendations with her own analysis. After she reaches a decision to buy or sell a particular asset, she does the same trades for all her clients. Has Hirshliefer likely violated the Standards?

Question92: The civilian population (age 16 and over) of country A is 100 million; 5 million are unemployed and 55 million hold jobs. What is the rate of unemployment of this country?

Question93: Which of the following will cause an increase in aggregate demand in the United States?

Question94: A stock is expected to pay dividends of 1.75 and 2.00 over the next two years, after which its price is projected at $37.50. If the market's discount rate is 11.5%, what should be the current value of this stock?

Question95: On 12/31/99, Morgan Corporation's capital structure is as follows:
Common Stock outstanding 200,000
*
Nonconvertible, $100 Par, 6% Preferred Stock 37,700 Shares
*
8.00 %, $1,000 Convertible bonds $1,500,000
*
Stock options to purchase 33,000 shares of common at $30.00 a share.
*
Average market price of common stock during 2000 was $39
*
The following events occurred in 2000:
On 9/1/00, Morgan sold 283,000 additional shares of common stock.
*
Net income for the year was $1,375,000, after taxes.
*
The 8.00% convertible bonds are convertible into 80 shares of common stock for each $1,000 bond.
*
The tax rate for 2000 is 25%
*
What is the diluted EPS for 2000?

Question96: A stock jumps 10% in one trading day after being in a long downtrend, The volume for the day is below average. Technicians usually interpret this as a sign of a:

Question97: Economic analysis suggests that patent laws, which can often be used to limit the entry of potential competitors into an industry,

Question98: The purchase of raw land with the intent of selling it later does not include the problem of

Question99: The crowding-out model implies that a

Question100: Bill lives in Montana and likes to grow zucchini. He applies fertilizer to his crop twice during the growing season and notices that the second layer of fertilizer increases his crop, but not as much as the first layer. What economic concept best explains this observation?

Question101: Assume two months have elapsed since the last coupon payment date. The cum-coupon price for
$ 1,000,000 par value of a 10-year bond paying 6-1/2% coupon interest in semi-annual payments is
$ 1,011,325. What is the full price?

Question102: A trial generates only two results, "success" and "failure." The probability of success is higher than that of failure. The variance of the number of failures in 20 trials equals 2.35. The probability of success on a given trial equals ________.

Question103: Lower of cost or market rule can be applied directly to:

Question104: Calculate an 80% confidence interval for a population mean. You have a sample of 21, a sample mean of 25%, and a sample standard deviation of 10%. The sample appears to be approximately normally distributed.

Question105: Which of the following statements is (are) true with respect to expensing or capitalizing intangible costs?
I). When developing patented content internally, only the legal expenses associated with the patent may be capitalized.
II). The cost associated with acquiring a brand must be expensed in the year of the acquisition.
III). The costs involved in developing software should be capitalized.
IV). In general, research and development expenses may be capitalized as per the matching principal.

Question106: Lindy Pok is an analyst at a Brokerage house. Lindy is in the process of writing a research report on
GHL. Which of the following situations represent a conflict of interest in terms of the Standards of
Professional conduct?
I). Lindy does part-time work for GHL.
II). Lindy's husband holds 10% of the equity of GHL.
III). Lindy's firm has a large financial interest in GHL.
IV). Lindy's mother supplies flowers to GHL for their special occasions.

Question107: It is estimated that 70% of motorists on a certain stretch of highway exceed the speed limit. A highway patrolman with a radar device randomly selects 15 motorists on this part of the highway and checks their speed. What is the probability that at least 13 are caught speeding?

Question108: Annualized returns:
I). allow for comparison among different assets and over different time periods.
II). assume that money can be re-invested repeatedly while earning a similar return.
III). cannot be calculated when the holding period return is more than 10 years.

Question109: Which approach predicts that if an economy operates at full employment and faces a trade deficit, currency devaluation (depreciation) will improve the trade balance only if domestic spending is cut, thus freeing resources to produce exports?

Question110: Using the arc convention, compute the approximate elasticity of demand from the following data:

Question111: Seabreeze Mortgage Securities has mortgage backed securities outstanding that have a monthly cash flow yield of 0.325%. What is their annualized cash flow yield?

Question112: Mike is a real estate broker and recently he helped John purchase a 5-year-old house in New York for
$ 300,000, making $12,000 (excluded in the $300,000 house price) as his commission. The amount counted towards US GDP should be

Question113: In 2010, Patriot Corporation found that they overstated their inventory by $5,000 in 2008. How would this affect the company's net income in 2010 (Assume the tax rate of 40%)?

Question114: If a constant were to be added to a set of scores, the standard deviation would:

Question115: A project has the following annual cash flows:
CF = 24,000; CF = 12,700; CF = 15,000; CF = -10,000
1 2 3 4
What is the maximum amount a firm should invest in the project if it requires a risk adjusted, 12% rate of return?

Question116: The Z-spread is different from the nominal spread because

Question117: If a stock's price rises while its volume declines, technicians usually interpret this as a signal that:

Question118: County Farm Insurance Co. manages a portfolio of corporate bonds for the purpose of producing cash flows sufficient to meet liabilities originating from its sale of life insurance policies. Credit rating and the size and timing of coupon and principal payment have been the criteria used to select bonds for the portfolio. An unexpected decrease in the level of market yields may:
I). increase the market value of bonds in the portfolio
II). reduce income realized from reinvestment of coupons
III). cause callable bonds to be called by issuers

Question119: Initially the term structure is flat. Economic factors cause the required return for a cash flow to be received in 10 years to increase by 25 basis points. This change in the term structure:

Question120: The smaller the p-value:

Question121: If $:E(EUR) = 0.7928 and $:E(GBP) = 0.5311 then:

Question122: A firm has EBIT of $15 million, interest expense of $5 million, and faces a tax rate of 40 percent. There are 12 million shares outstanding. The change in EPS resulting from a 20% decrease in EBIT would be closest to:

Question123: What is the duration estimate of the dollar price change for a 7%, 5-year bond with a duration of 4.158, selling at 100, when the yield changes by 1 basis point?

Question124: Asset-based valuations don't work well for companies with:
I). high proportion of intangible assets.
II). high proportion of current liabilities.
III). significant property, plant and equipment.

Question125: If the Fed injects $1 million into the economy by buying T-bills in open market, and the required reserve is 20%, then the money supply will increase a maximum of:

Question126: All of the following are required by the GIPS for composite construction except for:

Question127: Changes in the expected inflation rate will affect:
I). aggregate demand.
II). short-run aggregate supply.
III). long-run aggregate supply.

Question128: In the presence of a risk-free security, the efficient frontier

Question129: Which of the following statements regarding the treasury stock method of computing outstanding shares is FALSE? The treasury stock method:

Question130: This is an example of

Question131: Unemployment compensation:

Question132: A study of a company's practice regarding the payment of invoices revealed that on the average an invoice was paid 20 days after it was received. The standard deviation equaled five days. Assuming that the distribution is normal, what percent of the invoices were paid within 15 days of receipt?

Question133: If companies have identical inventoriable costs, but use different inventory flow assumptions when the price of goods has not been constant, then the:

Question134: A firm's ROE equals 47%. Its financial leverage (assets/equity) equals 1.8 and its asset turnover is 0.8.
If the firm's total net sales equal $1.35 million, its net income equals ________.

Question135: Which of the following statements is (are) true with respect to the nature of bonds?
I). For premium bonds, its yield to maturity is always lower than its current yield.
II). For discount bonds, the duration equals the maturity of the bond.
III). Since longer term interest rates are more stable than shorter term interest rates, longer term bonds are less price sensitive than shorter term bonds.
IV). Not even U.S. government bonds are immune from interest rate risk.

Question136: When individuals evaluate their portfolios they should evaluate

Question137: The required return of a 5-5/8% coupon, semi-annual payment bond changes from 5.5% to 5.75%.

Question138: Which of the following statements least accurately describes the interpretation of an F-statistic?

Question139: If the interest rate is falling, we can conclude that:

Question140: Robert withdrew $100,000 from an account that paid 10 percent annual interest and used the funds to purchase real estate. After one year he sold the property for $120,000. According to an economist,
Robert's profit on this deal was:

Question141: If a security just experienced a triple bottom pattern, its price is then expected to:

Question142: When an uptrend reverses twice at roughly the same high price level, a ______ pattern is formed.

Question143: An 8%, 20-year corporate bond is priced to yield 9%. The Macaulay duration for this bond is 8.85 years. Given this information, the bond's modified duration is:

Question144: Under the percentage-of-completion method:

Question145: With respect to the portfolio management process, the security analysis is done in the

Question146: A multivariate distribution

Question147: An industry experiencing rapidly increasing demand and improving profitability is best characterized as being in the _____ stage.

Question148: A bond is trading at the ex-coupon transaction price which is 99-7/32 for a semi-annual pay, 9-5/8% coupon bond. 4.0 months have elapsed since the last coupon. What is the accrued interest for the buyer for $2,750,000 par value of this bond?

Question149: 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

Question150: The price/earnings ratio valuation method values a company:

Question151: Beta and standard deviation are common measures of investment risk. How are these risk measures best characterized?

Question152: You are given the following information regarding a random variable:

P(1 x <= 5) is equal to:

Question153: Which statement is false?

Question154: Lionel Stein currently works for JHK Bank managing private client's money. Lionel decides to change
Banks and go and manage private client accounts for RTU Bank. Just prior to leaving JHK Lionel convinces several current clients to move to RTU with him. In addition Lionel convinces several prospective clients that he presented to at JHK to open private accounts with RTU. Has Lionel violated the
Code and Standards?

Question155: Automatic stabilizers in the economy smooth business cycles by:

Question156: The ______ of an asset represents the interaction of supply and demand of the asset.

Question157: One of the crucial ingredients for an effective central bank to implement inflation targeting is:

Question158: Which of the following combinations would not be a likely outcome by combining an interest rate swap with a currency swap?

Question159: ________ are also known as redeemable common shares.

Question160: An investor invested $10,000 in an open-end mutual fund 90 days ago. Today his investment is worth only $9,874. What is his annualized rate of return?

Question161: Suppose that four different portfolios have produced the following returns over the past year: 10%,
3 0%, 5% and 15%.
I). The mean return is 15%.
II). The range is 25%.
III). The mean absolute deviation is 7.5%.
2
IV). The variance is 87.5% .
V. The standard deviation is 9.354%.
Which statement(s) is/are FALSE?

Question162: Using extraordinary long depreciable lives for assets is an example of

Question163: Ace Investment Managers manages an equity fund with an expected risk premium of 10% and a standard deviation of 24%. The risk-free rate is 6%. The expected return on the market index is 12%, and the market index has a standard deviation of 20%. Ace's client has a $300,000 portfolio, $180,000 of which is invested in the equity fund and $120,000 of which is invested in a T-bill money market fund. The standard deviation of return on this combined portfolio is closest to:

Question164: An 8%, 20-year bond is selling for $90.80. What is the total amount of coupon and reinvestment income necessary to earn the yield to maturity?

Question165: An investor wishes to diversify his portfolio and is looking at including non-equity investments. Which of the following offer the greatest potential for diversification benefits?

Question166: Which one is generally considered to be a leading indicator?

Question167: The standard deviation measures

Question168: A share of stock is expected to pay a dividend of $1.00 one year from now, with growth at 5% thereafter. In the context of a dividend discount model, the stock is correctly priced today at $10.
According to the single stage, constant growth dividend discount model, if the required return is 15%, the value of the stock two years from now should be:

Question169: Using a few valuation models and a range of inputs, an analyst estimates a security's intrinsic value to be between $18 to $22. The security is trading at $21.5. The security appears to be:

Question170: Which of the following issues does a policy statement not address?

Question171: _______ financing is capital provided for a company that expects to go public within a year or so.

Question172: A researcher randomly samples 100 citizens of Florida and finds that 95 of the citizens are literate.
The researcher then finds a 90% confidence interval. Which of the following is false?

Question173: A certain function has 2 key properties.
I). 0 = p(x) = 1.
II). The sum of the probabilities p(x) over all values of X equals 1.This function is known as the

Question174: Which of the following items would have a tax consequence for financial accounting purposes?
I). Fines Paid for Law Violations
II). Product Warranty Liabilities
III). Life Insurance Proceeds Received (co. is beneficiary)

Question175: This year, Flower Buds expects to pay a dividend of $0.60 per share on the 60,000 shares outstanding. Flower Buds expects to have a payout ratio of 40%. How much income does Flower Buds expect to earn?

Question176: You invest $100 in a risky asset with an expected rate of return of 12% and a standard deviation of
1 5% and a T-bill with a rate of return of 5%. A portfolio that has an expected outcome of $115 is formed by:

Question177: Referring to the information in the following table, if good S is capital intensive, then following the
Heckscher-Ohlin Theory,

Question178: An un-weighted, or equally-weighted, price index would be best used as a benchmark index for which of the following portfolios?

Question179: Which of the following are appropriate procedures for handling insider information inside a firm?
I). Control information flow between departments.
II). Monitor employee trading when in possession of sensitive information.
III). Limit the number of employees with access to the information.

Question180: The manager of Liz-Beth Co. is given a 2% bonus based on income before taxes. The net income after taxes is $11,200 if Liz-Beth uses the FIFO method for inventories. The tax rate is 30%. Cost of goods sold would have been $10,000 higher if LIFO is used. How much is the difference in the manager's bonus if LIFO is used instead of FIFO?

Question181: Bob Ryan, CFA, is an analyst with a large insurance company. His personal portfolio includes a significant investment in the common stock of QRS Company, which his firm does not now follow. The director of the insurance company's research department asks Ryan to analyze QRS and write a report about its investment potential. Based on CFA Institute's Standards of Professional Conduct, Ryan should:

Question182: A U.S. Treasury Inflation Protected Security has been issued with a real rate of 1.75%. In the first six months of the year inflation has equaled a 3% annualized rate. If the face value of the security is $10,000, what is the interest payment to the investor?

Question183: What begins the indirect method of determining cash flow from operating activities?

Question184: eRetailer.com is borrowing $1 million at 10% for a year on a discount basis with a bank. How much in funds are available for use? What is the effective cost of interest?

Question185: The closing price today for a security was $20. It was $18 20 days ago.

Question186: ABC Corp. is considering the following mutually exclusive projects:
Which of the following would represent the most optimal choice?

Question187: A distribution of 6 scores has a median of 21. If the highest score increases 3 points, the median will become _______.

Question188: Money serves as a unit of account because

Question189: Which of the following represents the correct method of constructing common-sized financial statements?

Question190: You have a portfolio of 4 stocks, A, B, C and D.
Exactly 25% of your capital is invested in each stock.
E(RA) = 15%, E(RB) = 12%, E (RC) = 10% and E(RD) = 8%. The expected return on the portfolio is:

Question191: An investor reads an article regarding one of his holdings. He is surprised to find out that there is significant evidence of massive accounting fraud at the firm. This source of risk is best described as:

Question192: When applying income tax allocation, interest expense incurred on funds borrowed to acquire municipal bonds would be classified and accounted for as follows:

Question193: Which of following correctly specifies the level of the firm's receivables balance?
I). Average annual sales / Average collection period.
II). Average collection period / Average daily sales.
III). Average daily sales X Average collection period.
IV). Credit sales / Accounts receivable turnover.

Question194: A company has a callable issue outstanding. If the volatility of interest rates increases, all of the following statements are true EXCEPT

Question195: Which of the following statements is not true of forward contracts?

Question196: A big value for F will result in:

Question197: Under which circumstances can you trade using non-public information?

Question198: Which of the following is most likely correct?

Question199: An options investor longs one index put option on the Standard & Poor's 100 Index (S&P100). The put has the following characteristics:
Type of option: put option Underlying asset: S&P100 Exercise price: 640 Premium: 0.31 Expiration date:
October
The current price of the S&P100 is 787.77. This long put option is:

Question200: According to the code of ethics, members of CFA Institute shall:

Question201: Select the correct use of the Chartered Financial Analyst and CFA marks:
I). Shawn Cook, CFA
II). CFA Level II, and degree expected June 2013.
III). Sam's CFA Advisory Services, LLC
IV). This study session's focus is on Chartered Financial Analysis.

Question202: Zero-coupon bonds are bonds that

Question203: Jumbo, Inc. had sales of $8,000 in November, $14,000 in December, and projects sales of $10,000 in
January, $12,000 in February, and $8,000 in March. The firm's COGS in any given month is equal to 70% of the next month's sales. The firm collects its receivables in 60 days and pays its payables in 30 days.
The firm begins January 1 with $10,000 in cash. All sales and purchases are on credit. There are no other costs or revenues. What is Jumbo's cash balance at the end of March? Assume there are 30 days in every month.

Question204: According to SAS 99, which of the following is least likely to be a risk factor related to attitudes/rationalizations to commit fraudulent accounting?

Question205: If a given score is at the 30th percentile for reference group A and the 60th percentile for reference group B, which of the following is most likely true?

Question206: Which of the following is correct about a probability distribution?
I). Sum of the probabilities of all possible outcomes must equal 1
II). Probability of each outcome must be between 0 and 1 inclusive
III). Outcomes must be mutually exclusive

Question207: Which is not true of the accounting procedures or the accounting rules applied to intangible assets?

Question208: Which of the following is/are true about a normal distribution?
I). It is a bimodal distribution.
II). It can be characterized completely by a single parameter.
III). It ranges from negative infinity to positive infinity.
IV). It is positively skewed.

Question209: What is the interest rate risk, in percentage price change, of a semiannual-pay 9%, 15-year bond with an 8.5% yield if rates increase by 60 basis points?

Question210: Which one of the following would not result in a timing difference?
I). Accelerated depreciation is used for tax purposes and straight-line is used for financial reporting.
II). Warranty expense is estimated for financial reporting; however, for tax purposes it is recognized as incurred.
III). Installment sales are recognized at point of sale for financial purposes but as the cash is received for tax purposes.

Question211: Given a 30-day horizon, a money market yield of 4.0134% produces a(n)

Question212: Branded pharmaceuticals industry is a(n) ______ industry.

Question213: The demand curve of a monopolist is

Question214: The sponsors of a well-known charity came up with a unique idea to attract wealthy patrons to the
$ 500 a plate dinner. After the dinner, it was announced that each patron attending could buy a set of 20 tickets for the gaming tables. The chance of winning a prize for each of the 20 plays is 50-50. If you bought a set of 20 tickets, what is the chance that you will win 15 or more prizes?

Question215: Which of the following statements is false with respect to factors that influence the attractiveness of financing with warrants and convertibles?

Question216: Which of the following will increase the aggregate demand?
I). Higher prices in stock market.
II). Higher prices in real estate market.
III). Higher real wealth.

Question218: An inventory write-down has a negative effect on:
I). liquidity ratios.
II). profitability ratios.
III). activity ratios.
IV). solvency ratios.

Question219: Which ones of the following items are examples of intangible assets:
I). Franchises.
II). Goodwill.
III). Secret processes.
IV). Organization costs.

Question220: According the Global Investment Performance Standards (GIPS), when dealing with the integrity of data to be used for performance presentation, which of the following statements is NOT correct?

Question221: Which of the following measurements can be found for a portfolio by simply taking the weighted average of the individual components.
I). Beta
II). Return
III). Standard deviation

Question222: A company with outstanding bonds of $100,000 retires the debt early by buying back the bonds at
$ 83,000. The impact on the cash flow statement, assuming the indirect method is used, would be:

Question223: If a monopolist increases sales from 10 to 11 by lowering its price from $40 to $38, its marginal revenue is:

Question224: As the price of a normal product drops, demand

Question225: If an experiment results in one of two dichotomous responses, the variable is defined as a

Question226: Which measure is based on total risk?

Question227: What is the interest rate risk, in percentage price change, of a semiannual-pay 9%, 15-year bond with an 8.5% yield if rates decrease by 50 and 75 basis points?

Question228: Which of the following does NOT favor a capital lease?

Question229: Assuming there are no leakages out of the banking system, a money multiplier equal to 10 means that:

Question230: The purchase of treasury stock

Question231: On December 31, 2003, Numark Co. leased a machine from Hardie Ltd. for a five-year period. Equal annual payments under the lease are $315,000 (including $15,000 annual executory costs) and are due on December 31 of each year. The first payment was made on December 31, 2003, and the second payment was made on December 31, 2004. The five lease payments are discounted at 10% over the lease term. The present value of minimum lease payments at the inception of the lease and before the first annual payment was $1,251,000. The lease is appropriately accounted for as a capital lease by
Numark. In its December 31, 2004 balance sheet, Numark should report a lease liability of:

Question232: Calculate a 90% confidence interval for a population mean. You have a sample of 21, a sample mean of -25%, and a sample standard deviation of 10%. The sample appears to be approximately normally distributed.

Question233: Which of the following is a true statement regarding the comparison of t-distributions to the standard normal distribution?
I). The normal distribution is symmetrical whereas the t-distributions are slightly skewed.
II). The proportion of area beyond a specific value of t is less than the proportion of area beyond the corresponding value of z.
III). The greater the df, the more the t-distributions resemble the standard normal distribution.

Question234: If a researcher were conducting a paired difference experiment for a sample size of 100, and a 90% confidence interval, which of the following test statistics would he/she use for a two-tailed test?

Question235: Using greater amounts of debt in the capital structure

Question236: A company prohibits itself from offering shares at discounted prices to management, board members and other insiders prior to a public offering of its securities. This practice is:

Question237: The probability that the price of a stock increases is 0.30. The price of the stock will either increase or decrease each day independently of what happened on the previous day. An experiment consists of observing the price of this stock during a 30-day period. What is the probability that the stock price will increase 10 days out of the 30 days?

Question238: Companies with defined benefit plans are required per SFAS No. 132 to make all of the following disclosures except:

Question239: The standard deviation of a large population is 20. To test:
H(0): u = 4 vs H(A): u >4
At level of significance .05, a sample of size 100 will be taken. You will reject H(0) if:

Question240: If you want to find information about management and director compensation, you should look

Question241: When a deferred tax liability reverses, it leads to

Question242: On May 15, your firm receives 20 cases of designer pens. On June 30, your firm pays $3,250 for the pens. On July 15, the pens are sold on credit for $10,500. On September 10, your firm collects the receivable in full. If each transaction occurs at the end of the business day, how many days are in the accounts payable period?

Question243: Which of the following is not included in investing activities?

Question244: Analysts should go beyond the "bottom line" when analyzing and interpreting financial statements because

Question245: An investor buys 100 baskets of the Standard and Poor's 500 stock index for $1,400 each. She insures the portfolio by buying put options. What is the effect of the put options?

Question246: If you are a bondholder for a firm, which of the following ratios would you be most interested in?
I). Times interest earned.
II). Total debt to total assets.
III). Return on equity.
IV). Quick ratio.

Question247: Jamie Smith works for AMC Brokerage. He is in the process of releasing a research report on an advertising company called PLW. He recommends that his clients buy the share. Which of the following statements is not likely to result in a conflict or possible conflict situation?

Question248: Taylor Corporation purchased a new asset for $80,000. The asset had an estimated lifeof 5 years and an estimated salvage value of $20,000. What is the depreciation expense in the second year if the company uses the double-declining balance method?

Question249: Standard deviation and beta both measure risk, but they are different in that beta measures:

Question250: Benny Len is an analyst at a large Brokerage firm. Benny has recently visited the Head of operations at company HTY with the view to writing a report on them. The operations director presents Benny with three production scenarios for the coming year, the optimistic, pessimistic and realistic scenarios. When
Benny writes his report he only uses the optimistic production scenario but does not report this as the optimistic scenario, rather he reports these numbers as the numbers that are likely to be achieved. Based on this scenario Benny recommends that the entire firm's clients purchase HTY stock. Has Benny violated the Code and Standards?

Question251: Which of the following is/are true about advantages of international trade?
I). It leads to lower prices for imported goods.
II). It leads to lower prices for exported goods.
III). It leads to an expansion of consumption possibilities.
IV). It leads to an expansion of the production possibility frontier.

Question252: The industry demand curve in an oligopoly market

Question253: Which of the following statements regarding hypothesis testing is false?

Question254: We can determine something about the skewness of a distribution by considering which of the following?

Question255: Which measure gives investors rankings that are identical to those of the Sharpe ratio?

Question256: For a firm with a simple capital structure, all of the following are necessary to measure basic earnings per share (EPS) EXCEPT:
I). dividends paid to preferred shareholders.
II). number of shares outstanding at the beginning of the year.
III). the timing and number of shares issued or repurchased during the year.
IV). dividends paid to common shareholders.

Question257: Under a monopoly, in equilibrium

Question258: Big Toys, Inc. has a 34 day inventory period and a 23 day receivables period. The company purchases the toys which it sells from The Toy Co. under a 45 day payment arrangement. The Toy Co:

Question259: Which of the following statements is true with respect to a statistical decision and an economic decision?
I). When in conflict, a statistical decision must override an economic decision since the former is an objective test.
II). A statistical decision will always be objective whereas an economic decision may be subjective.
III). If the statistical decision is not to reject the null, it simply implies that the sample results were inconclusive.
IV). A statistical decision may easily be influenced by changing the level of significance of the test.

Question260: A futures contract on a stock index can be settled on the expiration day by

Question261: Critics of monopolistic competition argue that it is inefficient because the firms

Question262: If a firm observes that the marginal revenue product of labor exceeds the wage at the current level of hours, the firm is likely to

Question263: Changes in fiscal policy refer to changes in:
I). Government expenditures.
II). Tax policy.
III). Money supply.
IV). Fed interest rates.
V. Borrowing money by issuing T-securities.

Question264: Gross Sales total $505,000 and Sales Returns & Allowances total $15,000. Average accounts receivable for the period are $42,000. What is the accounts receivable turnover rate?

Question265: The law of demand is simply a reflection of

Question266: ________ financing is one of the formative stages of financing in venture capital.
I). Seed
II). First-stage
III). Start-up

Question267: There are 1,000 identical firms in a purely competitive industry. In the short run, the total revenues of each firm are less than total costs. What will happen in the long run?

Question268: The following data pertains to the Sapphire Company:
Net income equals $15,000
*
5,000 shares of common stock issued on January 1st
*
10 percent stock dividend issued on June 1st
*
1000 shares of common stock were repurchased on July 1st
*
1000 shares of 10 percent, par $100 preferred stock each convertible into 8 shares of common
*
were outstanding the whole year.
What is the company's diluted earnings per share (EPS)?

Question269: Which of the following is INCORRECT concerning medium term notes?

Question270: Which one of the following best explains why the crowding out effect, brought on by an increase in government spending financed by the sale of government bonds to the public, is likely to reduce aggregate demand?

Question271: Is it possible that a project has a payback period of one year, a negative NPV and a positive IRR?

Question272: U.S. GAAP requires that inventories are:

Question273: Taxable temporary differences result in a deferred tax ______ when the tax base of an asset is
_ ____ than its carrying amount.

Question274: At the beginning of 2001, Osami Corporation had 1.4 million shares of common stock outstanding and no preferred stock. At the end of August 2001, Osami issued 1.2 million new shares of common stock.
If Osami reported net income equal to $7.2 million, what were its earnings per share (EPS) for 2001?

Question275: 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?

Question276: Suppose a fully employed economy had only two industries, one a monopoly and the other competitive.
Assuming there are no economies of large-scale production, government action to break the monopoly into many competitive firms would lead to a(n)

Question277: When a price ceiling causes an excess demand which leads to an illegal market in which the price exceeds the legally imposed price ceiling the illegal market is called a price ceiling, the illegal market is called a

Question278: You plan to buy a common stock and hold it for one year. You expect to receive both $1.50 in dividends and $26 from the sale of stock at the end of the year. If you wanted to earn a 15% return, the maximum price you would pay for the stock today is:

Question279: A current account surplus reflects:

Question280: The realized mean monthly return on the S&P 500 in the 1990's appears to have been substantially different than the mean return in 2000's. The data indicate that assuming equal population variances is not unreasonable.

u = 1990's population mean return and u = 2000's population mean return. The decision made in this
1 2
hypothesis is (assume at the 10% level):

Question281: Assume the following information about an equally-weighted index comprised of 3 stocks, A, B and C
Security | Price (Beginning) | Price (End) | Total Dividends A | 5 | 6 | 1 B | 8| 7 | 0 C | 10 | 15 | 2
The price return of the index is:

Question282: Which of the following statements concerning the percentage-of-completion and completed-contract methods is CORRECT?

Question283: Which of the following investments in debt securities would not normally be classified as long-term?

Question284: Which of the following would cause the price of a put option to increase?
I). An increase in the price of the underlying security.
II). An increase in the exercise price.
III). An increase in the volatility of the underlying security.

Question285: Which of the following is true?

Question286: A recession is likely to occur if there is a:

Question287: Choose the correct statement.

Question288: A firm should accept a project if _________, according to the NPV rule.

Question289: Philpott Co. had 1,200,000 common shares outstanding on January 1 and December 31, 2002. In connection with the acquisition of a subsidiary company in June 2001, Philpott is required to issue 50,000 additional common shares on July 1, 2003, to the former owners of the subsidiary. Philpott paid $300,000 in preferred shares dividends in 2002, and reported net income of $5,100,000 for the year. Philpott's diluted earnings per share for 2002 should be:

Question290: Robert Haley has "CFA Level 2" on his business cards. He has passed the Level 2 examination and is registered for the Level 3 examination to be given next June.

Question291: Which of the following pooled investments is most likely to make a few large investments?

Question292: Crowding-out effects implies that

Question293: Suppose that events A, B, C, and D are independent, and have probabilities of 0.25, 0.50, 0.40, and
0 .30, respectively. What is P (ABCD)?

Question294: If you observe that number of building permits has increased steadily over the past 2 quarters, it is highly likely that an upturn:

Question295: An investor is currently considering the choice between a corporate and a municipal bond. The yield on these two bonds is given below.
Securities: Yield 10-year corporate bond: 6.43
1 0-year municipal bond: 5.20
The investor's marginal tax rate is 28%. Which bond provides a higher after-tax yield for this individual investor?

Question296: A nation can gain from international trade when:
I). the relative prices of the nation's products differ from those of other countries.
II). it imports goods for which it is a high-opportunity cost producer while exporting goods it produces at low opportunity cost.

Question297: The _______ of a _______ option has the right to sell 100 shares of common stock at a specified price for a given period of time.

Question298: An investment of $275 grows to $400 in 3 years. The holding period return is:

Question299: The clearinghouse is:

Question300: If the financial markets are liquid and the costs of trading are low, the financial system:

Question301: Justin is trying to estimate the trailing P/E multiple of IBM. The current stock price is $86.2. Justin gathers the following data from the company's financial statements:
IBM's current fiscal year ends in December 2002. The expected EPS for the 4th quarter of 2002 and the next fiscal year are $0.48 and $3.66, respectively. The trailing P/E of IBM is _____.

Question302: The business cycle is:

Question303: Jumbo, Inc. had sales of $8,000 in November, $14,000 in December, and projects sales of $10,000 in January, $12,000 in February, and $8,000 in March. The firm's COGS in any given month is equal to
7 0% of the next month's sales. The firm collects its receivables in 60 days and pays its payables in 30 days. The firm begins January 1 with $10,000 in cash. All sales and purchases are on credit. There are no other costs or revenues. What is Jumbo's accounts payable at the end of January? Assume there are 30 days in every month.

Question304: Consistent with capital market theory, systematic risk:
I). refers to the variability in all risky assets caused by macroeconomic and other aggregate market-related variables.
II). is measured by the coefficient of variation of returns on the market portfolio.
III). refers to nondiversifiable risk.

Question305: Of the following statements:
I). In a stratified random sample, each item in the sample has the same probability of being sampled.
II). In a simple random sample, each item in the sample has the same probability of being sampled.

Question306: Jamie Smith works for AMC Brokerage. He is in the process of releasing a research report on an advertising company called PLW. He recommends that his clients buy the share. Which of the following statements may result in a conflict or possible conflict situation?
I). Jamie's mother has a material shareholding in PLW.
II). Jamie does private work for PLW Company.
III). Jamie's sister supplies the coffee to PLW.
IV). AMC Brokerage has a large holding in PLW.

Question307: You invest $100 in a risky asset with an expected rate of return of 12% and a standard deviation of
1 5% and a T-bill with a rate of return of 5%. What percentages of your money must be invested in the risk-free asset and the risky asset, respectively, to form a portfolio with a standard deviation of 6%?

Question308: Which of the following is a form of internal credit enhancement?

Question309: The staff of a company is 45% female. The probability of a female requesting a sick leave is 12% versus 10% for males. An individual who requested a sick leave was randomly selected from the staff of this company. The probability that this individual is a female would be closest to:

Question310: Average fixed cost

Question311: When graphing investor utility to show the tradeoff of risk and return, the utility curves of the more risk-averse investors are

Question312: Which of the following statements does not accurately describe a closed-end fund?

Question313: The convexity adjustment for a callable bond with a duration of 5.5 and convexity of -38, when the interest shock is 250 basis points, is:

Question314: What is the area under the normal curve between z = 1.0 and z = 2.0?

Question315: Which of the following accounts is an asset?

Question316: In order to increase the amount of output sold, a monopoly must:

Question317: 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:

Question318: The time it takes an auto mechanic to replace a carburetor is known to follow a normal distribution with a mean of 53 minutes and a standard deviation of 7.5 minutes. This means that

Question319: Which of the following costs is not capitalized in the cost of trademarks (under U.S. GAAP)?

Question320: In the mid-1990s, the United States considered requiring tomatoes to be stacked in boxes without padding. The effect of this regulation would have been to ruin vine-ripened tomatoes imported from
Mexico. Such an act is considered an example of a

Question321: If the retailing industry is perfectly competitive and Wal-Mart opens five new stores, output must be such that:

Question322: A depository receipt is a ______ DR when the foreign company whose shares are held by the depository has a direct involvement in the issuance of the receipts.

Question323: The marginal revenue product will shift to the right if

Question324: The domestic demand Q for a good X at a price P is given by Q = 400 -2P while the supply function is given by 100 + 4P. The world price for good X is 45 in international markets. All quantities are in thousands of units. If the government imposes a tariff of 5% on imports, the imports will be:

Question325: Total profit is maximized at the output level at which:

Question326: A sinking fund requirement is when

Question327: Which of the following statements is not correct?

Question328: Consider the following statement:
I). Marginal cost is the additional cost incurred in undertaking an activity.
II). The opportunity cost of undertaking an activity is the benefit forgone by undertaking the next best alternative.
Which one(s) is(are) true?

Question329: An asset that is plotted above the security market line (SML) is

Question330: If a security just experienced a triple top pattern, its price is then expected to:

Question331: A put on stock X with a strike price of $40 is priced at $2.00 per share, while a call with a strike price of
$ 40 is priced at $3.50. What are the maximum per share loss to the writer of the uncovered put and the maximum per share gain to the writer of the uncovered call?
Maximum Loss to Put Writer : Maximum Gain to Call Writer

Question332: If the demand for a good is relatively inelastic, then the elasticity of demand for the labor used to produce the good will tend to be

Question333: Assume there are six firms in an industry. Firm A, B, C, D and E each has 15% market shares, respectively. Firm F has a share of 25%. Now that firm A is going to merge with firm C.
What would be the increase in the HHI as a result of the merger?

Question334: A random variable is:

Question335: Which of the following factors is not an explanation of the positive relationship between market price and quantity supplied?
I). The law of diminishing returns makes it more costly for firms to expand output quickly.
II). As all firms in an industry hire more factors of production, the prices paid for them often increase.
III). For most firms, unit costs decrease as output increases in the long run.
IV). As price increases, some less efficient firms will enter the market.

Question336: ______ are effectively a form of equity.

Question337: ______ ADRs are used to raise capital on U.S. market.

Question338: A valid test of the weak form of the EMH should incorporate which of the following?
I). only publicly available data
II). an estimate of all transactions costs
III). a risk adjustment of returns

Question339: A mayor of a big city is interested in knowing the fate of the 2001 high school graduates of that city. To learn this, the mayor decides to conduct a survey. The population of this survey would be:

Question340: The current price of wheat is $1.00 per bushel, and the price elasticity of demand for wheat is known to be 0.50. A bad harvest causes the supply of wheat to decrease, and as a result, the price of wheat rises by 20%. What will be the percentage change in the quantity demanded of wheat, and will farm revenues rise or fall?

Question341: Glassia Red is making a presentation to the firm BB, seeking investment banking business. During the presentation she offers to start coverage (generate research reports) of the firm. If BB agrees to provide
Glassia with investment banking business on the understanding that Glassia's firm will begin coverage then:

Question342: Making the investment decision involves subdividing the major steps into several concrete considerations. The process of the investment decision involves all of the following except:

Question343: On January 1, a business exchanged a plant asset with a book value of $1,500 for a similar asset that had a price of $23,000. The business received a trade-in allowance of $2,100 on the old plant asset.
The income-tax method was used to record this trade. What was the result of the exchange?

Question344: On a common-size financial statement, which of the following is given a designation of 100%?

Question345: Paragon Company's operating profits are $100,000, interest expense is $25,000, and earnings before taxes are $75,000. What is Paragon's interest coverage ratio?

Question346: According to the J-curve concept, which of the following is false? That the effects of a currency depreciation on the balance of payments are:

Question347: An uptrend is when a security makes ____ lows and _____ highs.

Question348: In which of the following market structures is collusion most likely to occur?

Question349: Based on the "A Manual for Investors", investors should ensure that all members of ______ must be
Independent Board Members.
I). Audit committee.
II). Remuneration / Compensation committee.
III). Nominations Committee.

Question350: Members of the CFA Institute should make reasonable efforts to detect and prevent violations of applicable laws, rules, regulations, and the Code and Standards by whom, according to the Standards of
Professional Conduct?

Question351: Recent history has shown that the movements of more than 3% in the Dow Jones Industrial Average occur in 2% of the trading days. What is the probability that within the next 30 trading days there will be one or more days in which the average will move more than 3%?

Question352: Assume a company's beginning shareholders' equity is $200 million, its net income for the year is
$ 25 million, its cash dividends for the year are $5 million, and there was no issuance or repurchases of common stock. The company's actual ending shareholders' equity is $220 million. What amount has bypassed the net income calculation by being classified as other comprehensive income?

Question353: The slope of the SML in an economy is 8.9%. The risk-free rate prevailing in the economy is 4.9%. A security has a correlation coefficient of 0.23 with the market. The market's standard deviation is 15% while that of the security is 19%. The expected return on the portfolio equals ________.

Question354: Degree of Total Leverage = DTL; Degree of Operating Leverage = DOL; Degree of Financial
Leverage = DFL.
Which of the following is incorrect?

Question355: Assume three months have elapsed since the last coupon payment date. The cum-coupon price for
$ 250,000 par value of a 5-year, semi-annual pay, 6% coupon bonds is $225,900. What is the full price?

Question356: A stock is not expected to pay dividends until three years from now. The dividend is then expected to be $2.00 per share, the dividend payout ratio is expected to be 40%, and the return on equity is expected to be 15%. If the required rate of return is 12%, the value of the stock today is closest to:

Question357: The larger the critical value on the z-statistic,

Question358: The potential gains on short position generally are ______ and the potential losses are ______.

Question359: If an inflation is caused by a demand shock, raising interest rates will likely:

Question360: A property can be purchased for $180,000. The investor provides 20% as owner's equity and borrows the remainder at 8.50% p.a. The investor sells the property for $170,000 in one year. What is the rate of return to the investor? (Ignore costs associated with real estate transactions.)

Question361: A brokerage firm, which has $10 million in S&P500 stocks, enters into an equity swap with a pension fund which currently has $10 million in a short term savings account earning LIBOR. If these two entities were to arrange a proper equity swap, in which payments are to be made annually, what would be the net payment for a period that saw the S&P500 net 12% and LIBOR set at 8%?

Question362: Assume that a company announces an unexpectedly large cash dividend to its shareholders. In an efficient market without information leakage, one might expect:

Question363: If prices have risen by 5% in one year, real output:

Question364: Which of the following is most appropriate? A firm can claim compliance

Question365: The embedded options that are granted to the issuer of a bond MAY include:
I). the right to call the issue.
II). the right of the underlying borrowers in a pool of loan to repay an amount in excess of the scheduled principal repayment.
III). the accelerated sinking fund provision.
IV). the cap on a floater.

Question366: Which of the following best explains a ratio of "net sales to average net fixed assets" that exceeds the industry average? The firm:

Question367: A portfolio consists of 45% of wealth invested in the market portfolio and the remaining in risk-free
T-bills yielding 6.3%. The market portfolio has an expected return of 17% and a standard deviation of 19%.
The beta of the portfolio is ______.

Question368: A standard normal distribution (Z-distribution) has:

Question369: Assuming everything else remains the same, when a stock goes ex-rights its price should:

Question370: The following information pertains to Bender, Inc., for last year:
Net income of $25 million
*
1 million shares of $10 par value preferred stock outstanding paying a 10% dividend
*
50 million shares of common stock outstanding at the beginning of the year
*
Issued an additional 5 million shares of common stock 6 months ago
*
What is Bender Inc.'s basic earnings per share (EPS)?

Question371: Which of the following statements is correct?

Question372: Which of the following is incorrect?

Question373: If a product is a Veblen good:

Question374: Kandy Miller is undecided between purchasing the four period bond or a series of one period bonds.
Given the forward rates and spot rates provided below, what would Kandy earn on the four period spot rate bond?Spot Rates and Six Month Forward Rates (Annualized Rates on a Bond Equivalent Basis)

Question375: Financial ratios are used in all of the following areas EXCEPT:

Question376: A high proportion of the value of a growth stock comes from:
I). Past dividend payments
II). Past earnings
III). PVGO (Present Value of the Growth Opportunities)

Question377: A forward rate agreement is an agreement to buy or sell

Question378: All of the following statements are true with respect to the effects of changing interest rates on the market value of debt and on financial statements and ratios, except:

Question379: An analyst has gathered the following information about a company: Net profit margin of 15%, Asset turnover ratio of 0.267, Equity multiplier of 4.5, Dividend payout ratio of 30%. What is the company's growth rate?

Question380: What is the bond-equivalent yield of a 12% annual-pay bond?

Question381: When enacted tax rates change:

Question382: Economic profit is

Question383: Which model(s) assumes sticky wages (workers don't want to lower their wages to help the market reach a new equilibrium)?
I). Keynesian school.
II). Neo-Keynesian school.
III). New Classical school.

Question384: Manufacturers were subdivided into groups by volume of sales. Those with more than $100 million in sales were classified as Class A large; those from $50 to $100 million as Class A medium size; and those between $25 and $50 million, and so on. Samples were then selected from each of these groups. What is this type of sampling called?

Question385: Positive convexity means that:

Question386: Which of the following is NOT true about exchange rates quoted in the United States?

Question387: On January 2, 2002, Heather Ltd. signed a ten-year noncancelable lease for a passenger ferry. The lease stipulated annual payments of $68,353 starting at the end of the first year, with title passing to
Heather at the expiration of the lease. Heather treated this transaction as a capital lease.
The ferry has an estimated useful life of 15 years, with no residual value. Heather uses straight-line amortization for all of its capital assets. Aggregate lease payments were determined to have a present value of $420,000, based on implicit interest of 10%.
In its 2002 income statement, what amount of interest expense should Heather report from this lease transaction?

Question388: Assume that we have 3 assets in a portfolio, the respective market values of which are $100, $400 and $500. Suppose also that E (R1) = 2%, E(R2) = 4% and E(R3) = 6%. The whole portfolio has a market value of $1000. Determine the expected return of the portfolio.

Question389: Beta is the slope of the:

Question390: What is the best way to avoid data-snooping bias?

Question391: Beginning accounts receivable $ 50,000 Ending accounts receivable $ 30,000 Net sales $600,000
Cost of goods sold $375,000 Operating expenses $ 80,000
What was the amount of cash received from customers?

Question392: If BJSH Bank is required to maintain a 20 percent reserve by its central bank, and currently it has excess reserves of $500,000, what is the maximum amount of loan this bank can extend?

Question393: You have $500 that you would like to invest. You have 2 choices: Savings Account A which earns 8% compounded annually or Savings Account B which earns 7.75% compounded semiannually. Which would you choose and why?

Question394: Three investors Jen, Sarah and Matt are considering two investments A & B.
Investment A is the less
risky of the two investments, requiring an outlay of $5,000 with an expected rate of return at 12%. Each investor is satisfied with this expected return. Investment B also requires an investment of $5,000 and has an expected return of 12% but appears to have considerably more variability in potential returns compared with A.
Jen now requires a return of 16%, Sarah is still satisfied with 12% and Matt seeks only an 8% expected return.
Given the information above, which of the three investors, would be considered risk-averse?

Question395: The price volatility of a variable rate note may be reduced by:

Question396: Which of the following bonds is likely to command the HIGHEST yield, assuming they are all issued by the same entity and have the same maturity?

Question397: For the purpose of deriving the yield curve, the yields on maturities with no on-the-run Treasuries are estimated:

Question398: Susan Co. had 300,000 common shares issued and outstanding at December 31, 2001. No common shares were issued during 2002. On January 1, 2002, Susan issued 200,000 nonconvertible preferred shares. During 2002, Susan declared and paid $100,000 cash dividends on the common shares and
$ 80,000 on the preferred shares. Net income for the year ended December 31, 2002 was $620,000. What should be Susan's 2002 earnings per common share?

Question399: Which of the following statements is least accurate with respect to the rationales and drawbacks of using the price/earnings (P/E) ratio for valuation purposes?

Question400: Which of the following would cause a lessee to prefer to record an operating lease?

Question401: Which of the following affects a firm's business risk?
I). The degree of operating leverage.
II). The risk of adjusting sales prices.
III). The level of uncertainty about future sales.

Question402: Buying securities on margin means that an investor:

Question403: An investor invests $5000 today for 7 years at an interest rate of 8% compounded quarterly. Which of the following is true?

Question404: The revaluation model is:
I). An alternative to the cost model.
II). Not permitted under IFRS.
III). Not permitted under U.S. GAAP.

Question405: A client's ability to take risk is mainly determined by these factors:
I). investment time horizon.
II). psychological factors.
III). level of financial knowledge.
IV). net wealth.

Question406: Harold Black is a portfolio manager who manages the pension portfolio of Company XCG. In addition to the normal compensation that Harold's company receives, Harold is entitled to use all of Company
XCG's facilities at their offices. Harold does not mention this benefit to anybody at his firm. According to
CFA Institute's Standards of Professional Conduct, which Standard of Professional Conduct has been violated?

Question407: Which of the following conditions is not a criterion for classifying a lease as a capital lease?

Question408: A consumer group wants to prove that the average hospital costs are more than $931 per day. The group randomly samples 60 accounts and finds a sample mean of $950. The hypothesis test is at an a-level of 5% and assumes a oof $50. Which of the following is true?

Question409: A front-end load mutual fund with a net asset value of $12.04 is being offer to investors at $12.35. The fund load would be closest to:

Question410: Elizabeth Savoca estimated that for every 1% increase in tuition costs at college, 2.4% fewer students applied to that college. This indicates that the elasticity of applying to college is:

Question411: Ms. Smith recently made a real estate purchase of $120,000, using financing for 80% of this investment with debt costing 9.0% interest. What would be the rate of return on her equity if the value of the parcel increased by $12,000 in her first year of ownership?

Question412: Which of the following is not a measure of liquidity?

Question413: The probability that a mutual fund will generate a positive return in the next 12 months is called:

Question414: Which exchange rate regime removes a country's domestic monetary policy?

Question415: Taylor Corporation purchased a new asset for $80,000. The asset had an estimated life of 5 years and an estimated salvage value of $20,000. What is the depreciation expense for the second year if the company uses the straight-line method?

Question416: At a price of $30, a firm sells 150 units of output per day. The slope of the demand curve is 0.1 (in absolute value). If the marginal cost of production is $8, what should the firm do?

Question417: Which of the following statements concerning the calculation and reporting of fully-diluted earnings per share is correct?

Question418: MRC produces chips with a defective rate of 15%. For an random sample of 20 chips from MRC, let
X count the number of defective chips in the sample (and assume x is a binomial random variable), P(X 2)
= ______ (to nearest 0.001)

Question419: A company signs a long-term construction contract for $10 million. In the first Year of the contract, costs to date totaled $4 million, of an estimated $8 million in costs. The company received cash payments of $7 million. The gross profit recognized in year one, under the percentage of completion method would be:

Question420: Which of the following is true about diluted earnings per share?
I). Often referred to as pro forma calculations
II). Is computed as if convertible preferred stock has been converted
III). Is used to compute the price-earnings ratio
IV). Represents a hypothetical case

Question421: Complete this sentence: "The kth percentile of a given distribution is ..."

Question422: A population is known to have a left skewed distribution with a mean 400 and a standard deviation of 25.
If a sample with size 50 is drawn at random from the population, what is the probability that the sampling distribution of the mean x-bar will have a mean less than 350?

Question423: Which of the following statements regarding investment companies is FALSE?

Question424: A major disadvantage of relying solely on the comparative sales approach of valuing real estate is that the approach:

Question425: Which of the following should be classified as financing cash flow?
I). interest paid on borrowed funds.
II). dividends paid to stockholders.
III). interest income.
IV). dividend income.

Question426: Countries A and B have the same monetary base and reserve requirement. People in A tend to hold more currency than people in B.
The money supply will be:

Question427: Under the null hypothesis, Ho, x = y. Under the alternative hypothesis, x does not equal y. If the critical z-statistic for the desired significance level is 1.68 and you find the z-statistic to be -3.2, you should:

Question428: If the underlying theory suggests that the value of an estimated variable is greater than a particular number, it is appropriate to use:

Question429: __________ are included in the bond indenture to protect bondholders from certain actions by the company.

Question430: According to SAS 99, which of the following is least likely to be a risk factor related to incentives/pressures to commit fraudulent accounting?

Question431: A portfolio manager is concerned about not keeping up with the rate of inflation. His portfolio has a mean return of 9% with a variance of 144. If the inflation is expected to be 3.5% what is the shortfall risk, i.e., the portfolio return being less than 3.5%?

Question432: Bond 3 is a 4%, 5-year bond that yields 5%. What is the relative percentage of total future dollars that reinvestment income is expected to generate with Bond 3?

Question433: Where would an investor find a company's management discussion of results of operations, capital resources, and outlook based on known trends?

Question434: What is the modified duration on a noncallable bond with a Macaulay duration of eight years, a yield to maturity of 7%, and quarterly coupon payments?

Question435: Consider resource A that is could be used by firms in two different industries. In Industry 1 the marginal revenue per unit of output is $2.50 and the marginal productivity of resource A is 0.4. In Industry
2 the marginal revenue per unit produced is $5.00 and the marginal productivity of resource A is 0.25.
Which of the following statements is true?

Question436: An asset seems to be undervalued relative to a comparison asset or group of assets,
I). The asset is expected to outperform the comparison asset or assets on a relative basis.
II). The asset may be undervalued.
III). The asset may be overvalued.

Question437: When bonds are issued at a premium, the long-term liability reported on the balance sheet for the bonds:

Question438: To draw a downtrend line, a technician draws a line connecting the _____ of the price chart.

Question439: "Normal profits" exist when economic profits are

Question440: If a Board Member leases a company airplane for free personal use, it is an indication of

Question441: What do we call the value z that is computed using sample data?

Question442: For the hypothesis test shown at the right, the decision should be ______.

Question443: Which of the following is true of a monopoly?

Question444: Given the historical returns for the two stocks listed below, what can be said about the correlation coefficient?

Question445: What would be bid-ask spread be for pound sterling quoted at $=1.4419-28?

Question446: Empirical probability is:

Question447: The reserve requirement is 10%. You take $5,000 and deposit it in your checking account. What will be the maximum total change in bank deposits resulting from this?

Question448: Internal liquidity ratios

Question449: A municipal bond is callable beginning with the fifth coupon date. The call price schedule specifies call prices that decline with each passing coupon payment date from 107% of par to 100% of par on the maturity date.
I). The call provision makes the timing of the promised cash flows uncertain
II). The call provision makes the size of the promised cash flows uncertain
III). The call provision makes the tax status of the interest payments uncertain

Question450: You have $10,000 in a savings account paying 5% per year. You wish to make a withdrawal of
$ 709.52 at the end of every year. After all the withdrawals are made, the account will have a zero balance.
How many withdrawals can you make?

Question451: Which of the following statements is (are) true with respect to the usage of the various forms of duration and convexity measures?
I). Holding everything constant, Modified duration will always be higher than Macaulay duration.
II). Both modified duration and Macaulay duration assume that the cash flows from a bond will not be affected by changes in interest rates.
III). If interest rates are low enough, effective duration and modified duration will yield the same results for a callable bond.
IV). When there is increasing likelihood that the issuer will call the bonds, effective convexity should be used as opposed to modified convexity.

Question452: Consider the following information about a fund. The fund has been in existence for 3 years. Over this period it has achieved a mean monthly return of 3% with a sample standard deviation of monthly returns of 5%. It was expected to earn a 2.5% mean monthly return over the 3-year period.
You want to test a claim that the investment disciplines of the fund results in a standard deviation of monthly returns of less than 6%.
The test statistic for conducting this hypothesis test is:

Question453: SEC rule 12b-1 allows managers of certain funds to use a portion of the fund's average net assets every year for ___________expenses.

Question454: When the economic revival begins, companies will tend to:

Question455: Variable X is distributed normally and has a mean of 10. If the probability that an observation of X will be negative is 0.16, what is the coefficient of variation of X?

Question456: If a firm's average per-unit costs fall as it produces a larger output, then

Question457: 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)?

Question458: In January 1999 a private investor decided to allocate $2,000 to a gas and electric utilities mutual fund,
$ 5,000 to a small company mutual fund, and $3,000 to a technology stock mutual fund. In 1999, the utilities fund had a return rate of 4.3%, the small company mutual fund had a return rate of 1.4%, and the technology stock mutual fund had a return rate of 8.5%. Find the average rate of return on this investment.

Question459: Suppose you were told that scores on an examination were converted to standard scores with a mean = 500, range of 800, and a standard deviation of 100. A person with a score of 600 has performed better than what percent of the persons taking the test?

Question460: Consider a stock call option with the following characteristics:
Type of option: call option on stock Underlying asset: 100 shares of Coca Cola stock Exercise price: $60 per share Premium: $1.25 per share Expiration date: November
Let the current market price of Coca Cola stock be $62.75 per share. In this case, the call option:

Question461: The major differences between a warrant and a call option are:
I). Warrants are contracts outside of the firm while options are within the firm
II). Warrants have long maturities while options are usually short maturities
III). Warrant exercise dilutes the value of equity while option exercise does not

Question462: Which of the following statement(s) is/are false?
I). Adjusting entries may involve recording revenues before cash is received.
II). For every accrued expense there will be a corresponding change in accrued revenue. IIIM dji iilh h
III). Most adjusting entries involve the cash account.
IV). The systematic allocation of the cost of an asset to expense during the periods of its useful life is called adjusting.

Question463: Between 1981 and 1983, the annual rate of increase in the Canadian total consumer price index (CPI) declined from 12.5 per cent to just under 6 per cent. Again, from 1990 to 1992, the rate of inflation slowed from about 5 per cent to 1.5 per cent. This is an example of:

Question464: An airline initially has a single price of $200 for all consumers. At this price, it sells 400 business tickets and 700 tourist tickets. The airline's marginal cost is $50. The slope of the business demand curve is 2.0 (in absolute value), and the slope of the tourist demand curve is 0.1 (in absolute value). How can the airline increase its profits, assuming that it can separate the market and prevent resale?

Question465: Which of the following statement(s) is/are true?
I). If no errors are made in the daily recording of transactions, adjusting entries are unnecessary at the end of the period.
II). An adjusting entry to recognize wages payable at year-end causes a decrease in total assets.
III). An adjusting entry to recognize that an advance payment from a customer has now been earned will cause an increase in assets.
IV). Adjusting entries to accrue unrecorded expenses such as salaries and interest expense cause an increase in expenses and a corresponding decrease in assets.

Question466: You are trying to accumulate $5,000 in a savings account at the end of 4 years. The savings account pays 7% per year and you plan to make yearly deposits at the end of each year. How large must the deposits be?

Question467: All of the following would be regarded as limitations in using ratio analysis, except:

Question468: Greenbelt Processors had a beginning inventory of 798 units valued at a cost of 34,895. It purchased
4 ,474 units of new inventory worth 195,402 during the year. A year-end audit revealed that it had 853 units on hand. If the average unit price was 43.65 at the end of the year, what COGS would Greenbelt report?

Question469: If a company estimates that its expected return on pension plan assets will increase to 9.5% from 9.0% this would be considered ________.

Question470: If the supply of a good decreases, which of the following will generally occur in a market setting?

Question471: The Allen Corporation had 100,000 shares of common stock outstanding at the beginning of the year.
Allen issued 30,000 shares of common May 1. On July 1, the company issued a 10 percent stock dividend.
On September 1, Allen issued 1,000, 10 percent bonds convertible into 21 shares of stock each. What is the weighted average number of shares to be used in computing basic and diluted earnings per share
(EPS) respectively, assuming the convertible bonds are dilutive?

Question472: In the past the FASB has been criticized for having a ______ approach to standards.

Question473: Net income is

Question474: Which of the following should be classified as investing cash flow?
I). purchase and sale of debt of other entities.
II). loans to other entities and collection of loans to other entities.
III). issuance and redemption of debt (bonds and notes).
IV). payments of interest on the company's debt securities.

Question475: A put option has a strike of $100, its premium is $7, and the stock is at $100. What is the intrinsic value?

Question476: A population is:

Question477: The coupon payments to a domestic investor from a foreign bond is represented as a _______ entry in the _______ account.

Question478: Which of the following Standards of Professional Conduct includes the ethical responsibility to not knowingly make any misrepresentations regarding investment analysis, recommendations, actions, or other professional activities?

Question479: In reference to liabilities, the ______ basis of measurement means the undiscounted amount of cash or cash equivalents that would be required to settle the obligation today.

Question480: Olivia Hernandez's clients have substantial holdings of US consumer goods manufacturer PXG Ltd.
PXG has sales primarily in North America and Europe. Hernandez reviews research reports about the dollars euro exchange rate, which mostly predict that the dollar will get more expensive thus hurting
PXG's exports to Europe . She speaks with representatives of PXG and visits PXG factories where she meets production managers. Finally she visits retailers where she learns that over the last month many customers have expressed their dissatisfaction with PXG products. After reviewing her information,
Hernandez sells her clients' PXG holdings.

Question481: As the manager of a ski resort, you want to increase the number of lift tickets sold by 8%. Your staff economist has determined that the price elasticity of demand for lift tickets is 2. To increase sales by the desired amount, you should decrease the price of a lift ticket by:

Question482: The following cash flows should be treated as incremental flows when deciding whether to go ahead with an electric car except:

Question483: External (informational) efficiency means that:

Question484: ABC Corporation just paid a dividend of $1.25 per share. These dividends are expected to grow at
2 3% over the next three years and thereafter come in line with its long term normalized growth rate of 7%.
If investors currently require a 13% rate of return from this stock, what is the best estimate of ABC's current stock price?

Question485: Which return measure reflects a constant dollar investment at the beginning of each time period?

Question486: If you write a put option to sell a stock at $30 in 30 days, your option position is ______ and your exposure to the risk of the stock is ______.

Question487: Under the completed-contract method, the billings on construction contract represents:

Question488: Which industry is likely to be concentrated with weak pricing power?

Question489: The ________ of the investor is (are) his or her investment goals, expressed in terms of both risk and return.

Question490: Enigma Corporation anticipates that it will have a current ratio of less than one at the end of 2001.
What would be the effect on Enigma's current ratio if it raised funds through a short-term loan on the balance sheet date at the end of the year?

Question491: The benefits provided by investment companies include all of the following except:

Question492: In accounting for a lease transaction classified as a capital lease, over the term of the lease:

Question493: Securities that are replaced by on-the-run issues are known as

Question494: The journal entry to record the sale or disposition of a depreciable plant asset always includes:

Question495: Select the correct statement(s) regarding sales of receivables:
I). An outright sale or securitization of accounts receivable transfers what would be future operating cash flow into the current period.
II). An outright sale or securitization of accounts receivable transfers current operating cash flow into future periods.
III). In the future, if a company sought to reduce the amount of receivables sold or securitized, operating cash flow would rise.
IV). Only an incremental amount of receivables sold would serve to increase operating cash flow.

Question496: The most commonly used method for appraising residential properties is:

Question497: Which of the following statements is incorrect concerning the CAPM?

Question498: The key difference between a triangle pattern and a pennant pattern is that:

Question499: When economists say the demand for a product has increased, they mean that the

Question500: How does increasing the measure of days sales in payables (DSP) affect operating and financing cash flows?
Operating | Financing

Question501: An examination of the historical performance of stocks currently trading on major stock exchanges will likely suffer from:

Question502: Which factor generally leads to a high competitive industry?

Question503: The Morningstar research report shows that there are ______ industries in the "Fragmented with
Strong Pricing Power" category _______ industries in the "Fragmented with Weak Pricing Power" category.

Question504: ABC Co. uses a defined benefit pension plan. At year-end the pension obligation is $27.4 million and plan assets $24.5 million. ABC's balance sheet will report:

Question505: Reported earnings are more reliable indicators of a firm's fundamental value when they include

Question506: Tests of the relationship between price earnings ratios and future stock returns suggest that:

Question507: An analyst has put together the following information from an annual report:

What is the cash flow from financing?

Question508: A simple random sample is one where

Question509: If the cross elasticity of demand is -2:

Question510: Even though Mary's income is very low, she makes sure that she purchases enough milk for her family to drink. As her income rises, she does buy more milk. Which graph in Figure 5.3 best represents
Mary's Engel curve for milk?

Question511: The main difference between the t and z statistic is that the t statistic

Question512: Sally Duvall is estimating the mean of a population with a sample of 35 observations. The variance is unknown. Which of the following statements is FALSE?

Question513: The following statements regarding the NPV rule and the rate of return rule are true except:

Question514: Which of the following statements is (are) true with respect to insuring a portfolio by way of protective strategy?
I). The strategy requires the sale of put options while owning the underlying asset.
II). If the price of the underlying asset increases dramatically, then an insured portfolio will perform much better than an uninsured portfolio.
III). The cost of portfolio insurance will rise as the volatility of the underlying asset increases.
IV). The upside potential for an insured portfolio is unlimited.

Question515: In 2008 an American taught spoken English in China and he made $30,000 that year. When he came back to the US he brought with him $25,000 home and then bought a new computer for $2,000 and an used car for $12,000. He then deposited the rest of the money in his bank account. Through the series of transactions the amount counted towards US GDP should be:

Question516: CFA Institute recommends maintaining records for at least ____ years.

Question517: Currently the market in a stock is "$30.12 bid, offered at 30.62". A new buy limit order is placed at
$ 30.25. This limit order is said to:

Question518: An investor owns 100 shares of General Motors stock. She sells one stock call option. The investor's position is now a covered call with the following characteristics:
Stock position: LONG 100 shares of General Motors Stock purchase price: $62.00 per share Option position: SHORT 1 call option General Motors stock Underlying asset: 100 shares of General Motors
Exercise price: $80.00 per share Premium: $0.13 per share Expiration date: October
If the expiration-day price of General Motors stock were $82.00 per share, then the expiration-day profit/loss for the covered call would be:

Question519: Which form of efficient market hypothesis assumes that all information is available to everyone at the same time?

Question520: Oakmont Corporation issued $ 100,000 of callable bonds on 1/1/99 at a coupon rate of interest of 7%.
The bonds sold at a discount which resulted in an effective yield of 8% to the bond investors. On January
1 , 2000, the yield on these bonds fell to approximately 7% as market conditions led to an increase in bond prices. What change, if any, should Oakmont make to its accounting records to reflect the change in the yield?

Question521: The overnight repurchase rate for general collateral is 6.50%. For a dealer seeking financing using special collateral, the repurchase rate agreed to:

Question522: Assume the managers want to maximize bonuses, which are based on current net income.
Managers should prefer:

Question523: Assume that six months ago you bought 2,500 shares of a stock at $70 per share using margin. The margin rate was 40%, and the interest rate on the margin loan was 8%. Assume no commissions. What is your gain or loss if the current stock price is $71 per share?

Question524: Jake Stan, a CFA Charterholder, is writing an unfavorable research report on a company called PKO.
Larry Spelt, who is Jake's supervisor and who is NOT a CFA Charterholder, informs Jake that the firm is about to underwrite a large stock offering for PKO. Larry tells Jake to please upgrade his research report on PKO to reflect a purchase recommendation. Jake does this without disclosing the underwriting activity.
According to Standards of Professional Conduct, which Standard/s of Professional Conduct has/have been violated?
I). Standard V A - Diligence and Reasonable Basis.
II). Standard VI A - Disclosure of Conflicts to Clients and Prospects.

Question525: Price discrimination is the practice of: