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Test Prep CFA-Level-I Exam
CFA® Level I Chartered Financial Analyst (Page 147 )

Updated On: 12-Feb-2026
Page 147 of 793
PDF with 3963 Questions

The probability that SUV sales will decline by over 10% by June 1 if gasoline prices increase by 50% by May 1, is called:

  1. a lagged likelihood.
  2. an unconditional probability.
  3. a joint probability.
  4. a conditional probability.

Answer(s): D

Explanation:

A conditional probability takes the form of P(A|B), the probability that a an event (A) will happen, given the occurrence of another event, B. It is conditional because it is conditioned on another event, B.



You are examining a group of 6 stocks within an industry. The industry average profit margin is expected to be 30%. For these stocks, the average profit margins have been 50%, 25%, 15%, 5%, 45%, and 30%. What is the mean absolute deviation of profit margins from the industry average?

  1. 13.3%.
  2. 13.7%.
  3. 13.5%.
  4. 13.0%.

Answer(s): A

Explanation:

The mean absolute deviation = the sum of (as i goes from 1 to n) of the absolute value of (X_i - Xbar), divided by n. Here, we have [|50% - 30%| + |25% - 30%| + |15% - 30%| + |5% - 30%| + |45% - 30%| + |30% - 30%|]/6 = 13.33%



A large group of inductees was given a mechanical aptitude and a finger dexterity test. The mean score on the mechanical aptitude test was 200, with a standard deviation of 10. The mean and standard deviation for the finger dexterity test were 30 and 6 respectively. What is the relative dispersion in the two groups?

  1. Mechanical 5 percent, finger 20 percent
  2. Mechanical 500 percent, finger 200 percent
  3. Mechanical 20 percent, finger 10 percent
  4. Mechanical 50 percent, finger 200 percent
  5. None of these answers

Answer(s): A

Explanation:

The respective CVs are found from (s*100)/mean. Mechanical: 10*100/200 = 5% and Finger: 6*100/30 = 20%.



A sample of the personnel files of eight male employees revealed that during a six month period, they lost the following number of days due to illness: 2, 0, 6, 3, 10, 4, 1 and 2. What is the mean deviation (in days)?

  1. 2 3/8
  2. None of these answers
  3. 1
  4. 0
  5. 3 1/8

Answer(s): A

Explanation:

The mean is 3.5. The mean deviation is the absolute values of the deviation from the mean. (1.5 + 3.5 + 2.5 + 0.5 + 6.5 + 0.5 + 2.5 + 1.5)/8 = 19/8 = 2.375



The slope coefficient in a regression measures:

  1. The significance of the regression line.
  2. The percentage change in the dependent variable caused by a 1% change in the independent variable.
  3. The rate at which the dependent variable changes with respect to the independent variable.
  4. The change in the independent variable caused by a unit change in the dependent variable.

Answer(s): C

Explanation:

In a univariate regression, the slope coefficient gives the change in the dependent variable caused by a unit change in the independent variable. It thus measures the rate at which the dependent variable changes with respect to the independent variable.






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