Free CFA-Level-I Exam Braindumps (page: 120)

Page 120 of 991

What annual interest rate, compounded annually, would cause a series of 10 deposits of $500 to accumulate to $9,000, if the first deposit is made one year from today?

  1. 12.52%
  2. 15.38%
  3. 11.12%
  4. 8.04%
  5. 10.09%

Answer(s): A

Explanation:

On the BAII Plus, press 10 N, 0 PV, 500 PMT, 9000 +/- FV, CPT I/Y. On the HP12C, press 10 n, 0 PV, 500 PMT, 9000 CHS FV, i. Make sure the BAII Plus has the P/Y value set to 1.



How much would you need to deposit today in order to be able to withdraw $500 in 2 years and $700 in 4 years, if the account has nothing in it today and interest is 6% per year, compounded annually?

  1. $999.46
  2. $1,007.54
  3. $445.00
  4. $1,200.00
  5. $950.51

Answer(s): A

Explanation:

Work this question as two compound interest problems. On the BAII Plus, press 2 N, 6 I/Y, 0 PMT, 500 FV, CPT PV, which yields $445.00. Then press STO 1. Then press 4 N, 700 FV, CPT PV, which yields $554.46.
Then press + RCL 1 = to see the answer. On the HP12C, press 2 n, 6 i, 0 PMT, 500 FV, PV. Then press STO
1. Then press 4 n, 700 FV, PV. Then press RCL 1 + to see the answer. Note that the answer will be displayed as a negative number.



You have invested in a long-term, fixed deposit account earning 4% per year for 20 years, compounded

annually. Your friend has invested in a similar account but one that earns 4.25% per year, compounded semi- annually. If each of you deposited $5,000, by what amount is your friend wealthier than you due to this deposit?

  1. $538
  2. $601
  3. $639
  4. $521

Answer(s): C

Explanation:

The friend's account has 5,000*(1+0425/2)^40 = 11,595 at the end of 20 years. Your account has 5,000* (1.04^20) = 10,956. The difference is $639.



You are examining a group of 6 companies. Their average profit margins have been 49%, 10%, 5%, 35%, 30%, and 30%. What is the range of profit margins?

  1. 49.0%.
  2. 30.0%.
  3. 44.0%.
  4. 5.0%.

Answer(s): C

Explanation:

The range = the maximum value - the minimum value. Here, we have 49% - 5% = 44%.



Page 120 of 991



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