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CFA CFA I Exam
CFA Level I Chartered Financial Analyst (Page 123 )

Updated On: 26-Jan-2026
Page 123 of 793
PDF with 3960 Questions

Which of the following statements is least likely to be a unique risk associated with a hedge fund?

  1. Cash needs arising from marking positions to market.
  2. Unexpected absence of normal liquidity under extreme market conditions.
  3. Higher volatility of returns as compared to traditional equity funds.

Answer(s): C



A commodity market is in contango if:

  1. the spot price is higher than the futures price.
  2. the spot price is equal to the futures price.
  3. the spot price is lower than the futures price.

Answer(s): C



Jacques Fontenot wants to place an order to purchase 10,000 shares of BQ Inc. at a price of 75.00 or below. The shares are currently trading for 82.1 bid and .82.2 ask. What type of order should Fontenot place?

  1. Market order.
  2. Stop loss order.
  3. Limit order.

Answer(s): C



Ned Jones, CFA, manages an endowment fund. The fund's asset allocation includes domestic stocks and bonds, international stocks and bonds, as well as real estate investments. Jones wants to establish an accurate benchmark to compare the fund's performance against. Which of Jones' following statements concerning indexes to be used for benchmarking is least likely correct?

  1. The creation of an investment bond index is difficult because of bond pricing issues, and because the universe of bonds is constantly changing.
  2. Correlations between bond index returns for different countries have tended to be lower than correlations between different bond indexes within a single country.
  3. Sovereign bond indexes outside the United States represent after tax returns.

Answer(s): C



Two stocks have identical risk, but one of them offers a higher expected return than the other. This apparent inefficiency in the market:

  1. indicates that arbitrageurs must be unaware of the mispricing.
  2. may persist and even grow larger before any correction occurs.
  3. can only arise when arbitrageurs lack the capital to exploit the situation.

Answer(s): B

Explanation:



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