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Free CFA-Level-I Exam Braindumps (page: 164)

Page 163 of 991
PDF with 3963 Questions

What monthly payment, beginning next month, would repay a $25,000 car loan over 60 months, assuming your loan has an interest rate of 6.9% per year, compounded monthly?

  1. $1,757.07
  2. $493.85
  3. $843.95
  4. $1,789.14
  5. $650.58

Answer(s): B

Explanation:

On the BAII Plus, press 60 N, 6.9 divide 12 = I/Y, 25000 PV, 0 FV, CPT PMT. On the HP12C, press 60 n, 6.9 ENTER 12 divide i, 25000 PV, 0 FV, PMT. Note that the answer will be displayed as a negative number. Make sure the BAII Plus has the value of P/Y set to 1.



A new extended life light bulb has an average service life of 750 hours, with a standard deviation of 50 hours. If the service life of these light bulbs approximates a normal distribution, about what percent of the distribution will be between 600 hours and 900 hours?

  1. 95%
  2. 68%
  3. None of these answers
  4. 34%
  5. 99.7%

Answer(s): E

Explanation:

z = (X-u)/sigma. z1 = (600 - 750)/50 = -3.0. z2 = (900 - 750)/50 = 3.0. from the z tables, z = 3 is 0.4987.
Therefore the area between z1 and z2 is 0.4987*2 = 0.9974



An employee had the following percentage increases in salary over the last 5 years: 4%, 7%, 10%, 15%, 12%.
The geometric mean of his salary increases equals ________.

  1. 9.60%
  2. 9.22%
  3. 9.53%
  4. 8.72%

Answer(s): D

Explanation:

The straight geometric mean of the increases is (0.04*0.07*0.1*0.15*0.12)^(1/5) = 8.72%. Note that this is different from geometric rate of change, which in this case would be (1.04*1.07*1.1*1.15*1.12)^(1/5) - 1 = 9.53%. You should be very careful about this point since the Mason & Lind textbook is quite ambiguous on this point. Finally, note that the geometric mean may not be defined if some of the salary changes are negative.



Suppose that stocks A, B, C, and D are independent with respect to their price movement, and have probabilities of increasing of 0.25, 0.50, 0.40, and 0.30. What is the probability that stocks A and C will increase in price? In other words, find P(AC).

  1. 3.5%.
  2. 11%.
  3. 10%.
  4. 1.0%.

Answer(s): C

Explanation:

If events are independent, then the joint probability of them occurring together is just the product of the individual probabilities. So P(AC) = 0.25 * 0.40 = 10%. Note that we did not state whether the other stocks, B and D, increased in value or not.






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