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Test Prep CFA-Level-I Exam
CFA® Level I Chartered Financial Analyst (Page 165 )

Updated On: 11-Jan-2026
Page 158 of 793
PDF with 3963 Questions

An investor holds a long position in a futures contract on the S&P 500 Index. The futures contract has a term of three months, requires 10% margin, and has a futures price of 1,574. The investor posted $37,500 into the margin account at contract initiation. After the contract initiation, the futures price on the index experienced infrequent but dramatic drops. Two days ago, the investor received a margin call and was required to post an additional $17,500 to the margin account. Which of the following is most likely the maintenance margin on the contract?

  1. $17,500.
  2. $18,750.
  3. $22,500.

Answer(s): C



Frank Holmes, CFA, is reviewing Martha Inc, a distributor. Holmes is interested in the company's European- style call option, which has a value of $5.90. Currently, Martha's stock is trading at $33 per share and pays no dividend. The exercise price of both the call and put options is $30, with 80 days to expiration. The current risk- free rate is 5.50%. Martha's put option sells for $2.75. Calculate the synthetic call option value.

  1. $3.35
  2. $5.75
  3. $6.10

Answer(s): C



Kim Lee is valuing a closely held private shoe retailing company. She compares the company to other shoe retailing competitors that are publicly traded and are highly liquid. Relative to the private company, the shares of the publicly traded competitors most likely include a:

  1. marketability discount.
  2. minority interest discount.
  3. control premium.

Answer(s): B



Nina Foch, CFA, is considering investing in an exchange traded fund (ETF). However, she is unsure how the ETF compares to open-end and closed-end funds. Which of the following statements comparing ETFs with open-end and closed-end funds is least likely to be true?

  1. ETF shares can be sold short, while open-end fund shares cannot be shorted.
  2. The legal structure of an ETF is similar to a closed-end fund.
  3. ETF shares trade like closed-end fund shares.

Answer(s): B



Ann Fowler, CFA, has a client that wants to invest in hedge funds. Fowler recommends the client invest in a Fund of Funds (FOF), which will invest in a variety of hedge funds. Fowler makes the following statements:
Statement 1:Investing in several different types of hedge funds will reduce risk compared to investing in a single fund.
Statement 2:An important part of the selection process is due diligence to resolve any transparency issues.
Which statements are correct?

  1. Only statement 1 is correct.
  2. Only statement 2 is correct.
  3. Both statements 1 and 2 are correct.

Answer(s): A



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