Real CFA CFA-Level-I Exam Questions [Updated 2022]
CFA-Level-I Exam Dumps Pass with Updated 2022 CFA Institute CFA Level I Chartered Financial Analyst
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NEW QUESTION 1308
Which of the following is not part of the eight main sections of GIPS?
- A. Verification.
- B. Calculation methodology.
- C. Composite construction.
Answer: A
Explanation:
Verification is not part of the eight sections, although strongly recommended.
NEW QUESTION 1309
Compute the return on equity for a company with profit margin of 2%, total asset turnover of 6 times, and total assets divided by equity of 1.2.
- A. none of the above.
- B. 16.67%
- C. 14.4%
Answer: C
Explanation:
The return on equity can be computed as the product of profit margin, total asset turnover, and financial leverage (measured as total assets divided by equity), or 2 x 6 x 1.2 = 14.4%.
NEW QUESTION 1310
Which is not true of the accounting procedures or the accounting rules applied to intangible assets?
- A. Accumulated amortization accounts are maintained for intangibles.
- B. Patents have a legal life of 17 years.
- C. Generally, the straight-line method of amortization is used on intangible assets.
Answer: A
Explanation:
Accumulated amortization accounts are not maintained for intangible assets. The expired portion of the cost of the asset is credited directly to the asset account, just like the treatment for prepaid assets.
NEW QUESTION 1311
If the nominal interest rate is 7%, then the effective annual rate is
I). 7.19 % with quarterly compounding.
II). 7.21% with monthly compounding.
III). 7.25 % with continuous compounding
Which one of the following is true?
- A. II and III.
- B. I, II and III.
- C. I and III.
Answer: C
Explanation:
Using Texas Instruments BA II PLUS For m = 4
2 nd ICONV: NOM = previous value
2 nd CLRWORK: NOM = 0.00
7 ENTER: NOM = 7.00 DownArrow: EFF = 0.00 DownArrow: C/Y = previous value (**)
4 ENTER: C/Y = 4.00 UpArrow: EFF = 0.00 CPT: EFF = 7.19 So (I) is correct
Note: For n = 12, replace 4 by 12 in line (**)
Using HP 12C For m = 12
f CLEAR REG: 0.00000000
f CLEAR FIN: 0.00000000
7 ENTER: 7.00000000 (*) 12 n divided by i: 0.58333333 100 CHS
ENTER PV: - 100.00000000 FV: - 107.2290081 Divided by 12: 7.22900810 So (II) is not correct
Note: For quarterly compounding, replace 12 by 4 in line (*)
For m = 8 i.e. continuous compounding 1 ENTER: 1.00000000 7%: 0.07000000 g ex: 1.07250818 *%: 7.25081810 so III is correct.
NEW QUESTION 1312
If the supply of a good decreases, which of the following will generally occur in a market setting?
- A. The quantity demanded will increase.
- B. The quantity demanded will decrease.
- C. Demand will decrease.
Answer: B
Explanation:
An inward shift of the supply curve for a good implies that the equilibrium will occur at a higher price and lower output. This is because the demand curve (which remains constant) and the supply curve now intersect at a higher price and lower output.
NEW QUESTION 1313
If a Board Member leases a company airplane for free personal use, it is an indication of
- A. inappropriate executive compensation.
- B. related-party transactions.
- C. personal use of company assets.
Answer: C
Explanation:
On the other hand, if a Board Member leases his or her own airplane to the Company, it will be considered as a related-party transaction.
NEW QUESTION 1314
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%.
*
What were the preferred dividends paid this whole year?
- A. 0
- B. 1
- C. 2
Answer: B
Explanation:
(.0625)(100)(2315) = 14469 (.08)(100)(2572) = 20576 14469 + 20576 = 35045
NEW QUESTION 1315
Which of the following describe(s) a speculator?
I). An investor who neither wishes to sell natural gas nor wishes to buy natural gas takes a SHORT position in natural gas futures contracts
II). A pet food manufacturer who wishes to purchase a large quantity of corn at the end of 6 months' time takes a LONG position in corn futures contracts
III). An investor who neither wishes to buy silver nor sell silver takes a LONG position in silver futures contracts
- A. II and III.
- B. I, II and III.
- C. I and III.
Answer: C
Explanation:
The actions described in A and C represent positions that increase risk. The action described in B represents a position that decreases risk. A and C are actions that would be taken by a speculator.
NEW QUESTION 1316
If the Laspeyres index is 120, the Paasche index is 115, then the Fisher index is:
- A. 117.47.
- B. 117.5.
- C. 235.
Answer: A
Explanation:
It is the geometric mean of the two indices.
NEW QUESTION 1317
The sampling distribution of the sampling mean is:
- A. the distribution of the means of all possible samples of a given size from a given population.
- B. the distribution of all possible means of a given population.
- C. the distribution of the means of all possible samples of a given population.
Answer: A
Explanation:
The sampling distribution of the sample means is a probability distribution of all possible sample means of a specific sample size.
NEW QUESTION 1318
Is it possible that a project has a payback period of one year, a negative NPV and a positive IRR?
- A. No, because a project with a positive IRR has a positive NPV.
- B. No, because a project with a negative NPV has a negative payback period.
- C. Yes.
Answer: C
Explanation:
If the cumulative cash in one year equals the outlay and additional cash flows are not very large, this scenario is possible. e.g. initial outlay = 100, first year cash flow = 100 and second year cash flow = 5. The required rate of return is 10%. This project would have a payback period of 1 year, an NPV of -4.96 and an IRR of 4.77%.
NEW QUESTION 1319
Taxable temporary differences result in a deferred tax ______ when the tax base of an asset is
_ ____ than its carrying amount.
- A. liability, less.
- B. asset, less.
- C. liability, more.
Answer: A
Explanation:
Or when the tax base of the liability exceeds its carrying amount.
NEW QUESTION 1320
Taylor Corporation purchased a new asset for $80,000. The asset had an estimated life of 5 years and an estimated salvage value of $20,000. What is the depreciation expense for the second year if the company uses the straight-line method?
- A. $12,000
- B. $14,440
- C. $16,000
Answer: A
Explanation:
Depreciation expense each year for five years would be $12,000 [($80,000 - $20,000)/5].
NEW QUESTION 1321
A long-term asset is different from a long-term investment in stocks or subsidiaries primarily because:
- A. A long-term asset is long-term in nature.
- B. A long-term asset has physical substance.
- C. A long-term asset is used in operations and not for resale.
Answer: C
Explanation:
It is the most correct one. The primary difference between long-term assets and long-term investments in general is it is used in the operations of the business.
NEW QUESTION 1322
The best way to study the composition of financial statements is to prepare
- A. common-size statements.
- B. a cross-sectional analysis
- C. a ratio analysis.
Answer: A
Explanation:
Common-size statements show the relationship of the component parts to a total in a single statement.
NEW QUESTION 1323
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