Question1: 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.
Question2: Funds frequently assess a fee to cover marketing and other expenses. This is called a:
Question3: If a firm has a monopoly over the sale of photographic paper and seeks to maximize profits, then:
Question4: Which of the following is the best example of frictional unemployment?
Question5: Under which cost flow assumption is the ending inventory composed of the most recently purchased merchandise?
Question6: You are the landlord of a small office building. The rent is $750 per year paid at the beginning of each year. You always invest the rent payments at a rate of 6% per year. What will be the accumulated value of the invested payments at the end of 5 years?
Question7: As sample size increases,
Question8: Regarding additional compensation arrangements, when is it appropriate to accept gifts, benefits, compensation, or consideration that competes with a member's employer?
Question9: A 1993 survey conducted by the local paper in Columbus, Ohio, one week before the election day, asked voters who they would vote for City Attorney. The goal was to predict the outcome of the upcoming election. Thirty-seven percent said they would vote for the Democratic candidate. On election day, 41% actually voted for the Democratic candidate. The number 37% is a
Question10: In which of the following cases will the total expenditures on a product increase?
Question11: A confidence interval was used to estimate the proportion of American new car owners who purchased domestic cars. A random sample of 58 new car owners generated the following 90% confidence interval:0.376, 0.426.Based on the interval given, does the mean population proportion of new car owners who purchased domestic cars exceed 39%?
Question12: Suppose a portfolio manager purchases $2 million of par value of a Treasury inflation protection security. The real rate is 2.6%. Assume that at the end of the first six months the CPI-U is 3.2%. The inflation-adjusted principal at the end of the first six months is
Question13: In the Heckscher-Ohlin model, the countries differ in:
Question14: John has a LONG position in 20 October copper futures contracts. If he sells 20 October copper futures contracts, he will have closed his futures position by:
Question15: Which of the following is not a measure of liquidity?
Question16: A bond is currently selling for $91.42. It is a 7% coupon bond, with payments made semiannually, yielding 8.5% with 8 years remaining to maturity. If yields were to increase by 1.5% immediately, what would this bond sell for?
Question17: The World Bank uses ______ for industry classification.
Question18: If a legislature decides to reduce poverty by passing a law requiring that employers pay higher wages, economic theory and historical experience suggest that
I). unemployment for low-skill employees will increase.
II). a market surplus of low-skill labor will develop.
III). employers will offer less job training to low-skill employees.
Question19: If the Federal Reserve wants to lower the inflation rate, it will ____ the federal funds rate by undertaking open market ____ of government securities.
Question20: Which factor generally leads to a high competitive industry?
Question21: Because of the timing lags involved, fiscal policy can be:
Question22: On a survey questionnaire, students were asked to indicate their class rank in college. If there were only four choices from which to choose, which measure(s) of central tendency would be appropriate to use for the data generated by that questionnaire item?
Question23: The mean return in 1999 for a stock mutual fund of large companies was 7.2% with and the mean return for a risk-free bond was 1.0 %. If the Sharpe measure for the mutual fund is 0.50, what is the standard deviation or risk of the stock mutual fund?
Question24: 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?
Question25: Suppose that the probability of A is 0.80 and the probability of B is 0.60, if A and B are independent events, what is the joint probability of A and B?
Question26: 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.
Question27: 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?
Question28: Technical analysts assume the markets are ______ while fundamental analysts assume the markets are ______.
Question29: Swimsuit Shop uses FIFO inventory method. During a time of rising prices and constant inventory level
(in terms of quantity), Swimsuit Shop would experience
Question30: You are considering a portfolio only of long positions not involving leverage and have the following information:
Stock | Expected Return | Variance | Correlation
1 |15% | 100 | R1,2 = 0.6 2 |18% | 64 | R1,3 = 0.2 3 |24% | 400 | R2,3 = -1.0
Without doing any calculations, what is the correct statement about the risk of a portfolio consisting of these three stocks?
Question31: "Material" in the phrase "material non-public information" refers to information that:
Question32: Which of the following is/are true?
I). The mean deviation can never be negative.
II). The range of a data set can never be negative.
III). The mean deviation is always less than the mean absolute deviation (MAD).
Question33: Which statement(s) is/are FALSE?
I). Under the LIFO method of inventory valuation, the ending merchandise inventory would be valued at the purchase price of the most recent purchases.
II). During extended periods of rising prices, the FIFO method of inventory valuation will yield a higher cost of goods sold and a lower ending merchandise inventory, when compared to the LIFO method of inventory valuation.
III). The accounting principle of consistency prohibits any changes in the method of inventory valuation.
IV). JIT means just in time and is an inventory method where the raw materials for production are purchased in smaller quantities after orders have been taken for the manufactured products.
Question34: James Morrison is a profit-seeking banker. His bank has $25 million in excess reserves. Mr. Morrison
Question35: When a U.S. bank buys foreign stock shares, puts them in a trust and resells trust units, the shares become known as?
Question36: A mutual fund has securities in its portfolio that are worth $196 million. The fund has borrowed $12.1 million to purchase securities on margin and has 28.5 million fund shares outstanding. What is the fund's net asset value (NAV) per share?
Question37: A simple random sample is one where
Question38: The required return of a 5-5/8% coupon, semi-annual payment bond changes from 5.5% to 5.75%.
Question39: Which of the following best explains why the return on assets (ROA) ratio may show distorted increases over time?
Question40: 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?
Question41: If a company issues debt and then uses the proceeds to repurchase some of its outstanding shares, keeping other things constant, its ROE will likely:
Question42: 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%?
Question43: First National Bank finds itself in a situation where it is receiving fixed rate income from its loan portfolio and must pay floating rate expenses to its depositors. Which of the following plain vanilla interest rate swap payments would be of interest to the bank?
I). First National makes fixed rate payments
II). First National makes floating rate payments
III). First National receives floating rate payments
Question44: On June 1, 2008, the 12 3/8 May '14 Treasury bond is quoted at 134:05 bid and 134:09 asked. If
Smedley buys a bond at the market and if the value of the bond on December 1, 2008, is 132:00, what will be her holding period return? (Do not take accrued interest, if any, into account in calculating the return)
Question45: To maximize profits, a perfectly competitive firm should do all of the following except:
I). produce until economic profits are maximized.
II). produce until marginal cost equals price.
III). produce until marginal revenue equals marginal cost.
IV). produce until per unit profits are maximized.
Question46: Which of the following most accurately measures interest rate sensitivity for bonds with embedded options?
Question47: 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:
Question48: Which of the following statements is recommended with regards to personal investing?
I). Restrictions on participation in an IPO of equity or equity-related securities.
II). Preclearance of all trades.
III). Disclosure of all holdings in which the employee has a beneficial interest.
Question49: If a security just experienced a triple top pattern, its price is then expected to:
Question50: 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.
Question51: Which of the following combinations of interest rate options would replicate a 6-month by 9-month forward rate agreement to pay 5% fixed? The LIBOR below refers to the 3-month LIBOR.
Question52: When the Federal Reserve raises the federal funds rate, the long-term real interest rate ____ and investment ____.
Question53: 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 February? Assume there are 30 days in every month.
Question54: A survey of 144 retail stores revealed that a particular brand and model of a VCR retails for $375 with a standard deviation of $20.If 95% and 98% confidence intervals are developed to estimate the true cost of the VCR, what difference would they have?
Question55: Which statement is FALSE?
Question56: Backwardation often occurs when a commodity s price is:
Question57: If we are testing if the variances of two populations are equal, what should be the distribution of the underlying populations?
Question58: Which of the following is a measure of a firm's liquidity?
Question59: A 5-unit apartment building is being considered as an investment. The average monthly rent per unit is $1,150. The total vacancy and bad debt losses are projected at $3,450. Annual operating expenses include $8,500 for maintenance, $7,000 for property taxes, and $2,200 for property insurance. The net operating income would be closest to:
Question60: In a perfectly competitive market:
Question61: An appreciation of the US dollar would ____ (increase, decrease, not affect) aggregate demand, and an increase in the real interest rate would ____ (increase, decrease, not affect) aggregate demand.
Question62: Which of the following is NOT a characteristic of a typical venture capital (VC) fund?
Question63: In a perfectly competitive market,
Question64: If credit terms of "1/10, net 35" are offered, the approximate cost (using 365 days) of not taking the discount and paying at the end of the credit period would be __________.
Question65: Stock A has a standard deviation of 16% and a beta of 1.1. T-bills are currently yielding 3.7% on an annualized basis. The expected return on the market index is 9.1% while its standard deviation is 14.9%.
If Stock B is expected to earn 10.51% and it is of equal risk to Stock A, which of the following statements would be the most accurate?
Question66: 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
Question67: On January 1, 2003, Mill Corporation leased a machine to Ott Corporation for a 5-year term at an annual rental of $50,000. The lease is an operating lease. At the inception of the lease, Mill received
$ 100,000, covering the first year's rent of $50,000 and a security deposit of $50,000. This deposit will not be returned to Ott upon expiration of the lease but will instead be applied to payment of rent for the last year of the lease. Mill properly reported rental revenue of $100,000 in its 2003 income tax return. Mill's tax rate was 30%. In Mill's December 31, 2003, balance sheet, what portion of the $100,000 should be reported as a liability?
Question68: Which one of the following would decrease the length of the cash cycle, all else equal?
Question69: The following dataset shows the change of a consumption basket over time:
2 010 (price/quantity)- Bread: $0.77/50; Milk: $1.22/30. 2011 (price/quantity)- Bread: $0.80/52; Milk:
$ 1.24/28. The denominator of the Paasche index should be calculated as:
Question70: In Harvey, N.D. three local banks have issued no-interest loans in the form of Harvey Bucks. They can be spent in local stores. Retailers get 95 U.S. cents for each Harvey Buck. From this information you can conclude that Harvey Bucks:
Question71: Technical analysis assumes that shifts in trends can be detected sooner or later in the action of the
_ _______.
Question72: If an effective minimum price is imposed by the government, what would be expected to occur?
Question73: At the end of 2010, a firm changes its depreciation method from the double-declining balance method to straight line. The firm only has one asset, a building that cost $4,000,000 and has a salvage value of $200,000 after a life of 20 years. The tax rate is 20%. The asset was purchased in January of
2 008. What will be the effect of the change on 2010 net income resulting from the years 2008 and 2009?
Question74: Which is (are) NOT defined as barriers to entry?
I). Patents
II). Monopolies
III). Government licensing
IV). Economies of scale
V. Market forces
VI). Defects
Question75: An alternative to making a good or service illegal that would have the same effect on price and quantity traded is a
Question76: On October 1, 2001, Little Company signed an operating lease for a building with Big Company for 6 years, at $10,000 per year. At the inception of the lease, Little paid $20,000, covering rent for the first two years. Little closed its books on December 31, and correctly reported $20,000 as rent expense on its 2001 income tax return. How much should Little report in the 2001 income statement as rent expense?
Question77: As compared to the short-run supply curve, what should the long-run supply curve look like?
Question78: 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.
Question79: Which of the following statements are false?
I). Long-term creditors have an avid interest in the accounts receivable turnover rate.
II). Operating income/Annual interest expense = Interest coverage.
III). Operating income/Average total assets = Return on equity.
Question80: 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:
Question81: 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%?
Question82: 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?
Question83: Which of the following statements is correct in terms of Standard IV (A) - Loyalty to Employer?
Question84: If the government regulates a natural monopoly through a policy of average-cost pricing, we would expect that, compared to an unregulated natural monopoly,
Question85: An old college friend provides you with a stock tip. He had heard that XYZ, Inc. was the sole patent holder in a new technology that will increase gasoline mileage on any automobile by 20%. You immediately purchase the stock for all client portfolios where it is suitable.
Question86: An open market purchase of government securities by the Federal Reserve ____ banks' reserves and
_ ___ the federal funds rate.
Question87: Which rate determines when an economy will experience wage-push inflationary pressures?
Question88: After 8 years of claiming compliance, the firm has to present a ____-year performance record at a minimum.
Question89: Clay's Construction Company does work on large construction contracts that take many years to complete. Before they become a public company they are trying to decide which method of recognizing revenue they should use for financial reporting only. If they decide to use percentage of completion rather than completed contract, the effect will be:
Question90: The key difference between an SMA and a mutual fund is that:
Question91: A project may have multiple IRRs because
Question92: A firm can pursue a differentiation strategy on the basis of
I). its product.
II). method of delivery.
III). economies of scale.
IV). production process.
V. marketing approach.
VI). can charge a higher price while attempting to retain cost parity with its competitors.
Question93: When applying income tax allocation, interest expense incurred on funds borrowed to acquire municipal bonds would be classified and accounted for as follows:
Question94: The lifetime of a 2-volt non-rechargeable battery in constant use has a normal distribution with a mean of 516 hours and a standard deviation of 20 hours. Ninety percent of all batteries have a lifetime less than
Question95: An options investor purchases one foreign currency call option on Swiss francs (SF). The call has the following characteristics:
Type of option: call option Underlying asset: SF62,500 (62,500 Swiss francs) Exercise price: $0.61 per SF
Premium: $0.003 per SF Expiration date: December
By taking a LONG position in this call option, the investor has:
Question96: The Capital Market Line:
Question97: How many three-digit numbers can you form using the digits 1, 3, 5, 7 and 9 without a repeating a digit within the number to be formed?
Question98: The marginal benefit of going to a movie during the week is currently $6 for you. Assume that the price of going to the movies, $4, measures its marginal cost. Following the economic decision rule, you will
Question99: Bramley Company has declared a 20% stock dividend. At the close of trading just prior to going ex-dividend, Bramley was at $50 per share. At the open of trading on the ex-date, the price will be closest to
Question100: The mean of sample with a known population variance of 25 was estimated as 12.5. The sample size was 22 and the sample variance was 28. Which of the following represents the appropriate 95% confidence interval for the normally distributed population?
Question101: Which set of circumstances is most likely to result in a narrow confidence interval?
Question102: A company can determine if its ______ objective has been met by evaluating its ability to earn a satisfactory net income.
Question103: Susan Miller, CFA, works for an investment counseling firm. James Sims, a new client of the firm, is meeting with Miller for the first time. Sims had used another counseling firm for financial advice for years, but has switched his account to Miller's firm. After a few minutes of 'get-acquainted' small talk, Miller explains to Sims that she has discovered a highly undervalued stock that offers large potential gains. She recommends that he purchase the stock for his account. Miller has committed a violation of CFA
Institute's Standards of Professional Conduct. What should she have done differently?
Question104: An automatic machine inserts mixed vegetables into a plastic bag. Past experience revealed that some packages were underweight and some were overweight, but most of them had satisfactory weight.
Weight % of Total Underweight 2.5 Satisfactory 90.0 Overweight 7.5
Three packages are selected from the food processing line. What is the probability of selecting and finding that all three of them are underweight?
Question105: The required return of an option-free, 10% coupon, semi-annual pay bond with 12 years to maturity is
10.37%. A 10% coupon, semi-annual pay bond with 12 years to maturity is callable after the fifth year.
Assuming credit quality and other relevant factors are equivalent:
Question106: For the hypothesis test shown below, the conclusion should be _______.
Question107: When should a rational financial manager pay a bill if 1) a discount is offered, 2) the discount has not yet expired, 3) the firm needs to borrow funds to take the discount, 4) the firm will have sufficient cash by the end of the net period, and 5) the best possible borrowing rate exceeds the cost of forgoing the discount?
Question108: A venture capital investment is expected to yield of payoff of $100 million in five years if it survives.
The initial cost is $20 million and the appropriate discount rate is 20%. What is the average annual probability of failure that makes the investment's NPV = 0? In other words, what is the maximum annual average probability of failure before the investment is not acceptable?
Question109: Which form of efficient market hypothesis asserts that security prices reflect all information, even including insider information?
Question110: Which commercial classification system classifies companies based on a company's primary business activity?
Question111: A firm should cease to do business when:
Question112: Which statement is false regarding the ideal exchange rate regime?
Question113: Mutual fund operating expenses:
Question114: Assuming all other factors remain unchanged, which one of the following would reduce a firm's price/earnings ratio?
Question115: Which exchange rate regime does France adopt?
Question116: David Stoyer is valuing a 400,000 square feet building. What is the value of his property using the sales/square ft technique assuming that the table below shows all recent sales of comparable properties in his proximate area?
Question117: Details of changes in accounting principles for depreciation are found
Question118: The value of an option-free, 10-year, 7.5% coupon bond is $1,035. A bond indenture specifies terms of the put privilege, the put privilege having a value of $12.25. The value of the putable bond is:
Question119: Technicians do NOT believe:
Question120: A large mass of data can best be summarized pictorially by means of:
Question121: 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?
Question122: Which of the following statements about duration characteristics are true?
I). The duration of a coupon bond will always be less than its term to maturity.
II). There is generally an inverse relationship between term to maturity and duration.
III). There is a positive relationship between coupon and duration.
IV). There is an inverse relationship between yield to maturity and duration.
Question123: The bond indenture specifies that the 8% issue due June 2010 of Felton Corp. is redeemable at par value in the event of a merger. The bond is callable after December 31, 2005 at 103. In the event of a merger between Felton Corp. and a suitor company, owners of this issue will receive:
Question124: The last day that the buyer of the share will receive the dividend is:
Question125: A 95% confidence interval for a population parameter signifies which of the following?
I). 95% of similarly constructed intervals will contain the population parameter.
II). For a given sample size, 95% of the samples that have the sample statistic for the population parameter lie within the specified confidence interval around the actual population parameter.
III). The confidence interval will correctly estimate the population parameter with a probability of 95%
Question126: Which transaction would require the recognition of deferred income tax consequences?
I). Interest revenue on municipal bonds.
II). Unrealized losses on temporary investments.
Question127: A population is:
Question128: Nonrecurring items are:
Question129: The before-tax cost of debt capital for a firm _______.
Question130: Which of the following would be an effect of capitalizing interest costs?
I). Depreciation is understated.
II). Interest coverage would be understated.
III). Cash flows from investing are understated.
IV). Cash flows from operations are understated.
Question131: Which of the following loans is typically not secured?
Question132: 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?
Question133: Assume that Able Corporation has paid and expensed several speeding fines for its salespeople.
Fines are never deductible for tax purposes. This will result in which of the following?
Question134: Which of the following will lead to a reduction in the long-term debt to equity ratio?
Question135: 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?
Question136: 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?
Question137: Which of the following is not an example of an affirmative (positive) covenant?
Question138: Your great aunt has promised to give you a $150,000 inheritance upon her death. If you had the money today, you could invest it at a rate of 4.5% per year. What is the present value of your inheritance if your aunt lives for 10 more years?
Question139: Jorgensen Products has just issued 25,000,000 in 4.50% annual coupon bonds at a market yield of
4 .80%. The bonds have a maturity of 8 years. What adjustments would an analyst make to the CFF at the end of the first year?
Question140: What is the difference in the reinvestment income for the following two bonds? Bond 1 is a 6%, 5-year bond, and Bond 2 is a 6%, 10-year bond. Both bonds yield 5%.
Question141: Two parties enter into a three-year interest rate swap, which involves the exchange of LIBOR+1% for a fixed rate of 12% on a $100 million notional amount. The LIBOR rate today is 11%, but is expected to increase to 15% in one year and fall back down to 8%. Which statement accurately depicts the flow of net cash flows between the two counter-parties?
Question142: If the weekly return is 0.15%, the compound annual return is:
Question143: A normal distribution has a mean of 25% and a standard deviation of 33%. What is the 95% confidence interval around the mean, i.e., if 95% of observations can be expected to fall in this range?
Question144: A person's social security number is an example of which level of measurement.
Question145: Which of the following statements is (are) inconsistent with the Markowitz theory of portfolio management?
I). Investors maximize a one-period expected utility curve with inherent diminishing marginal utility of wealth.
II). Investors use the risk measure of beta as the basis of determining risk.
III). Investors base their investment decisions exclusively on the basis of expected risk and return.
IV). a single asset or portfolio of assets is considered to be efficient if no available asset has a superior return for a given risk level, or lower risk given a return level.
Question146: The repurchase rate is 3.60% on a loan of 2 days for which $1,000,000 par value of a bond is sold to the lender at par. What is the repurchase price?
Question147: Which of the following items has economic value, but not recorded on the balance sheet as an asset?
Question148: Which of the following would be considered as a nonparametric test?
I). A test to determine if two events are truly independent of each other.
II). A test to determine if the variances of two populations are equal.
III). A test to determine if the means of two populations are equal.
IV). A test dealing with a data set that's made up of rankings, as opposed to nominal values.
Question149: For investments made by banks, the risk tolerance is typically ______ and the liquidity needs are typically ______.
Question150: In terms of Standards of Professional Conduct when dealing with the procedures for compliance per
Standard I(D): Misconduct, which of the following ways is NOT an effective method for member compliance? Members should encourage their employees to:
Question151: A 10 year, 8% coupon bond has a price of 97.21 of 100 par. If its effective duration is 4.9 and the yields increase by 0.35%, what is the bond's new price, as estimated by its duration?
Question152: You meet a friend at lunch. He tells you that his firm, XYZ, has just landed a government contract that will double revenues at the firm. This will be announced at a news conference tomorrow.
I). You should advise clients to buy the stock as soon as you return to the office.
II). You should encourage your friend to disclose this information immediately.
III). You should refrain from trading on the information until it is publicly released.
Question153: Nabil buys 100 shares of "take a chance technologies" stock at $20 per share and wants to limit his losses. He could place a ______ order to sell 100 shares at $15, good until cancelled.
Question154: Which of the following are NOT explicitly addressed in the Code of Ethics?
Question155: Financial statements are an input into which step in the financial statement analysis framework?
Question156: Empirical probability is:
Question157: According to CFA Institute's Standards of Professional Conduct, what is the responsibility of members in terms of Standard I.A.(Knowledge of the Law)?
Question158: Which one of the following statements is correct?
Question159: The par value of a bond is
Question160: Which element is "defined" in a defined benefit pension plan?
Question161: Which of the following is true of a monopolist's demand curve?
Question162: All of the following occurrences could cause demand-pull inflation except an
Question163: You have set up a test of a suitably phrased null hypothesis. After analyzing the statistical underpinnings of the test and the stringency requirements you have imposed, you have determined that the probability of rejecting the null hypothesis equals 30%. The probability that you will reject the null hypothesis when it is true is equal to 13% and the probability that you will reject the null hypothesis when it is false is equal to 17%. The significance level of your test equals ________.
Question164: 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:
Question165: Which type of indices tends to have the momentum effect?
Question166: Once a head and shoulders pattern is formed, the expectation is that:
Question167: A private investment in public equity allows a private investor to buy shares at a price that is usually
_ ___ the public-quoted market price.
Question168: Both portfolio Y and Z are well-diversified. The risk-free rate is 6%, the expected return on the market is 15%, and the portfolios have the following characteristics:
Portfolio | Expected Return | Beta Y | 17% | 1.20 Z | 14% | 1.00
Which of the following best characterizes the valuations of portfolio Y and Z?
Question169: The country with a comparative advantage in the production of good X is the one that:
Question170: Consider a cyclical industry in which many firms are not profitable. These firms have operations in many countries such as the US, Germany, Brazil and China. Which valuation method is the most appropriate one to compare these companies in the industry?
Question171: Given equal circumstances, which inventory method is the best to use for tax purposes (assume prices are rising)?
Question172: Using the rates of z1= 3.00%,1f1= 3.60%,1f2= 3.92%,1f3= 5.15%, compute the forward discount factor for period two.
Question173: A dormitory on campus houses 200 students. 120 are male, 50 are upper division students, and 40 are upper division male students. A student is selected at random. The probability of selecting a lower division student, given the student is a female, is:
Question174: Which of the following is the most valid argument for including venture capital investments in a traditional multi-asset class portfolio?
Question175: An industry experiencing rapidly increasing demand and improving profitability is best characterized as being in the _____ stage.
Question176: Refer to the graph below. Assuming that the monopoly maximizes profit it will earn profits of:
Question177: 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.
Question178: If prices of a product are falling the use of LIFO rather than FIFO will lead to:
Question179: Which of the following is secured only by the reputation of the issuing firm?
Question180: The gains from trade for consumers are measured by
Question181: The manufacturer of a sore throat spray claims that their product brings pain relief to sore throat sufferers within 5 seconds of contact. The manufacturer reported that for a random sample of 100 sore throat sufferers, the mean time of relief was 3.2 , seconds with a standard deviation of 1 second. Find the rejection region for the test if testing at z z0.01.
Question182: If the Fed wants to fight inflation, it should:
I). lower the federal funds rate target.
II). raise the federal funds rate target.
III). increase the supply of money.
IV). decrease the supply of money.
Question183: Determine net sales for 20x2 if the average days' sales uncollected equals 73 days and Accounts
Receivable at the end of 20x1 was $4,250 and at the end of 20x2 was $4,750.
Question184: Covariance of returns is positive
Question185: 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%)?
Question186: A coefficient of skewness of +2.48 indicates:
I). the mean is larger than the median
II). a large positive skewness
III). the tail of the distribution is to the right
Question187: Which of the following is an example of a conservative accounting policy?
Question188: Which statement is false?
Question189: Which one of the following is true?
Question190: The head and shoulders pattern signals that
Question191: Which is true of positively skewed distributions?
I). They have a limited, but frequent, upside.
II). Their downside is less frequent but more unlimited.
III). They are attractive to investors because their mean is larger than their median.
Question192: Which of the following is an example of ordinal data?
Question193: Technical analysts believe that speculative trading peaks at market ______.
Question194: Which of the following is not included in investing activities?
Question195: Refer to the graph below. Assuming a consumer has $5 to spend, if a soda costs $0.50 and a chocolate bar costs $0.50, the consumer would optimally choose to consume:
Question196: One year ago, Sandra Gordon purchased 200 shares of a Pacific fund when they were trading at
$ 58.20 and had a NAV of $60.00. Sandra sold her shares at the end of the year when they were trading at
$ 62.00 and had a NAV of $62.20. Ignoring fees, what is Gordon's rate of return if the fund paid $2.30 to its shareholders during the year?
Question197: A sample is:
Question198: When a market is in long-run equilibrium, then
Question199: Which exchange rate regime allows the monetary authority to earn seignorage?
Question200: On the same test, Tom scored at the 87th percentile, and Bill scored at the 73rd. This means
Question201: A bond is currently trading at 98.5 per 100 par, thus yielding 6.21%. It is estimated that the bond price will be 99.4 if rates decreased by 25 basis points and 97.8 if rates increased by 25 basis points. What is this bond's effective duration?
Question202: 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:
Question203: Regarding the disclosure requirements for PP&E, which piece of information is required by IFRS but not by U.S. GAAP?
Question204: What statement(s) is/are true?
I). Deferred taxes are determined on the basis of average tax rates determined on an industry-by-industry basis.
II). Computation of taxable income is based on the matching principle.
Question205: Consider the following statements about t and z-tests:
I). The degrees of freedom in a t-distribution depend on sample size, and generally the degrees of freedom are defined as n-1.
II). As sample size increases a t-graph begins to resemble a z-graph.
III). For infinity degrees of freedom the critical values for a z-distribution can also be found on a t-table in the row that has infinity as its degrees of freedom.
Which statement(s) is/are TRUE?
Question206: Which of the following is long-term asset?
I). An idle building.
II). Land held by land developers or sub-dividers.
Question207: The market price of stock Y is now $30. An order specifies the stock must be sold once the price drops to $25 or below. This order is likely to be a:
Question208: Price discrimination is the practice of:
Question209: Ben Ripper pays insurance on his office building for coverage for the following year. He would record this transaction by
Question210: Two bonds differ in their provisions for early retirement. Bond A is a 5-year serial bond. Bond B contains a sinking fund provision requiring the issuer to provide the trustee with sufficient funds to retire
2 0% of the original principal each year for 5 years. The sinking fund provision calls for the trustee to select the serial numbers of bonds to be retired by random assignment. Neither bond is callable.
I). The timing and size of bond A's promised payments are known with certainty.
II). There is a 20% chance that an investment position in bond B will be reversed after the first year.
III). The probability that an investment position in bond B will be reversed before maturity increases as time to maturity decreases.
Question211: Which trade policy will have no impact on government revenue?
Question212: In 2001, a portfolio with 6 stocks had the following total return rates in percentages:27.98%, 44.94%,
54.53%, -52.68%, 10.21%, 0.50%. The average return rate for this portfolio was 4.92% and the standard deviation was 37.66%. How confident are you that the return rates will fall within -51.57% and 61.41%?
Question213: On May 25th, 2004, Dove Landing Corporation bought 2,500 shares of Hunt Corporation's common stock at a total cost of $200,000. At 12/31/04 year-end, the Hunt Corp. stock was worth $212,750. The stock is classified as a trading security. The income tax rate is 35%. Which one of the following reflects the proper treatment for Dove Landing's investment for the year 2004?
Question214: When regional integration results in the replacement of higher-cost domestic production by lower-cost imports from other members, ______ occurs.
Question215: Select the incorrect statement(s) regarding good corporate governance practices:
I). Board Members cannot have any material relationship with the Company, other than as a Board
Member or Shareowner of the Company.
II). Board Members cannot use Company assets.
III). If a Shareowner-approved proposal is not binding, then the Company does not have to implement it.
Question216: Which of the following statements are true with respect to a hypothesis test regarding the equality of the variances of two normally distributed populations?
I). The F-statistic is the appropriate test statistic that should be used in this case.
II). The chi-squared is the appropriate test statistic that should be used in this case.
III). If the calculated statistic is within the critical values, than the conclusion would be not to reject the statement that the variances of the two populations are equal.
IV). If the calculated statistic is within the critical values, than the conclusion would be to reject the statement that the variances of the two populations are equal.
Question217: 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.
Which test statistic do we use for conducting a test of the hypotheses?
Question218: Suppose that the price level is 100 in 1993, 115 in 1994, 125 in 1995. Over the period 1993 to 1995, we can say that the price level has ______ while the inflation rate has ________.
Question219: An analyst has extracted the following information from the financial statements of Myco:
What is the leverage ratio (total assets/equity) for Myco?
Question220: An analyst has a client with a $1,000,000 portfolio. The client may need to liquidate $100,000 of the portfolio at the end of a particular year. The client does not want to invade the initial capital of $1,000,000.
The table below summarizes different investment allocations.
What is the probability that the return on the safety-first optimal portfolio will be less than the shortfall level
RL? Assume normality.
Question221: Step-up notes are
Question222: Inventories valued using ______ are least likely to incur inventory write-downs.
Question223: Consider a bond that pays 10% semiannually and has 6 years to maturity. The market requires an interest rate of 12% on bonds of this risk. What is this bond's price?
Question224: A price-taking firm CANNOT:
Question225: An investor aged 24 wishes to accumulate a large amount of money by her 50th birthday. She will pay equal annual payments of $1200 into an account which pays interest at 10 % per annum compounded annually. Payments start on her twenty-fifth birthday and end on her fiftieth birthday. How much will she have accumulated by her 50th birthday?
Question226: Item A is recognized for financial reporting but not allowed by tax legislation. Item B is recognized for tax reporting but not for financial reporting. A ______ will result from item A and a ______ will result from item B
Question227: 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?
Question228: Which of the following will be true for a competitive firm in long-run equilibrium?
I). P = MC
II). ATC = MC
III). P = ATC
Question229: Janet Ver is a portfolio manager managing large institutional clients. Janet does not act on a sale recommendation from the firm's equity division, until she has sold her personal holding in the stock. Once she has sold her personal holding in the stock then she will sell the stock out of her institutional clients' portfolios. In terms of CFA Institute's Standards of Professional Conduct per Standard VI (B): Priority of
Transactions, has Janet violated this standard?
Question230: 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.
Question231: The ________ ratio is the most conservative liquidity ratio.
Question232: As a consumer moves along an indifference curve:
Question233: The crowding-out model implies that a
Question234: Imagine a fictional derivative that can, when combined with certain other financial instruments, pay
$ 100,000 each time a Democrat is elected President of the U.S. This fictional derivative has:
Question235: Which statement about portfolio diversification is correct?
Question236: Currently the market in a stock is "$30.12 bid, $offered at 30.62". A new sell limit order is placed at
$ 30.12. This limit order is said to:
Question237: What are potential liabilities of a company such as possible damage awards due to lawsuits?
Question238: 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?
Question239: Which type of ADR can be used if a foreign company wants to raise capital in the US through a public offering of the ADRs?
I). Unsponsored ADR.
II). Level I.
III). Level II.
IV). Level III.
Question240: Which of the following statements about venture capital investments is least accurate?
Question241: Assume a student received the following grades for the semester:
History, B;
Statistics, A;
Spanish, C;
and English, C
History and English are 5 credit hour courses, Statistics a 4 credit hour course and Spanish a 3 credit hour course. If 4 grade points are assigned for an A, 3 for a B and 2 for a C, what is the weighted mean for the semester grade?
Question242: In terms of CFA Institute's Standards of Professional Conduct when dealing with the procedures for compliance per Standard IV A (Loyalty), which of the following are activities that might constitute a violation of the duty to the employer:
I). misappropriation of trade secrets.
II). conspiracy to bring about the resignation of other employees.
III). misuse of confidential information.
IV). misappropriation of client lists.
Question243: When the liability method is used, the amount recognized for income tax expense is:
Question244: Saunders, a mining analyst for Hokassen Investments, has completed his analysis of Okun Drilling &
Mining for a wealthy client of Hokassen. He has concluded that, based on core samples and geological surveys of land owned or leased by Okun, the company has in excess of 1 million ounces of gold available to mine. Saunders drafts a research report stating the following: 'Based on the fact that the company has 1 million ounces of gold to be mined, I recommend purchasing Okun stock for your portfolio.' If Saunders presents his report to the wealthy client, he will have:
Question245: Which one of these patterns is not a continuation pattern?
Question246: A student's grade in a course is determined by her score on two exams. The probability that she passes the first exam is 0.85, the probability that she passes the second exam is 0.80, and the probability that she passes both exams is 0.78. What is the probability that she passes at least one of the exams?
Question247: What could cause a company to have negative cash flow from operations in the same year in which it had a positive net income?
Question248: The larger the critical value on the z-statistic,
Question249: Which of the following statements is least accurate with respect to the portfolio duration measure?
Question250: 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.
Question251: The benefits provided by investment companies include all of the following except:
Question252: Where does the coefficient of variation (CV) generally lie between?
Question253: A portfolio has an expected rate of return of 15% and a standard deviation of 15%. The risk-free rate is 6 percent. An investor has the following utility function: U = E(r) - 0.5Ao2. Which value of A makes this investor indifferent between the risky portfolio and the risk-free asset?
Question254: Which of the following relationships is/are true in an oligopolistic market with collusion?
I). For a firm, marginal revenue = marginal cost
II). For a firm, marginal revenue = price
III). For the cartel, marginal revenue = marginal cost
Question255: Which of the following is correct?
Question256: Kiawah Corp. sold bonds at a price of 96.2 plus accrued interest. At the time of this issuance, the carrying value of the bonds would be less than: Face Value of the Bonds : Cash Received by Kiawah
(ignore fees)
Question257: Which of the following statements is (are) true with respect to bond valuation?
I). Spot rates are equal to the yield to maturity of on-the-run coupon paying Treasury securities.
II). The arbitrage-free valuation approach discounts each cash flow of a bond using a different discount rate.
III). As the required yield to maturity increases, the discount on a zero-coupon bond will decrease.
IV). If the yield to maturity on a bond is greater than a bond's coupon rate, then the bond will trade below par.
Question258: Bond price volatility is normally:
Question259: The sampling distribution of the sampling mean is:
Question260: What is the term for the bias in your inferences resulting from excessive reliance on the empirical results of others in designing your own analysis?
Question261: ______ ADRs are intended to be purchased by qualified institutional buyers only.
Question262: A risk-averse investor is most accurately described by which of the following statements? A risk-averse investor will:
Question263: The risk of a preferred stock is based on the:
Question264: 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):
Question265: A positively skewed distribution:
Question266: 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?
Question267: Toward the top of the economic cycle, as final demand starts to fall off, ______ starts to occur abruptly.
Question268: Which statement is true?
I). Companies try to get funding for their projects as all of them are worth funding.
II). In financial markets savers determine which projects obtain capital and which projects don't.
Question269: Assume the correct current ratio is bigger than 1. If purchase (on account) is overstated by $3,000 and the ending inventory is overstated by $3,000, the current ratio is ______ and the working capital is
_ _____.
Question270: Bridget's Midget Widget
Gross Profit has:
Question271: Assume that Company B is the only producer of breakfast cereal. If at the current level of production, the marginal revenue for a box of cereal is $2.50 while the marginal cost is $2.00, we would expect
Company B to
Question272: 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:
Question273: The ______ of an asset represents the interaction of supply and demand of the asset.
Question274: Peter Chairly is a energy analyst with Tableless Brokers. He is invited by Vrich Energy to visit their oil fields in Siberia. Chairly stays at accommodation owned by Vrich adjacent to their oil fields, there being no other place to stay within hundreds of miles. Chairly visits the oil fields and chats with production supervisors. The accommodation and meals provided by Vrich are modest. Chairly returns from the trip and writes a report in which he gives a 'buy' rating to Vrich Energy.
Question275: Which of the following statements about the statement of retained earnings is false?
Question276: Which ratio is used to measure a company's internal liquidity?
Question277: Typically in an ascending triangle, the ____ prices form a horizontal trendline and the _____ prices forma series of higher and higher lows.
Question278: A recent increase in the supply of oranges caused the price to drop from $5 to $2.50 per bushel and quantity demanded to rise from 10,000 bushels to 20,000 bushels. This indicates that the price elasticity of demand for oranges in this price range is
Question279: Steve is more risk-averse than Edie. On a graph that shows Steve and Edie's indifference curves, which of the following is true? Assume that the graph shows expected return on the vertical axis and standard deviation on the horizontal axis.
I). Steve and Edie's indifference curves might intersect.
II) Steve's indifference curves will have flatter slopes than Edie's.
III) Steve's indifference curves will have steeper slopes than Edie's.
IV) Steve and Edie's indifference curves will not intersect.
Question280: Cash payments for interest 15 Retirement of common stock 40 Cash payments to merchandise suppliers 93 Sale of equipment 31 Payment of dividends 38 Purchase of land 9 Cash payment for salaries
4 0 Cash collections from customers 265 Purchase of equipment 44
What are cash flows from financing activities?
Question281: If the government wants to increase tax revenues, it should tax goods and services that have a(n)
Question282: Which of the following statements is (are) true with respect to the relation between a statistical decision and an economic decision?
I). Both methods of analysis should lead to the same conclusion.
II). Once the null hypothesis has been accepted using statistical methods, the analyst should not override that conclusion.
III When both a statistical analysis and an economic analysis support the same conclusion it would be very imprudent to reject
III). When both a statistical analysis and an economic analysis support the same conclusion, it would be very imprudent to reject that conclusion.
IV). If both methods of analysis lead to different conclusions, the proper course of action would be to run the statistical analysis again using a different confidence interval.
Question283: If a product is an inferior good:
Question284: Diane Corporation had 400 units of inventory on hand at July 1, 2002, costing $20 each. Purchases and sales of goods during the month of July were as follows:
July 12, 2002 Sales 200 units @ $40 July 15, 2002 Purchases 100 units @ $26 July 25, 2002 Purchases
3 00 units @ $28 July 30, 2002 Sales 200 units @ $40
Assume Diane Corporation does not maintain perpetual inventory records. According to a physical count,
4 00 units were on hand on July 31, 2002.
The cost of ending inventory using the FIFO cost method is:
Question285: Firms in an oligopoly are less likely to collude when:
Question286: Equity real estate investment trusts are evaluated using common stock analysis techniques because:
Question287: As the futures contract approaches maturity, a commodity will trade at lower and lower prices to finally meet the future spot price. This situation is called:
Question288: 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:
Question289: Which of the following is correct?
Question290: A sample of 1,600 MBA recruiters was used to rank the top MBA schools in the US and abroad. The resulting rankings are:
Question291: If both the demand and the supply are perfectly inelastic, a tax results in
Question292: If the forward rate is higher than the spot rate, the price currency is said to be trading at a ______.
Question293: Which statement is false?
Question294: 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:
Question295: A survey of top executives revealed that 35% of them regularly read Time magazine, 20% real
Newsweek and 40% read U.S. News & World Report. Ten percent read both Time and U.S. News &
World Report. What is the probability that a particular top executive reads either Time or U.S. News &
World Report regularly?
Question296: An real estate investment project offers projected net operating income of $43,500 per year.
Assuming a capitalization rate of 15%, the fair market value according to the income approach would be closest to:
Question297: Assuming that an investment manager only has a small block of shares from a "hot" IPO. What is the best way for him to allocate this block according to the Standards of Professional Conduct on Fair
Dealing?
Question298: A forward rate agreement is an agreement to buy or sell
Question299: Julie Baskoff has purchased 100 shares of Watercraft Industries at 95 on margin. The initial margin was 60% and her broker requires a 35% maintenance margin. At what price would Julie get a margin call?
Question300: Taking financial reports to evaluate the past, current and prospective performance and financial position of a company for the purpose of making investment, create and other economic decisions best describes the role of
Question301: 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.
Question302: The overnight repurchase rate for general collateral is 6.50%. For a dealer seeking financing using special collateral, the repurchase rate agreed to:
Question303: What type of audit opinion is required when a company has a change in accounting principle?
Question304: In a monopolistic competition,
Question305: When does the selling price of long-term debt equal its maturity value?
Question306: In the past the FASB has been criticized for having a ______ approach to standards.
Question307: The gains and losses generated by tariffs and quotas are such that
Question308: Suppose Georgia was the only state that produced peaches. If peaches sold for $6 a pound in
Georgia and it costs 50 cents to transport a pound of peaches to Virginia, we would expect the price of a pound of peaches in Virginia to be
Question309: Which of the following statements does not accurately describe a closed-end fund?
Question310: When the average loss is zero, RSI becomes:
Question311: 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.
Question312: You are reviewing a list of 8 recommended securities and wish to invest in 4. You will put 40% of your capital in one, 30% in another, 20% in the third, and 10% in the last one. How many different ways can you choose among the 8 securities and invest according to your design?
Question313: The _____ is the period of time required for the firm to acquire inventory, sell the finished goods, and collect the proceeds.
Question314: When people are less careful about avoiding insured losses than they would be if they were not insured so that losses occur more often than they would otherwise, ____ occurs.
Question315: In accounting for a lease transaction classified as a capital lease, over the term of the lease:
Question316: Which statement is false?
Question317: Which statement is false?
Question318: According to SAS 99, which of the following is least likely to be a risk factor related to opportunities to commit fraudulent accounting?
Question319: When an economy dips into a recession, automatic stabilizers will tend to alter government spending and taxation so as to:
Question320: Beta and standard deviation are common measures of investment risk. How are these risk measures best characterized?
Question321: Suppose that P(A) = 0.7 and P(AB) = 0.42, find the probability of B given A, P(B|A).
Question322: The price in a stock market line chart is usually the:
Question323: Which of the following are problems that an effective corporate governance system would mitigate or eliminate?
I). Proxy voting is not permitted.
II). Board Members are unable to conduct in-depth evaluations of the issues affecting the Company's business.
III). A company requires a simple two-thirds vote for passing a Shareowner resolution and a simple majority vote to pass Board-sponsored initiatives.
IV). The only way for Shareowners to submit resolutions to consider specific issues is at the Company's annual general meeting.
Question324: Beal, Inc. intends to lease a machine from Paul Corporation. Beal's incremental borrowing rate is 14%.
The prime rate of interest is 8%. Paul's implicit rate in the lease is 10%, which is known to Beal. What interest rate will be used to calculate the minimum lease payments?
Question325: A company recognized an unrealized gain of $15,000 on a trading security. This would be reflected on the cash flow statement as:
Question326: 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?
Question327: Diminishing marginal returns occur when the marginal product of an additional worker is
Question328: In 2007 the book value of a company's inventory was $5 million before a $0.3 million write-down was recorded. In 2008, the fair value of the company's inventory was $0.5 million greater than the carrying value. Which of the following statements is/are correct (under the US GAAP)?
I). In 2007 the company's COGS would increase by $0.3 million due to the write-down.
II). In 2008 the company's COGS would decrease by $0.5 million due to the reversal.
III). In 2008 the company would record a $0.3 million recovery as a gain.
IV). In 2007 the company would record a $0.3 million loss due to the write-down.
Question329: Features of a firm's technology that lead to falling long-run average cost as output increases are
Question330: All of the following statements about accounting practices are true EXCEPT:
Question331: Why is systematic risk considered important?
Question332: A retail client of yours is interested in knowing how low an annual return a major stock index might have, as a once in a twenty year event. The index in question has had an annual return of 11% with a standard deviation of 22%. You believe these returns have been normally distributed. What is the low return that could be expected once in twenty years?
Question333: Which of the following statements about yield curves is true?
Question334: FasGrow is a no growth firm and has two million shares outstanding. It is expected to earn a constant
2 0 million per year on its assets. If all earnings are paid out as dividends and the cost of capital is 10%, calculate the current price per share for the stock.
Question335: Assume a small country imposes tariff.
After the tariff, the consumer surplus will decrease by: AF
Question336: 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:
Question337: Stock index mutual fund returns _________ the market index _________.
Question338: Which of the following statements is least accurate with respect to parametric and nonparametric tests?
Question339: Which of the following is correct?
Question340: The main difference between the current ratio and the quick ratio is that the quick ratio excludes:
Question341: Which of the following statements is (are) true with respect to valuing contracts?
I). The time value of both a call and a put will decrease as the contracts near expiration.
II). For a call to be at the money, its intrinsic value must be greater than zero.
III). Due to the efficiency of the option's markets, the actual price of the option is usually equal to its intrinsic value.
IV). For a put contract to be out of the money, the actual price of the underlying asset must be greater than the strike price of the option.
Question342: Points under the capital allocation line are ______ by investors.
Question343: All of the following statements about the value of a call option at expiration are true EXCEPT the:
Question344: The price elasticity of demand for a product tends to be small (less elastic) when
Question345: An investor is considering a 20-unit apartment building that is 10 years old and in excellent condition.
The purchase price is $700,000 with the land being valued at $50,000. The investor plans to sell the property after 4 years and anticipates paying selling costs of 6% of the sales price. The value of the property is expected to increase 2.5% annually over the 4-year holding period. The property is depreciated using the straight-line method over 27.5 years. The investor is in the 28% marginal income tax bracket and faces a 20% capital gains tax rate. The taxable gain/loss and capital gains tax due on the sale of the property at the end of year 4 would be closest to:
Question346: Which of the following test statistics should be used when conducting a hypothesis test for the equality of the variances of two populations?
Question347: A firm made donations of $50,000 this year. The donations were expensed for financial reporting purposes but not allowed so for tax purposes. The tax base and carrying amount of this item are:
Question348: The law of demand is simply a reflection of
Question349: Under a system of fixed exchange rates, an upward revaluation of a nation's currency would
Question350: Which of the following will cause an increase in aggregate demand in the United States?
Question351: Which organization provides funds for a wide range of projects in developing countries worldwide and financial and technical expertise aimed at helping these countries reduce poverty?
Question352: 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:
Question353: Which of the following should be classified as financing cash flow?
I). purchase and sale of equity securities of other entities.
II). issuance of equity securities and reacquisition of capital stock.
III). payment of dividend.
Question354: That which specifies the probability that the random variable takes on a specific value is known as the
Question355: Ashley Corporation constructed an office building for its own use. During 2000, the average accumulated expenditure for construction was $4,000,000. At the end of 1999, Ashley had borrowed
$ 1,000,000 specifically for the construction costs. The interest on the construction loan was 11%. The only other debt was $10,000,000 debentures (outstanding all of 2000), with an interest rate of 8%. What are the amounts of interest to be capitalized in 2000 and expensed in 2000?
Question356: If an industry experience patterns that do not correlate well against the general economy but trend against other economic variables such as stock prices, it is categorized as
Question357: Reclassification of capitalized interest as an expense will have the following balance sheet effect:
Question358: 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
Question359: Which of the following is true?
Question360: Which of the following statements is not true of futures contracts?
Question361: 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.
Question362: 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:
Question363: If the existing money stock is $100 billion, the nominal GDP is $400 billion, and the average price level is $20, then according to the quantity theory of money, the velocity of money is
Question364: A portfolio manager who does not have access to superior analysts should focus on:
Question365: If your discount rate is 8% per year, calculate the present value of the following cash flows:
End of year 1: $2,200
End of year 2: $3,000
End of year 3: $7,300.
Question366: Almost all bonds and currencies trade in:
Question367: An increase in the price of computer diskettes leads to an increase in total expenditures on the diskettes. Which of the following is true for this price change?
Question368: Suppose that, after conducting an analysis of past stock prices, you came up with the following observations. Which would appear to contradict the weak form of the efficient market hypothesis?
Question369: Which of the following is NOT a reason for sampling the population?
Question370: When the average product is greater than the marginal product, then the average product is
Question371: Internal liquidity ratios
Question372: Average income increases from $20,000 p.a. to $22,000 p.a. Quantity demanded per year increases from 5000 to 6000 units. Which of the following is correct?
Question373: Followers of technical analysis believe ALL of the following EXCEPT
Question374: Which of the following statements is not true of forward contracts?
Question375: The Gaffe Company had net income of $1,500,000. Gaffe paid preferred dividends of $5 on each of the 100,000 preferred shares. Each preferred share is convertible into 20 common shares. There are 1 million Gaffe common shares outstanding. In addition to the common and preferred stock, Gaffe has $25 million of 4 percent bonds outstanding. If Gaffe's tax rate is 40 percent, what is its diluted earnings per share?
Question376: Currently commodity markets are in contango. This means the roll yield on commodity indices is:
Question377: Which of the following costs related to software costs should be capitalized?
Question378: 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?
Question379: 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)?
Question380: 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.
Question381: Which of the following temporary differences ordinarily creates a future tax asset?
Question382: On January 2, 2002, Heather Ltd. signed a ten-year noncancelable lease for a passenger ferry. The lease stipulated annual payments of $70,000 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 amortization expense should Heather report from this lease transaction?
Question383: If a purely competitive firm seeks to maximize profit, the firm should
Question384: Using the arc convention, compute the approximate elasticity of demand from the following data:
Question385: Which best describes venture capital?
Question386: In a period of rising prices, many firms adopt the periodic LIFO method of accounting for inventory cost for tax purposes. When compared with periodic FIFO or average cost:
Question387: You are an analyst and you have studied Firm Q's financial statements as well as the prospects for the economy. You have come up with your projection of return for Q as well as its index of systematic risk.
How might you use SML?
Question388: As the price of a normal product drops, demand
Question389: Which of the following industries is/are most likely to be regarded as growth?
Question390: Credit investors may use the financial information to make economic decisions, including:
I). Determining the creditworthiness of a company.
II). Assigning a debt rating to a bond issue.
III). Valuating a stock for making an investment recommendation to others.
IV). Examining compliance with debt covenants or other contractual arrangements.
Question391: Under the semi-strong form of the EMH, a company announcing stronger-than-expected earnings would present most investors with what type of abnormal profit opportunity?
Question392: As a manager of a pension fund, you have a fiduciary duty to
Question393: 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%.
*
What was the after-tax interest charge?
Question394: Which statement(s) is/are correct?
I). A value-maximizing firm will raise new capital in a manner consistent with their target capital structure.
II). WACC is based on market values of debt and equity if the target capital structure is unknown.
III). The WACC is the correct cost of capital to use in capital budgeting.
Question395: Comparing financial measures or ratios for a company over time is an example of
Question396: Young Company does not currently pay any dividends. An analyst forecasts that Young Company will pay its first dividend of $0.50 per share at the end of year 5 and that the dividend payout will grow at the rate of 12% per year in perpetuity. If the required rate of return on Young company stock is 13%, the current value of its stock would be closest to:
Question397: A corporate bond quote of "zr 04" following the name of the issuer in The Wall Street Journal signifies that
Question398: Which of the following is a problem that an effective corporate governance system would mitigate or eliminate?
Question399: Which of the following would be a circumstance that would lead to the impairment of a long-term asset?
Question400: In order to calculate a bond's present value we use the
Question401: Which of the following will increase the demand for money?
Question402: The firm's short-run supply curve is:
Question403: 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.
Question404: A cup contains 4 pennies and 6 dimes. Three coins are selected with replacement from the cup.
What is the probability that exactly 2 of the coins selected were pennies?
Question405: A researcher is studying the number of trees that contain a certain type of locust in the Smoky
Mountains each year. He has found an average of 25% of the trees contain the locust with a standard deviation of 4%. If 100 trees were randomly sampled, which of the following statement is incorrect?
Question406: 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:
Question407: Suppose that all of the fast-food restaurants in the entire world are purchased by one firm. Relative to the current (competitive) price and quantity (and assuming that nothing else has changed), we would expect the monopolist to:
Question408: Advantage Corp.'s capital structure was as follows:
During 2000,
Advantage paid dividends of $3 per share on its preferred stock. The preferred shares are convertible into
2 0,000 shares of common stock. The 8 percent bonds are convertible into 30,000 shares of common stock. Net income for 2000 was $850,000. Assume the income tax rate is 30 percent. The basic earnings per share for 2000 is:
Question409: 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?
Question410: ________ financing is one of the formative stages of financing in venture capital.
I). Seed
II). First-stage
III). Start-up
Question411: To estimate the average cost of a food-shopping event, Delcore, Inc. randomly sampled 100 shoppers and found a sample mean of $72. Assuming a population standard deviation of $5, a 99% confidence interval for average cost for a food-shopping event is _______.
Question412: According to IFRS, in a sale-and-leaseback transaction, unless the fair (market) value of the asset at the time of sale is less than its undepreciated cost:
Question413: The capital asset pricing model (CAPM) states that:
Question414: Which one of the following requirements will not help to ensure the fair treatment of brokerage firm clients when a new investment recommendation is made?
Question415: One of the discretionary accounts managed by Bill Farnsworth, CFA, is the Jones Corporation employees' profit-sharing plan. Diane Jones, the company president, recently asked Farnsworth to vote the shares in the firm's profit-sharing plan in favor of the company-nominated slate of directors and against the directors sponsored by a dissident stockholder group. Farnsworth does not want to lose this client because he directs all the client's trades to a brokerage firm that provides Farnsworth with useful information about tax-free investments. Although this information is not of value in managing the Jones
Corporation account, it does help in managing several other accounts. The brokerage firm providing this information also offers the lowest prices for trades. Farnsworth investigates the proxy-fight issue, concludes that management's slate of directors is better for the long-run performance of the firm than those recommended by the dissident group, and votes accordingly. Farnsworth:
Question416: The employer's pension expense is the amount that it is obligated to pay to the pension trust in
Question417: A 7-year bond is selling for $89.78. The coupon is 7%, with payments being made semiannually, and the market required yield is 9%. If the market required yield drops to 8%, what will the amount of discount be?
Question418: 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?
Question419: Which of the following assumptions does the Gordon growth dividend discount model require?
I). Dividends grow at a constant rate.
II). The dividend growth rate continues indefinitely.
III). The required rate of return is less than the dividend growth rate.
Question420: Suppose the probability that oil prices will rise any given quarter is 0.51, and the probability that oil prices will stay level or decline is 0.49. If oil prices rise, GNP will contract by 1% with 80% probability, and expand by 0.5% with 20% probability. If oil prices decline or stay level, GNP will expand 3% with a 75% probability and contract 0.5% with a 25% probability. What is the expected change in GNP in the next quarter?
Question421: One feature common to both the trading and available for sale classifications is:
Question422: When the market is in backwardation, the roll yield will be ______ for a hedger.
Question423: Two basic assumptions of technical analysis are that security prices adjust:
Question424: Two normal distributions, X and Y, have means of 10% and 15% respectively. What is the mean of the following linear combination: 2X + 3Y?
Question425: The existence of momentum is:
Question426: Which of the following Treasury issues are quoted on the basis of yield in the Wall Street Journal?
Question427: Under the asset/liability method of calculating deferred tax consequences for temporary differences, deferred taxes are determined on the basis of:
Question428: What is a company's payables payment period if COGS are $200,000 and the average balance of accounts payable (AP) is $10,000?
Question429: Consider the following activity schedule:
Date Quantity Per Unit Total Cost Jan 1, Beginning Inventory 100 $18.00 $ 1,800.00 Mar 4, Purchase 400
19.00 7,600.00 Apr 1, Sold (50)
In a perpetual inventory system, what is the average cost per unit after the March 4 purchase?
Question430: It is important for any firm to determine its appropriate target cash balance:
Question431: 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
Question432: A coupon bond with duration of 4.75 has an initial price of par value. A 50 basis point decrease in required return would cause the price of $2,000,000 par value of this bond to:
Question433: Including costs in inventory that should be expensed will:
Question434: 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.
Question435: Accelerated depreciation method is appealing for all of the following reasons EXCEPT
Question436: If companies have identical inventoriable costs, but use different inventory flow assumptions when the price of goods has not been constant, then the:
Question437: As per Standard VI (A) of the Code and Standards, that deals with the disclosure of conflicts, a CFA
Institute member that is elected to serve as a Trustee of a large Pension fund, may do so, provided that:
Question438: 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?
Question439: A big value for F will result in:
Question440: Lease A does not contain a bargain purchase option, but the lease term is equal to 90% of the estimated economic life of the leased property. Lease B does not transfer ownership of the property to the lessee by the end of the lease term, but the lease term is equal to 70% of the estimated economic life of the leased property. How should the lessee classify these leases?
Question441: Operating profit is equal to ________.
Question442: A firm intends to take on a significant amount of new debt in order to fund the purchase of a close competitor. However the firm cannot complete the transaction unless it first calls one of its outstanding bond issues. It must be true that the called bonds
Question443: Which of the following does NOT favor a capital lease?
Question444: Which of the following costs is not capitalized in the cost of trademarks (under U.S. GAAP)?
Question445: If the price of tickets to Disney World increases from $30 to $33 and as a result attendance falls by 5 percent then the demand for the tickets is
Question446: The Dow Jones Industrial Average is an example of
Question447: The Santa Rosa Homeowners are trying to prove that the homes in the area are less than 5 miles from the nearest fire station. The data and hypothesis test is shown at the right. The conclusion should be
_ _____.
Question448: Consider a two-year currency swap, with semi-annual settlements. It is fixed dollar rate for fixed yen rate swap. The initial exchange rate is 99 Yen to the dollar. Notional principal is $100 million. The fixed dollar rate is 6%. The fixed yen rate is 2%. What happens on the last settlement date?
Question449: Beer and wine are the only goods produced in a perfectly competitive economy. Each is produced in a constant-cost industry and currently in equilibrium. Suddenly there is a permanent shift in the preferences of consumers in favor of beer and away from wine.
As a wine producer, in the short run, your best strategy is to:
Question450: Use of the percentage-of-completion method, versus the completed contract method results in:
Question451: When evaluating bonds it is helpful to understand that ________ and ______ will always be the same.
Question452: According to the Framework for the Preparation and Presentation of Financial Statements, the objective of financial statements is fair presentation of the company's
I). financial position.
II). financial performance.
III). cash flows.
IV). earning power.
Question453: A futures contract whose underlying good is U.S. Treasury bills would be classified as a(n) ________ contract.
Question454: A company in Hong Kong, where there is no taxes on dividends and capital gains, is considering either paying a special dividend or repurchasing its own shares. Shareholders of the company would have
Question455: A dataset of 105 observations is organized in a relative frequency distribution into 9 classes. The sum of the relative frequencies across all the classes equals ________.
Question456: An increase in real output will cause which of the following?
Question457: A distribution has a mean of 7 and a range of -100 to +50. The distribution is ________.
Question458: Kent Hold is tendering for a future client. He informs the client that he is an expert portfolio manager and has averaged a 30% annual return for his clients over the past two years. However Kent does not inform his client is that in this time period he only managed two accounts. In addition a large part of the return that he achieved was as a result of a large delisting. Without this delisting the return would have only been 12% average per annum.
Has Kent violated the Standards of Professional Conduct?
Question459: Daily travel expenses for H&J Employees are normally distributed with a mean of $250 and a standard deviation of $38. Q1 for this distribution is ______.
Question460: 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:
Question461: 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.
Question462: Grant Parker, a money manager, was promised a gift of significant value from a client contingent on the performance of the coming period. Would Grant be committing an ethical violation if he were to accept?
Question463: What type of charts does NOT provide four prices per data point entry?
Question464: 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
Question465: A company that employs a low-cost leadership strategy is associated with:
Question466: If an experiment results in one of two dichotomous responses, the variable is defined as a
Question467: 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, 2,315 shares outstanding. Convertible into 3.3
*
shares of common stock, Issue price $100
8% convertible preferred stock, $100 par, 2,572 shares outstanding. Convertible into 5 common
*
shares, Issue price $80
9,986 warrants are outstanding with an exercise price of $38. Each warrant is convertible into 1
*
share of common.
Average market price of common is $52.00 per share. Common shares outstanding at the
*
beginning of the year were 40,045.
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?
Question468: You are in an office in the U.S. and a colleague is trading for himself in advance of clients. You should
Question469: 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: 13.25 10-year municipal bond: 8.50
The investor's marginal tax rate is 34%. Which bond provides a higher after-tax yield for this individual investor?
Question470: Which of the following statements is false?
Question471: 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?
Question472: 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?
Question473: The market price of wheat is $2. The government imposes a legal minimum price (price floor) of $1.50.
What will be the effect on the market?
Question474: Assume EUR:USD is 1.3146, and the six-month forward points are quoted as -16. The EUR:USD six-month forward rate is:
Question475: Which of the following flow assumptions is not acceptable under generally accepted accounting principles?
Question476: Assumptions of the Markowitz model include which of the following?
Question477: To decrease the federal funds rate, the Fed can use open market operations to
Question478: The Ricardian model concludes that:
Question479: From the perspective of all the firms in an industry, the ideal collusive agreement is identical to the:
Question480: 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:
Question481: A probability function is a rule of correspondence or equation that:
Question482: CFA Institute recommends maintaining records for at least ____ years.
Question483: The audit committee should ensure that if there are any conflicts of interest between the external auditor and the Company, they should be resolved in favor of the
Question484: A natural monopoly occurs when
Question485: Warner Corporation reported net income in excess of its net cash flow from operations. A possible explanation of this difference is:
Question486: Municipal securities:
Question487: A quoted stock price quoted in ticks of $0.01 is an example of a
Question488: Which of the following statement(s) is/are true?
I). A high debt ratio indicates an extensive use of leverage.
II). The interest coverage ratio is computed by dividing the annual operating income by the annual interest expense.
III). The current ratio is equal to current assets divided by current liabilities.
IV). The debt ratio shows how many times the company earns its annual interest obligations.
Question489: The time that it takes to find a taxi when leaving a restaurant follows a left skewed distribution with a mean of 12 minutes and a standard deviation of 3 minutes. If 100 restaurant patrons are randomly sampled as to the amount of time that it takes for them to find a taxi, what type of sample distribution will be yielded?
Question490: 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 Greenbelt uses the weighted average cost method, what was its COGS for the year?
Question491: Which of the following issues does a policy statement not address?
Question492: What is the area under the normal curve between z = 1.0 and z = 2.0?
Question493: What do we call the value z that is computed using sample data?
Question494: The introduction of a tariff is expected to:
Question495: The nation of Economica has increased their M1 money supply by 10% over the last year by printing currency. This policy causes no price inflation. Which of the following could explain this phenomenon?
I). The nation of Islandia begins using the Economican currency as a reserve.
II). Aggregate output increases in Economica.
III). The Central Bank begins a government debt buy-back program.
Question496: Which of the following is true for monopolistically competitive firms in long-run equilibrium?
Question497: The M1 money supply measure does not include:
I). demand deposits.
II). interest-earnings checkable deposits.
III). checkable deposits.
IV). traveler's checks.
Question498: During a presentation to prospective clients, Sumanta Mitra makes the following two statements
'CFAs represent the elite of all investment professionals and are most qualified to manage your money.' and 'CFA charterholders obtain their charters after passing 3 levels of exams based on a comprehensive and rigorous study program.' Which of the above statements violates Standard VII (B): Reference to CFA
Institute, the CFA Designation, and the CFA Program?
Question499: Sampling error is:
Question500: The formula for joint probability is given by:
Question501: If the issuing company is considered to be of high risk and it may be years before the issuing company goes public, it is likely to issue ______ preferred shares.
Question502: If the rates for periods 1 through 6 are all 4.25% what is the relationship between the nominal spread and the Z-spread for the 7% 5 year corporate bond and the 6.5% 5 year Treasury bond?
Question503: Which measures of central tendency are not affected by extremely low or extremely high values?
Question504: Using extraordinary long depreciable lives for assets is an example of
Question505: 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?
Question506: If you can invest for 2 years at 5% today, or invest for 1.5 years at 4.6%, what would you have to earn on your reinvestment to be just as well off?
Question507: Consider the following:
Machinery, beginning balance $114,000 Machinery, ending balance $100,000 Accumulated Depreciation,
Machinery, beginning balance $ 60,000 Accumulated Depreciation, Machinery, ending balance $ 64,000
Depreciation expense $ 15,000
What was the amount of cash inflow from the sale of old machinery during the year? Assume no other transactions affected the Machinery account and that the sale of the machinery did not result in a gain or loss on disposal.
Question508: In terms of CFA Institute's Standards of Professional Conduct when dealing with the purpose and scope of Standard V(A): Diligence and Reasonable Basis, which of the following statements are correct?
I). Members must establish a reasonable basis for all investment recommendations and actions.
II). This standard is meant to address only the member-client relationship.
III). Diligence must be exercised to avoid any material misrepresentation.
IV). Records and documentation must be maintained in order to support the investment recommendations and actions.
Question509: A flag pattern is similar to a:
Question510: The distribution of the annual incomes of a group of middle management employees approximated a normal distribution with a mean of $37,200 and a standard deviation of $800. About 68 percent of the incomes lie between what two incomes?
Question511: 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.
Question512: A firm owns a building with a book value of $100,000 and a market value of $250,000. If the building is utilized for a project, then the opportunity cost ignoring taxes is:
Question513: An Indian software engineer works for a computer manufacturer in San Jose. He makes $60,000 a year and sends $10,000 to his family in India each year. The amount should be counted towards US GDP is:
Question514: Which of the following will give rise to a deferred tax liability?
Question515: The ZZT Company went public on June 1, 1999, by issuing 25 million shares of common stock. In
2 000, the firm raised additional capital by issuing 2 million shares of preferred stock. What is the weighted average number of common shares outstanding for the year ending December 31, 2000?
Question516: We would like to refer all probability statements to one set of normal probability values. The distribution hat fills this role is known as the
Question517: 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?
Question518: A futures contract on a stock index can be settled on the expiration day by
Question519: The best way to study the composition of financial statements is to prepare
Question520: The book value of property, plant, and equipment is the ________.
Question521: For the hypothesis test shown below, the decision should be ______.
Question522: Equilibrium quantity in markets characterized by oligopoly is
Question523: Which of the following is NOT a drawback of fund of funds investing?
Question524: You expect to receive a series of annual payments forever. The present value of this series of payments is $575.00. If these payments can be invested at a rate of 13% per year, what is the amount of each cash flow?
Question525: I). The generally accepted accounting principle (GAAP) that determines when revenue should be recorded in the accounting records is called the realization principle.
II). The generally accepted accounting principle (GAAP) that determines when expenses should be recorded in the accounting records is called the realization principle.
Question526: A percentile score of 40 indicates that a person
Question527: Increasing the confidence level, while keeping other values constant, has what effect on the width of the confidence interval?
Question528: 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?
Question529: An analyst is reviewing the following quotes from around the world:
In New York: $1 = Y(JPY)120. In Tokyo: AU$1 (Australian Dollar) = Y(JPY)60. In Sidney: $1 = AU$2.3.
What is the true cross rate between the AU$ and the Y(JPY)?
Question530: 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.
Question531: The joint probability of three events is given as 35%. Their individual probabilities are 50%, 60%, and
8 0%. What should be their joint probability if they are independent?
Question532: The market portfolio M is:
Question533: A(n) _______ is a numerical descriptive measure of a population, usually unknown.
Question534: Which of the following correlation coefficients would most effectively reduce the risk of a portfolio?
Question535: Inventory turnover and debt/equity ratios are measures of
Question536: Anti-dilutive securities should:
Question537: Judy Albert and Bob Tye, who recently started their own investment advisory business, have enrolled to take the Level III CFA examination next year. Albert's business card reads, 'Judy Albert, CFA
Candidate.' Tye has not put anything about the CFA designation on his business card. However, the firm's promotional material describes the CFA requirements and indicates that Tye participates in the CFA program and has completed Levels I and II). According to CFA Institute's Standards of Professional
Conduct:
Question538: The following table presents selected common-size income and balance sheet data for Curative Drugs.
Which of the following conclusions can be drawn from the data presented above?
Question539: _______ financing is capital provided for a company that expects to go public within a year or so.
Question540: Melons 'R' Us, a national chain of fruit stands, has an inventory period of 65 days, an accounts payable period of 30 days, and accounts receivable are collected, on average, in 24 days. The CFO plans to implement a discount plan in order to reduce the time it takes to collect receivables to 18 days. What will happen to the firm's cash cycle?
Question541: As a portfolio manager, you are comparing the yields on investment grade 10-year corporate bonds and the 10-year on-the-run Treasury. You notice that a bond issued by Ink, Inc. has a yield of 7.8% while the Treasury yields 6.02%. Calculate the yield ratio.
Question542: If no resources had a comparative advantage in the production of any good, the production possibility curve would be:
Question543: Which measure of dispersion does not disregard the algebraic signs (plus and minus) of each difference between X and the mean?
Question544: The _______ of a _______ option has the right to sell 100 shares of common stock at a specified price for a given period of time.
Question545: Starr Co. had 1997 sales of $210. Sales for 1998 increase by 15% and cost of goods sold remains
6 5% of sales. Starr Co.'s 1998 income statement will show gross profit of:
Question546: To test H(0): u = 20 vs. H(A): u<>20, a sample of 400 will be taken from a large population, whose standard deviation is 5. H(0) will be rejected if XBAR >= 20.5 or XBAR <= 19.5. The level of significance of this test is approximately:
Question547: Which of the following statements is (are) true with respect to the price behavior of putable bonds?
I). At very high levels of interest rates, the price of a putable bond will be very close to that of an equivalent non-putable bond.
II). At very low levels of interest rates, the put embedded in the bond will have a very low value.
III). Negative convexity will begin to appear for a putable bond at very low yield levels.
IV). At high yield levels, duration will underestimate the expected bond price for a given unit change in yield.
Question548: Which one of the following statements regarding the effect of leases on financial ratios (in early years) is CORRECT?
Question549: Suppose there are 2,500 people in the nation of Utopia. Of the people over 16 years old, 1,800 are employed, 200 are unemployed and looking for work, and 200 are unemployed and are not looking for work. The unemployment rate in Utopia is ______.
Question550: If a researcher testing the null hypothesis H : 53 u 57 vs. H : u 53 or u > 57, found that is equal to 56
0 a
when in reality is 59, identify the type of error that has been made.
Question551: Consider a level perpetuity of $250.00 with the first payment made at t = 4. The present value of the perpetuity today if the discount rate is 6 %, is
Question552: Which of the following are motivations to underreport earnings?
I). Negotiate labor union contracts.
II). Lower incentive compensation.
III). Appear more solvent.
IV). Obtain trade relief.
Question553: If a constant were to be added to a set of scores, the standard deviation would:
Question554: Larry Tolpert is an Investment Manager at a medium-sized Investment Management firm. Larry is giving a presentation to a group of prospective clients and makes the following comments about
Composite Construction. Which of the following statements made by Larry, in relation to Composite
Construction, are NOT correct?
Question555: Diseconomies of scale are associated with:
Question556: B1 is a consumer budget constraint.
Now the line moves to B2. This indicates that:
Question557: Liquidity risk corresponds to the risk
Question558: ABC Corp. is considering the following independent projects:
Which of the following would represent the most optimal choice?
Question559: When calculating diluted earnings per share, convertible securities are:
Question560: Economic analysis suggests that patent laws, which can often be used to limit the entry of potential competitors into an industry,
Question561: Which of the following is not a valid reason for selecting a sample instead of studying the whole population?
Question562: 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
Question563: All of the following securities may affect the numerator in the basic EPS equation EXCEPT:
Question564: 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:
Question565: Market neutral hedge funds are best described as:
Question566: You are comparing two companies by looking at financial ratios they publish in their annual reports.
You know that
I). you must be careful because not all financial statement ratios are computed the same way.
II). the financial ratios of a large firm and a medium size firm cannot be compared.
III). these financial ratios will capture the relevant differences between the two firms, leaving you with no need to look at the rest of the reports.
Question567: A(n) ______ 's object is to earn a return in excess of the fair rate of return.
Question568: Crashem Co. purchases equipment for $180,000 in cash. How would this transaction affect the financial statements?
Question569: 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?
Question570: Which of the following statements concerning the Security Market Line (SML) is incorrect?
Question571: You have a bond with 6 years to maturity. The bond pays 10% coupons semiannually, but the market demands a 12% return. If the market rate stays constant, what is the price path for years 6,4,2,0?
Question572: 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:
Question573: Refer to the graph below. Assuming that the industry operates under conditions of perfect competition and that the firms seek to maximize profits each firm in the industry will:
Question574: Which of the following is NOT one of the major areas where financial ratios are used?
Question575: Two sets of observations, A and B, each contain 160 observations. The variance of data in A equals
198.4 and that of the data in B equals 231.9. The two sets have the same mean. Then, A has a ______ dispersion and a ______ coefficient of variation.
Question576: Journalizing is performed by transferring information from the
Question577: Agency Rent-A-Car reports cash flows from acquisitions and sales of Rental Automobiles (RA) as investing activities. It provides an unclassified balance sheet, with RA reported under Property and
Equipment and amounting to at least 49% of total assets in 2010; car rentals are 77% of total revenue.
Net cash received on RA transactions of $5.751 million ($68.96 million realized on sales less $63.21 million spent on purchases) is highly material to Agency's net $9.06 million investing cash outflow, less so to the $83.15 million reported operating cash flow. Agency's rental fleet turns over about every other year.
The predominance of rental revenues and low RA turnover supports investing activity classification. The classification has a material effect on reported operating cash flow and investing cash flow. Reclassifying
Agency's $5.75 million RA net cash inflow from investing to operating will ______ its net investing cash flow by 63% percent while ______ operating cash flow by 7%.
Question578: 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?
Question579: Company Z, a U.S.-based firm, enters into a currency swap. Under the terms of the swap, Company Z makes dollar-denominated payments and receives British pound-denominated payments. Company Z expects the pound-to-dollar exchange rate to increase (pound strengthens, dollar weakens). This will make the pounds received "more valuable" in terms of the dollars they will buy. This situation represents which of the following swap motivations?
Question580: 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?
Question581: You are a corporate treasurer who needs to raise money. You expect interest rates to rise before you get the opportunity to issue debt. You could hedge your position by?
Question582: Which statement(s) is/are true?
I Under the FIFO method of inventory valuation, the assignment of costs to merchandise sold is in the same order in which the merchandise was purchased.
II). The FIFO method of inventory valuation is based on an assumption that the most recent costs incurred should be charged against current-year revenues.
III). The FIFO method of inventory valuation is based on the assumption that costs should be charged against revenues in the same order in which the costs were incurred.
IV). LIFO is considered the most conservative inventory pricing method.
Question583: Under the P/E method derived from the DDM, which of the following does not impact the P/E ratio?
I). the expected divided payout ratio.
II). the required rate of return.
III). the expected growth rate of dividends.
Question584: If two companies have identical operating risk, they also have identical
Question585: When interest rates are significantly higher than the coupon rate on a callable bond, the option-adjusted duration on that bond will be
Question586: In a given year, Gondolpha had total imports of 976 and total exports of 734. It also made direct foreign investments of 297. There were no other transactions on the BOP account. What's the current account deficit?
Question587: Of the following statements:
I). In a normal distribution, the coefficient of skewness is 1.0.
II). In normal distribution, approximately 95% of the observations lie within one standard deviation of its mean.
Question588: 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.
Question589: David Smith is a CFA member with supervisory responsibilities. However, due to his workload he has delegated a part of his supervisory responsibilities. What are Smith's responsibilities in terms of Standard
IV (C) - Responsibilities of supervisors?
Question590: Daily travel expenses for H&J Employees have a mean of $250 and a standard deviation of $50. If the accounting department is considered a random sample of size n = 49 then the probability the average daily expense for the accounting department is greater than $260 is ______(to the nearest 0.1%).
Question591: Select the correct use of the Chartered Financial Analyst and CFA marks:
I). He is a Chartered Financial Analyst.
II). On his name card, Andre states "Andre Labadie, cfa".
III). Cathy Labelle is a CFA-type financial analyst.
IV). Allan Lagda is a CFA (Passed Finalist).
Question592: 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?
Question593: What is the only source in the financial statements for learning about cash generation?
Question594: Cash payments for interest 15 Retirement of common stock 13 Cash payments to merchandise suppliers 95 Sale of equipment 35 Payment of dividends 39 Purchase of land 9 Cash payment for salaries
3 8 Cash collections from customers 276 Purchase of equipment 44
What are cash flows from operating activities?
Question595: 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?
Question596: 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.
Question597: Which of the following is NOT a hedge fund classification?
Question598: 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?
Question599: 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.
Question600: Given the following spot rates:
The arbitrage-free value of a 3-year, 10% Treasury issue would be closet to:
Question601: 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 ______.
Question602: Congratulations, you have won the lottery! Your prize is 50 payments of $200,000. The payments will be made at the end of each of the next 50 years. You plan to invest the payments at a rate of 7% per year.
What is the present value of your lottery prize?
Question603: DuPont analysis generates which ratio?
Question604: Your company purchased $10,000 worth of inventory on January 2nd on credit. The terms of the sale are 3/15 net 45. What is the effective annual interest rate if you pay the full amount in 35 days?
Question605: Printing money:
Question606: In a statement of cash flows, the acquisition of land by issuing capital stock:
Question607: An economic analyst says that the probability of Alan Greenspan announcing a rate cut next week is
0 .45 or 45%. This is an example of what type of probability?
Question608: Operating leverage is a measure of the
Question609: Two countries have free trade with each other, but they have different trade policies against other countries. This is an example of:
Question610: You are studying the finances of a life insurance company. You believe that if Company X generates at least $150 million in earnings this year, they will pay a large amount of stock into a company bonus pool.
If the earnings can fall anywhere from $110 million to $165 million with equal probability, what is the likelihood they will hit the bonus pool target?
Question611: 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.
Question612: 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?
Question613: The amount of one good that is just sufficient to compensate the consumer for the loss of some amount of another good is called
Question614: Suppose a t-test for the hypothesis that H(O): u = 0 vs. H(A): u<> 0 is carried out and we find t(obs.) =
1 .8. The descriptive significance level of the test is:
Question615: A profit-maximizing monopoly will produce an output where
Question616: U.S. GAAP requires that inventories are:
Question617: The height of a supply curve reveals
Question618: Assume the risk-free rate is 5%. The expected return on the market portfolio is 12%, and its standard deviation is 20%. A company has an expected return of 18%, a standard deviation of 90% and a correlation of 0.5 with the market. What is the company's Treynor ratio?
Question619: In an inefficient market, if an asset's intrinsic value is estimated to be $10 while the market price is $12, the asset appears to be:
Question620: A no-growth dividend discount model is:
Question621: An investment of $275 grows to $400 in 3 years. The holding period return is:
Question622: 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
Question623: As an analyst, you are concerned about whether Arcadian Manufacturing Co. can generate a stream of inflows sufficient to pay interest expense. In the last three quarters, Arcadian's operating cash flows have been decreasing, but its operating profits have been increasing. Which one of the following ratios is the best one to use in this situation?
Question624: Which of the following statements concerning the calculation and reporting of fully-diluted earnings per share is correct?
Question625: Companies with defined benefit plans are required per SFAS No. 132 to make all of the following disclosures except:
Question626: The probability that events A and B do not occur simultaneously equals 0.77. The probability of neither A nor B occurring equals 0.38. If P(A) equals 0.26, the probability of B occurring equals ________.
Question627: On December 31, 2003, Acadia Corp. leased machinery with a fair value of $420,000 from Clive
Leasing. The agreement is a six-year noncancelable lease requiring annual payments of $80,000 beginning December 31, 2003. The lease is appropriately accounted for by Acadia as a capital lease.
Acadia's incremental borrowing rate is 11%. Acadia knows the interest rate implicit in the lease payments is 10%.
The present value of an annuity due of 1 for 6 years at 10% is 4.7908. The present value of an annuity due of 1 for 6 years at 11% is 4.6959.
In its December 31, 2003 balance sheet, Acadia should report a lease liability of:
Question628: The Keynesian model believed that changes in ____ caused changes in output while the neoclassical economists believed that changes in ____ caused changes in output.
Question629: The profits and losses from an equity portfolio insured using puts would have the same profit and loss characteristics as:
Question630: In a large metropolitan area, past records revealed that 30 percent of all the high school graduates go to college. From 20 graduates selected at random, what is the probability that exactly 8 will go to college?
Question631: The economy is projected to emerge from a recession soon. The spread between AAA and CAA rated bond can be expected to
Question632: A sinking fund requirement is when
Question633: 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.
Question634: Increasing the frequencies in the tails of a distribution will:
Question635: A Treasury bill with 50-days till maturity is quoted with a bank discount rate of 3.50%. The holding period yield for this T-bill if purchased and held to maturity would be closest to
Question636: An estimator is efficient if:
Question637: The revaluation model is:
I). An alternative to the cost model.
II). Not permitted under IFRS.
III). Not permitted under U.S. GAAP.