Free CFA-Level-I Exam Braindumps (page: 145)

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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.



Assume you deposit $300 now into an account that had nothing in it previously, make an additional deposit of $400 in 1 year, and a final deposit of $200 in 4 years. How much is in your account in 6 years, if the account earns interest at 7% per year, compounded annually?

  1. $418.29
  2. $1,431.88
  3. $1,120.04
  4. $925.51
  5. $1,240.22

Answer(s): E

Explanation:

Solve this question by working several compound interest problems, moving each dollar amount over to year 5.
On the BAII Plus, press 6 N, 7 I/Y, 300 PV, 0 PMT, CPT FV, which yields $450.22. Then press STO 1, 5 N, 400 PV, CPT FV, which yields $561.02. Then press + RCL 1 = STO 1. Then press 2 N, 200 PV, CPT FV, which yields $228.98. Then press + RCL 1 = to see the answer. On the HP12C, press 6 n, 7 i, 300 PV, 0 PMT, FV.
Then press STO 1, 5 n, 400 PV, FV. Then press RCL 1 + STO 1. Then press 2 n, 200 PV, FV. Then press RCL 1 + to see the answer. Note that the answer will be displayed as a negative number. Also note that the value of "N" for each dollar amount is based on the distance from year 6.






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