QUESTION: 1205

A stock had the following percentage increases in its value over the last 5 years: 7%, 4%, 12%, 10%, 15%. The geometric rate of return on the stock equals ________.

8.72%
9.22%
9.60%
9.53%

Answer(s): D

Explanation:

The geometric rate of change equals (1.04*1.07*1.1*1.15*1.12)^(1/5) - 1 = 9.53%. Note this is different from the straight geometric mean, which in this case would be (0.04*0.07*0.1*0.15*0.12)^(1/5) = 8.72%. You should be very careful about this point since the Mason & Lind textbook is quite ambiguous on this point.

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QUESTION: 1206

What is the Net Present Value of this series of annual cash flows at an interest rate of 10% per year: Year 0:
<$25,000>, Year 1: $2,000, Year 2: $0, Year 3: $15,000, Year 4 $0, Year 5 $18,000? (Note that the <> are used to indicate a negative number).

<$735.51>
$314.37
<$279.41>
$42.21
<$967.49>

Answer(s): A

Explanation:

On the BAII Plus, press CF 2nd CLRWork 25000 +/- ENTER DownArrow 2000 ENTER DownArrow DownArrow 0 ENTER DownArrow DownArrow 15000 ENTER DownArrow DownArrow 0 ENTERDownArrow DownArrow 18000 ENTER DownArrow DownArrow 2nd Quit. Then press NPV 10 ENTER DownArrow CPT. On the HP12C, press these keys: 25000 CHS BlueShift CFo 2000 BlueShift CFj 0 BlueShift CFj 15000 BlueShift CFj 0 BlueShift CFj 18000 BlueShift CFj. Then press 10 i, YellowShift NPV. The "DownArrow" represents the downward-pointing arrow on the top row of the BAII Plus keyboard. Make sure the BAII Plus has the P/Y value set to 1.

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QUESTION: 1207

The current exchange rate for French francs is $0.20. For a U.S. bank this is an example of:

An indirect quote in European terms
An indirect quote in American terms
A direct quote in American terms
A direct quote in European terms

Answer(s): C

Explanation:

A direct quote provides the home currency price of a specific quantity of foreign currency. An indirect quote states the foreign currency price of one unit of home currency. A quote in American terms gives the number of US dollars per units of foreign currency, and in European terms gives the number of foreign currency units per
E. S. dollar.

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QUESTION: 1208

If a nation is running a "trade deficit," it is

spending more on public services than it is raising in tax revenues.
exporting more goods and services than it imports.
importing more goods and services than it exports.
encountering a balance of payments disequilibrium.
worse off as the result of its trade with foreign countries.

Answer(s): C

Explanation:

A trade deficit implies that a country is importing more value in terms of goods and services than it is exporting to foreign countries.

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Free CFA-Level-I Exam Braindumps (page: 302)

QUESTION: 1205

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QUESTION: 1206

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QUESTION: 1207

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QUESTION: 1208

Explanation: