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Test Prep CFA-Level-I Exam
CFA® Level I Chartered Financial Analyst (Page 151 )

Updated On: 12-Feb-2026
Page 151 of 793
PDF with 3963 Questions

A survey of passengers on domestic flights revealed these miles:

Miles Flown Number of Passengers
100 - 49916
500 - 89941
900 - 129981
1300 - 169911
1700 - 20999
2100 - 24996

What is the range (in miles)?

  1. 1,100
  2. 1,999
  3. 2,499
  4. 2,399
  5. None of these answers

Answer(s): D

Explanation:

2499 - 100 = 2399



The coefficient of variation is useful when:

  1. The frequency distribution contains open-ended classes or overlapping classes.
    II. The data sets being compared contain data in different measurement units.
    III. The data sets being compared contain data with similar measurement units.
  2. I only
  3. I & II
  4. III only
  5. II only
  6. I & III

Answer(s): D

Explanation:

The coefficient of variation is useful when the means of the data sets are widely different or when the observations are in different measurement units.



If you buy an item for $475 and agree to pay for it with 24 monthly payments of $22.50, beginning next month, what annual interest rate, compounded monthly, are you being charged?

  1. 17.53%
  2. 14.15%
  3. 12.63%
  4. 12.92%
  5. 1.05%

Answer(s): C

Explanation:

The interest rate returned by the calculator will be the periodic interest rate. It must be multiplied by the number of periods per year to have the correct answer. On the BAII Plus, press 24 N, 475 PV, 22.50 +/- PMT, 0 FV, CPT I/Y. Then press x 12 = to see the answer. On the HP12C, press 24 n, 475 PV, 22.50 CHS PMT, 0 FV, i.
Then press 12 x to see the answer. Make sure the BAII Plus has the P/Y value set to 1.



The semiannually compounded rate is 6% quoted on an annualized basis. The equivalent quarterly compounded rate is:

  1. 6.12%
  2. 5.91%
  3. 5.96%
  4. 5.76%

Answer(s): C

Explanation:

To solve such problems, think about investing a dollar for 1 year. The final amount should be the same under both the quotations. Under quarterly compounded rate, r, $1 grows to (1+r/4)^4 in 1 year. Under semiannual compounding, it grows to (1+0.06/2)^2 = 1.0609. Since these two should be equal, we get (1+r/4)^4 = 1.0609, giving r = 5.96%. Note that the quarterly compounded rate must be smaller than the semiannually compounded rate, ruling out 6.12 automatically.



A mortgage holding company has found that 1% of its mortgage holders default on their mortgage and lose the property. Furthermore, 90% of those who default are late on at least two monthly payments over the life of their mortgage as compared to 45% of those who do not default. What is the probability that a mortgagee with two or more late monthly payments will default on the mortgage and lose the property?

  1. None of these answers
  2. 0.019
  3. 0.009
  4. 0.020
  5. 0.018

Answer(s): D

Explanation:

We have P(def) = 0.01. P(not def) = 0.99. P(two late payments/def) = 0.90. P(two late payments/not def) = 0.45. Using Bayes formula: p(def/two late payments) = (0.01*0.9)/(0.01*0.9 + 0.99*0.45) = 0.0198 = 0.020.






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