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Free CFA-Level-I Exam Braindumps (page: 135)

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PDF with 3963 Questions

If you owe 3 debts ($800 due 3 months from now, $900 due 7 months from now, and $1,200 due 11 months from now), what single payment can you make today to settle them, if interest is assessed at 10% per year, compounded monthly?

  1. $2,387.29
  2. $2,600.00
  3. $3,552.39
  4. $2,724.84
  5. $2,504.88

Answer(s): D

Explanation:

Find the answer to this question by solving 3 compound interest problems. On the BAII Plus, press 3 N, 10 divide 12 = I/Y, 0 PMT, 800 FV, CPT PV which yields $849.21. Then press STO 1. Then press 7 N, 900 FV, CPT PV, which yields $780.33. Then press + RCL 1 = STO 1. Then press 11 N, 1200 FV, CPT PV, which yields $1,095.31. Press + RCL 1 = to see the answer. On the HP12C, press 3 n, 10 ENTER 12 divide i, 0 PMT, 800 FV, PV. Then press STO 1. Then press 7 n, 900 FV, PV. Then press RCL 1 + STO 1. Then press 11 n, 1200 FV, PV. Press RCL 1 + to see the answer. Make sure the BAII Plus has the P/Y value set to 1.



If an investor who has a required rate of return of 7% per year pays $1,000 for a five-year ordinary annuity, the annuity pays ________ per year.

  1. $244
  2. $256
  3. $271
  4. $263

Answer(s): A

Explanation:

If the annuity pays C per year, we have 1,000 = C/0.07*(1-1/(1.07^5)) => C = 1,000*0.07/0.287 = 244.



For a standard normal distribution what is the probability that z is greater than 1.75?

  1. 0.4599
  2. 0.0401
  3. None of these answers
  4. 0.9599
  5. 0.0459

Answer(s): B

Explanation:

The area under the curve for z = 1.75 is 0.4599. Therefore, 0.4599*2 = 0.9198. We want z >1.75. So we want (1 - 0.9198)/2 = 0.0401.



An automatic machine inserts mixed vegetables into a plastic bag. Past experience revealed that some packages were underweight and some were overweight, but most of them had satisfactory weight.

Weight % of Total
Underweight 2.5
Satisfactory 90.0
Overweight 7.5

What is the probability of selecting and finding that all three of them are overweight?

  1. 0.0004218
  2. 0.0000156
  3. 0.075
  4. 0.0000001
  5. None of these answers

Answer(s): A

Explanation:

P(all three overweight)=0.075*0.075*0.075 = 0.0004218.






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