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Test Prep CFA-Level-I Exam Questions
CFA® Level I Chartered Financial Analyst (Page 116 )

Updated On: 24-Feb-2026
Page 116 of 793
PDF with 3963 Questions

Which of the following statements regarding hypothesis testing is false?

  1. If the population standard deviation is known, then the standard deviation of the sample is found by dividing the population standard deviation by the square root of "n."
  2. The test statistic is also known as the "critical value."
  3. A Type II error is defined as the act of incorrectly failing to reject the null hypothesis.
  4. The level of significance is denoted by the Greek letter alpha.
  5. Despite the different ways to formulate a hypothesis, the null hypothesis is always tested at the point of equality.
  6. More than one of these answers is incorrect.

Answer(s): B

Explanation:

The test statistic is measured AGAINST the critical value. The test statistic is defined as "...a quantity, calculated on the basis of sample, whose value is the basis for deciding whether to reject or not reject the null hypothesis." The critical value is found by referencing the probability distribution for the series (z-distribution, t- distribution, Chi-squared distribution, F-distribution, etc.).
The remaining answers are correct.



What is the Net Present Value of this series of annual cash flows using an interest rate of 20% per year: Year
0: <$6,000>, Year 1: $4,000, Year 2: $3,000, Year 3: $2,000, Year 4: $1,000? (Note that the <> are used to indicate a negative number).

  1. $1,077.49
  2. $1,056.33
  3. $589.11
  4. $1,134.39
  5. $981.21

Answer(s): B

Explanation:

On the BAII Plus, press CF 2nd CLRWork 6000 +/- ENTER DownArrow 4000 ENTER DownArrow DownArrow 3000 ENTER DownArrow DownArrow 2000 ENTER DownArrow DownArrow 1000 ENTER DownArrow DownArrow 2nd Quit. Then press NPV 20 ENTER DownArrow CPT. On the HP12C, press these keys: 6000 CHS BlueShift CFo 4000 BlueShift CFj 3000 BlueShift CFj 2000 BlueShift CFj 1000 BlueShift CFj. Then press 20 i, YellowShift NPV. The "DownArrow" represents the downward-pointing arrow on the top row of the BAII Plus keyboard. Make sure that the BAII Plus has the P/Y value set to 1.



What is the variable used to predict another variable called?

  1. Important
  2. Causal
  3. Independent
  4. None of these answers
  5. Dependent

Answer(s): C

Explanation:

The dependent variable is the variable Y which is being predicted by the X variable, the independent variable.
The regression is written as Y' = a + bX. The letter "a" is the Y intercept and b is the slope of the line. Y' is the predicted value of Y given a specific value of X.



If you deposit $345 into an account paying 5.45% per year simple interest, how much interest will be earned after 10 months?

  1. $15.67
  2. $360.67
  3. $188.03
  4. $$359.59
  5. $14.59

Answer(s): A

Explanation:

The question only asks for the earned interest, not the total amount in the account. On the BAII Plus, press 345 x 0.0545 x 10 divide 12 = to see the answer. On the HP12C, press 345 ENTER 0.0545 x 10 x 12 divide to see the answer.



If two events A and B are mutually exclusive, what does the special rule of addition state?

  1. P(A and/or B) = P(A) +P(B)
  2. P(A and B) = P(A) + P(B)
  3. None of these answers
  4. P(A or B) = P(A) - P(B)
  5. P(A or B) = P(A) + P(B)

Answer(s): E

Explanation:

The key word is that these events are mutually exclusive. So P(A or B) = P(A) + P(B). The probabilities stand alone.






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