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Download CFA Institute CFA Level I Chartered Financial Analyst Exam Dumps

NEW QUESTION 46
Three investors Jen, Sarah and Matt are considering two investments A & B.
Investment A is the less
risky of the two investments, requiring an outlay of $5,000 with an expected rate of return at 12%. Each investor is satisfied with this expected return. Investment B also requires an investment of $5,000 and has an expected return of 12% but appears to have considerably more variability in potential returns compared with A.
Jen now requires a return of 16%, Sarah is still satisfied with 12% and Matt seeks only an 8% expected return.
Given the information above, which of the three investors, would be considered risk-averse?

  • A. Sarah and Matt
  • B. Jen
  • C. Jen and Sarah

Answer: B

Explanation:
Only Jen would be considered risk-averse. She is the only investor that demands a risk-premium to entice her into this riskier venture. Sarah would be considered risk-neutral as she is content with the same rate of return despite the higher risk levels and Matt would be considered a risk seeker as he is demanding a return that is less than the return offered for a lower risk investment.

 

NEW QUESTION 47
Given equal circumstances, which inventory method is the best to use for tax purposes (assume prices are rising)?

  • A. FIFO
  • B. average cost
  • C. LIFO

Answer: C

Explanation:
LIFO reduces taxable income and thus reduces taxes.

 

NEW QUESTION 48
What would be bid-ask spread be for pound sterling quoted at $=1.4419-28?

  • A. 0.062%
  • B. 0.64%
  • C. 0.63%

Answer: A

Explanation:
Percent spread = [(1.4428 - 1.4419)/1.4428] x 100 = 0.062%.

 

NEW QUESTION 49
Voting rights and proxies are discussed in CFA Institute's Standards of Professional Conduct per
Standard III(A): Loyalty, Prudence, and Care, Which of the following facts regarding voting rights and proxies are NOT correct?

  • A. Established law and regulation make it incumbent on investment managers to be thoroughly familiar with the issues that arise in proxies.
  • B. By exercising their voting rights, the shareholders can actively enhance their portfolio value.
  • C. Proxies have no value and can be voted on in any manner possible.

Answer: C

Explanation:
Proxies have economic value, and must be voted in the interest of the ultimate shareowner or plan beneficiary. Failure to exercise these rights may be to the detriment of the stockholder.

 

NEW QUESTION 50
Craig Pol is an investment analyst. Information was handed to Craig by his client in order to investigate an investment option for future expansion plans for a company. A financier finds out about this information and asks Craig to send him a copy of the information. According to the Standards of
Professional conduct, what should Craig do?

  • A. Send the information to the financier since in due course the public will anyway get to see the results.
  • B. Send the information to the financier and then inform his client.
  • C. Not send the information in order to preserve the confidentiality of his client.

Answer: C

Explanation:
Standard IV(B.5): Preservation of Confidentiality Information handed to a member to investigate an investment option for e.g. future expansion plans etc. should clearly not be given to external persons to view, unless the prior permission of the client is obtained.

 

NEW QUESTION 51
......

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