[Sep 20, 2023] Latest CFA-Level-I Exam with Accurate CFA Institute CFA Level I Chartered Financial Analyst PDF Questions

Practice To CFA-Level-I - ExamsTorrent Remarkable Practice On your CFA Institute CFA Level I Chartered Financial Analyst Exam

NEW QUESTION # 721
Suggestions for achieving faster long-run economic growth include the following except for:

• A. stimulating consumption.
• B. improving the quality of education.
• C. stimulating research and development.

Answer: A

Explanation:
A - technology improvement. C - human capital growth.

NEW QUESTION # 722
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?

• A. There will be a surplus.
• B. There will be no effect.
• C. There will be a shortage.

Answer: B

Explanation:
To be effective, a price floor must be above the market price. As, in this case, the legal minimum price is below the equilibrium price, it will have no effect on the market.

NEW QUESTION # 723
Which of the following indicates a company's ability to cover currently maturing obligations from recurring operations?

• A. Working capital
• B. Cash flow from operations to current liabilities
• C. Quick ratio

Answer: B

Explanation:
Free cash flow is the excess of operating cash flow over the basic needs.

NEW QUESTION # 724
Asset-based valuations don't work well for companies with:
I). high proportion of intangible assets.
II). high proportion of current liabilities.
III). significant property, plant and equipment.

• A. I and II.
• B. I and III.
• C. I, II and III.

Answer: B

Explanation:
It is hard to estimate their market values.

NEW QUESTION # 725
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 was the after-tax interest charge?

• A. 0
• B. 1
• C. 2

Answer: C

Explanation:
(.06125)(1000)(100) (6125)(1 - .4) = 3675

NEW QUESTION # 726
Under the direct method approach to cash flow statements, depreciation is:

• A. added to cash flows from operations.
• B. ignored in preparing the cash flow statement.
• C. deducted from cash flows from operations.

Answer: B

Explanation:
When preparing the cash flow statement under the direct method, depreciation is ignored since the statement is prepared by reconstructing the income statement from a cash flow perspective.
The statement starts with cash received from customers and works its way down through the income statement.

NEW QUESTION # 727
Details of changes in accounting principles for depreciation are found

• A. on the income statement.
• B. in the notes to the financial statements.
• C. on the balance sheet.

Answer: B

Explanation:
The balance sheet accounts are not affected by cumulative effects of accounting changes for depreciation. The balances in the asset and related accumulated depreciation accounts are not affected by the change. Only the amount of the cumulative effect (net of taxes) is found on the income statement. Details are found in the notes to the financial statements.

NEW QUESTION # 728
Which of the following best describes the relationship between revenue and retained earnings?

• A. Revenue increases net income, which in turn increases retained earnings.
• B. Revenue represents a cash receipt; retained earnings is an element of stockholders' equity.
• C. Revenue represents the price of goods sold or services rendered; retained earnings represents cash available for paying dividends.

Answer: A

NEW QUESTION # 729
Suppose a firm finds that an additional dollar spent on labor increases output more than an additional dollar spent on machines. Under these conditions, the firm:

• A. should use more labor and fewer machines if it wants to increase economic efficiency.
• B. should use more machines and less labor if it wants to increase economic efficiency.
• C. is either economically efficient or technically efficient.

Answer: A

Explanation:
Since an additional dollar spent on labor adds more to output than an additional dollar spent on capital, a firm can reduce the cost of producing a certain amount of output by using more labor and fewer machines.

NEW QUESTION # 730
A distribution has mean 75, median 80 and mode 85. The distribution is

• A. negatively skewed
• B. symmetric
• C. positively skewed

Answer: A

Explanation:
The mean is less than the median; the distribution is negatively skewed.

NEW QUESTION # 731
Joan and John Jett are considering the purchase of a piece of property down by Lake
Annawattapottamee. The house was designed to fit the unique geographic features of this remote setting.
The property appraisal most appropriate for valuing this property would most likely be:

• A. the comparative sales approach.
• B. the income approach.
• C. the cost approach.

Answer: C

Explanation:
Due to the unique features of this property, the cost approach would be most appropriate.

NEW QUESTION # 732
A mechanic is concerned that his very expensive pressure gauge is giving faulty readings. He measured 18 pressures with his gauge and then compared them with the actual pressure given. His gauge showed a mean of 120 psi with a standard deviation of 0.75 psi. The actual pressure was 122 psi.
The t test statistic is less than the critical value of t for a 90% confidence level. What should the mechanic infer from this?

• A. The gauge readings of the mechanic do not differ from the actual pressure at a 90% confidence interval.
• B. The calibrated gauge understates the real pressure at a 95% confidence interval.
• C. The gauge of the mechanic understates the real pressure at a 90% confidence interval.

Answer: C

NEW QUESTION # 733
The present value of a 4 year ordinary annuity of $1000 per year starting in year 1 is the difference of
2 perpetuities.
Perpetuity 1 : $1000 per year starting in Year 1
Perpetuity 2: $1000 per year starting in 5 years time.
Given a 5% discount rate, the present value of this annuity is

• A. $3545.95.
• B. $5,525.63.
• C. $16,454.05.

Answer: A

Explanation:
The first payment for Perpetuity 1 is at t = 1 The first payment for Perpetuity 2 is at t = 5 The formula for the present value of a perpetuity is PV = A/r, where A = the annuity, and r = the rate. This formula is simple enough to use directly on your calculator. For Perpetuity 1, PV at t = 0 is = 1000/0.05 =
2 0,000 For Perpetuity 2, we need to find the present value at t = 0. To do so, we need to first find the present value at t = 5-1 = 4 since an ordinary annuity has its first payment one period away. This also applies to a perpetual annuity. A = 1000, r at period 5 = 0.06. Thus, PV = 1000/0.05 = 20,000. From the perspective of now i.e. t = 0, this amount of 20,000 can be considered a future value. Thus we now need to find the present value of this amount.
Using Texas Instruments BA II Plus: Don't forget to clear your memories using 2nd QUIT and 2nd CLR
WORK 20000 +- FV: FV = -20,000.00 4 N: N = 4.00 5 I/Y: I/Y = 5.00 CPT PV7: PV = 16,454.05
Using Hewlett Packard hp 12 C f CLEAR FIN: 0.00000000 f CLEAR REG: 0.00000000 4 n: 4.00000000 5 i: 5.00000000 20000 CHS FV: - 20,000.00000 g END: - 20,000.00000 PV: 16,454.04950
The present value of the 4 - year annuity is x - PV(0) = 20,000 - 16,454.05 = 3,545.95.

NEW QUESTION # 734
Dave Jones is a compliance officer at a large brokerage house. As part of his job description he is required to put in place procedures to ensure that all trades are allocated fairly and accurately, and in a timely and efficient manner. In terms of CFA Institute's Standards of Professional Conduct per Standard:
Fair Dealing, what are some of the factors that he will need to consider?
I). All orders should be in writing and the date stamped on them.
II). Orders should be processed on a first-in, first-out basis.
III). All clients in a block should be given the same execution price.
IV). Establish procedures for determining material change in opinions.

• A. All of the above.
• B. I and III only.
• C. I, II and III only.

Answer: C

Explanation:
Establishing procedures for determining material change in opinions is not a specific procedure to ensure that all trades are allocated fairly and accurately, and in a timely and efficient manner.

NEW QUESTION # 735
Which of the following pooled investments is most likely to make a few large investments?

• A. Hedge funds.
• B. Exchange traded funds.
• C. Buyout funds.

Answer: C

Explanation:
Buyout funds are interested in shares of a public company. They then convert the company into a private one, restructure the company, and in a few years try to sell it to other investors.

NEW QUESTION # 736
The Fischer Company had net income of $1,500,000. Fischer paid preferred dividends of $5 on each of the 100,000 preferred shares. There are 1 million Fischer common shares outstanding. In addition to the common and preferred stock, Fischer has $25 million of 4 percent bonds (par value: $100) outstanding. Each bond is convertible into 4 common shares. If Fischer's tax rate is 40 percent, what is its diluted earnings per share?

• A. $0.33.
• B. $1.00.
• C. $0.80.

Answer: C

Explanation:
The numerator is net income plus the pre-tax interest. The number of bonds is $25 million /
$ 100 = 250,000. The bonds are convertible into 250,000 x 4 = 1 million common shares. Diluted EPS =
[$1,000,000 + $1,000,000(1 - 0.4)]/[1,000,000 + 1,000,000] = $0.80

NEW QUESTION # 737
In an inverse head-and-shoulders pattern, the low price reached at the bottom of the head is $40 and the neckline is established at $50. The price objective for a technician would be:

• A. $60.
• B. $45.
• C. $30.

Answer: A

Explanation:
50 + (50 - 40) = 60.

NEW QUESTION # 738
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

• A. permanent, temporary.
• B. temporary, permanent.
• C. permanent, permanent.

Answer: C

Explanation:
The differences between tax and financial reporting of these items will not be reversed so they are both permanent differences.

NEW QUESTION # 739
Two countries have free trade with each other, but they have different trade policies against other countries. This is an example of:

• A. Common market.
• B. Free trade area.
• C. Customs union.

Answer: B

Explanation:
In a free trade area each country maintains its own policies against non-members.

NEW QUESTION # 740
The following figure shows Larry's indifference map and budget lines for ham and pork. Which of the following statements is TRUE?

• A. Pork is an inferior good.
• B. Ham is an inferior good.
• C. Neither pork nor ham is an inferior good.

Answer: B

Explanation:
As income grows the consumption of Ham actually drops.

NEW QUESTION # 741
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?

• A. 0
• B. 1
• C. 2

Answer: C

Explanation:
976 - 734 = 242. It's a deficit.

NEW QUESTION # 742
Which of the following statements is (are) true with respect to the portfolio management process?
I). Individuals generally define risk in term of standard deviation.
II). The investment horizon for investors in the accumulation phase will be the longest relative to the other phases.
III). The level of return that the investor desires will determine how much risk that the investment manager should take.
IV). The investment horizon is deemed to end at the investor's age of death.

• A. II only.
• B. II and III only.
• C. I, II, IV only.

Answer: A

Explanation:
I is incorrect because individuals generally define risk in more subjective terms, for instance, prices below which they would incur a paper loss.
III is incorrect because it's the other way around, the level of risk that the investor can handle will determine what return to respect from the portfolio.
IV is incorrect because the portfolio could still be managed on behalf of beneficiaries even after the client's death. Thus the investment horizon approaches its end at the time when the portfolio is expected to be either fully or partially liquidated.

NEW QUESTION # 743
Suppose that P(A) = 0.7 and P(AB) = 0.42, find the probability of B given A, P(B|A).

• A. 0.600
• B. 0.829
• C. 0.294

Answer: A

Explanation:
The correct answer is P(B|A) = P(AB)/P(A) = 0.42/0.7 = 0.60.

NEW QUESTION # 744
What is the future value of the following regular (ordinary, deferred) annuity?
Payment amount = $100 Payment frequency = annual, at the end of each year Number of payments = 20
Interest rate = 8% per year.

• A. $4,750.00
• B. $4,576.20
• C. $2,160.00

Answer: B

Explanation:
19 18 17 1 0
FV = 100(1.08) + 100(1.08) + 100(1.08) + ... + 100(1.08) + 100(1.08) = $4,576.20

NEW QUESTION # 745
Which of the following is not included in investing activities?

• A. collection of the principal on a loan made to others
• B. purchases and sales of property, plant, and equipment
• C. repayment of the principal on a loan borrowed from others

Answer: C

Explanation:
Repayment of the principal on a loan borrowed from others is a financing activity.

NEW QUESTION # 746
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Practice To CFA-Level-I - ExamsTorrent Remarkable Practice On your CFA Institute CFA Level I Chartered Financial Analyst Exam: https://drive.google.com/open?id=1mpFSQVqktivJ5PRgwv1Thqmhn7cP7BGA