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Test Prep CFA-Level-I Exam
CFA® Level I Chartered Financial Analyst (Page 148 )

Updated On: 12-Feb-2026
Page 148 of 793
PDF with 3963 Questions

Which of the following is / are true?

  1. A sample is a subset of the population.
    II. The population mean is used to estimate the sample mean.
    III. The population mean equals the sum of all the available observations divided by the number of observations.
    IV. A sample has a unique mean.
  2. I, II, III & IV
  3. I, III & IV
  4. IV only
  5. I only
  6. I & III
  7. I & IV
  8. II only
  9. III only

Answer(s): F

Explanation:

The sample mean is used to estimate the population mean, not the other way around. The sum of all the available observations divided by the number of observations is the sample mean, not the population mean (unless the observation set equals the entire population, which is almost never the case).



The R-square in a univariate regression measures:

  1. the significance of the regression.
  2. the variance of the error term.
  3. the amount of variance in the dependent variable caused by the variance in the independent variable.
  4. the correlation between the dependent and the independent variables.

Answer(s): C

Explanation:

It should be noted that in a univariate regression, the square root of R-square equals the correlation coefficient.
The significance of a univariate or a multivariate regression is measured by the F-statistic.



John buys a house that costs $175,000 and agrees to pay for it with a 15 year mortgage at 7% per year, compounded monthly. What is John's monthly payment on the loan?

  1. $972.22
  2. $552.12
  3. $12,218.50
  4. $12,250.06
  5. $1,572.95

Answer(s): E

Explanation:

On the BAII Plus, press 180 N, 7 divide 12 = I/Y, 175000 PV, 0 FV, CPT PMT. On the HP12C, press 180 n, 7 ENTER 12 divide i, 175000 PV, 0 FV, PMT. Make sure the BAII Plus has the P/Y value set to 1.



Each salesperson in a large department store chain is rated either below average, average, or above average with respect to sales ability. Each salesperson is also rated with respect to his or her potential for advancement either fair, good, or excellent. These traits are the 500 salespeople were cross classified into the following table.

Sales Ability Potential for Advancement
Fair Good Excellent
Below Average 161222
Average 456045
Above Average 9372135

What is the probability that a salesperson selected at random will have average sales ability and good potential for advancement?

  1. 0.09
  2. None of these answers
  3. 0.12
  4. 0.525
  5. 0.30

Answer(s): C

Explanation:

Prob. of selecting a person with average sales ability: (45 + 60 + 45)/500 = 3/10. Prob. of selecting good potential amongst those with average sales ability: 60/150. Therefore: 3/10*6/15 = 0.12.



You are given a risk-free rate of 3% per year, a portfolio return of 8% per year, and a standard deviation of portfolio return of 22% per year. What is the Sharpe measure of risk-adjusted performance?

  1. 0.250.
  2. 0.234.
  3. 0.227.
  4. 0.222.

Answer(s): C

Explanation:

The Sharpe measure of risk-adjusted performance is equal to (rbar_p - rbar_f)/sigma_p, where rbar_p is the mean portfolio return, rbar_f is the mean risk-free return, and sigma_p is the standard deviation of portfolio return. In our case, we have (8% - 3%) / 22% = 5/22 = 0.227.






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