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Free Test Prep CFA-Level-I Exam Braindumps (page: 163)

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PDF with 3963 Questions

The weights (in grams) of the contents of several small bottles are 4, 2, 5, 4, 5, 2 and 6. What is the sample variance?

  1. 6.92
  2. None of these answers
  3. 1.96
  4. 2.33
  5. 4.80

Answer(s): D

Explanation:

Sample variance is given by: (Sum of squared deviation from the mean)/(n-1). Mean is 4. Sample variance = 14/6 = 2.33
xx-mean(x-mean)^2
2-24
2-24



What semiannual deposits are needed to accumulate $7,000 in 5 years if the account pays 6% per year, compounded semiannually, assuming that the first deposit is made in 6 months and also assuming that the account already has $1,750 in it today?

  1. $405.46
  2. $377.44
  3. $436.15
  4. $459.52
  5. $578.01

Answer(s): A

Explanation:

On the BAII Plus, press 10 N, 6 divide 2 = I/Y, 1750 PV, 7000 +/- FV, CPT PMT. On the HP12C, press 10 n, 6 ENTER 2 divide i, 1750 PV, 7000 CHS FV, PMT. Note that the answer this time is a positive number. This means that the $405.46 is a deposit in addition to the $1,750 original deposit. The $7,000 is entered as a negative number, because the $1,750 and the $405.46 are deposits and the $7,000 is a withdrawal. Make sure the BAII Plus has the value of P/Y set to 1.



A hypothesis test is conducted at the .05 level of significance to test whether or not the population correlation is zero. If the sample consists of 25 observations and the correlation coefficient is 0.60, then what is the computed value of the test statistic?

  1. 1.96
  2. 3.60
  3. 2.94
  4. 2.07
  5. None of these answers

Answer(s): B

Explanation:

Using the t statistics, t = r* [sq. root of ((n-2)/(1-r_squared))]. t = r*[n-2/(1-r^2)]^0.5. So t = 0.6*[23/0.64]^0.5 = 3.60.



You can enter a derivative contract that will pay $100 at the end of a year if the price of oil exceeds $25 per barrel, or $50 if it is equal to $25 or lower. The probability that oil will exceed $25 by the end of one year is 60%. If interest is 4% for one year, what should the fair price of the contract be?

  1. $80.00
  2. $76.92
  3. $60.00
  4. $83.20

Answer(s): B

Explanation:

The expected payoff for the contract is $100 * 0.60 + $50 * 0.40 = $80. At 4% interest, the present value of the expected payoff is $80/1.04 = $76.92. A deviation from this value would represent an example of the investment consequences of inconsistent probabilities.






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