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Free CFA-Level-I Exam Braindumps (page: 168)

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PDF with 3963 Questions

Consider the following three investments:

Future valueyearsinterest rate
1.$50,000 89% per year
2.$20,000 612% per year
3.$35,000 37% per year

The present values of the 3 investments are:

  1. $28,193, $12,145, $31,422
  2. $99,628, $39,476, $42,877
  3. $25,093, $10,133, $28,570
  4. $24,192, $11,876, $27,864

Answer(s): C

Explanation:

Future value = Present value*(1+r)^N for annual compounding. Therefore, Future valueyearsratePresent Value
1.50,000 89% 50,000/(1.09)^8 = 25,093
2.20,000 612% 20,000/(1.12)^6 = 10,133
3.35,000 37% 35,000/(1.07)^3 = 28,570
Note that the future value must always be greater than the present value.



What is the relationship among the mean, median and mode in a symmetric distribution?

  1. Mean is always the smallest value
  2. Mean is always the largest value
  3. None of these answers
  4. Mode is the largest value
  5. All equal

Answer(s): E

Explanation:

Since the distribution is symmetric, all three are equal.



If you deposit $5,000 today and make an additional deposit of $3,000 in 3 years, how much is in the account 6 years from today, if the money earns interest at 8% per year, compounded annually?

  1. $10,077.70
  2. $13,775.16
  3. $17,335.61
  4. $11,713.51
  5. $12,695.00

Answer(s): D

Explanation:

This question requires the solution of two problems. Find the FV of the original $5,000 deposit which equals $7,934.37, then find the FV of the $3,000 deposit 3 years from now which equals $3779.14, and add the two together. On the BAII Plus, press 6 N, 8 I/Y, 5000 PV, 0 PMT, CPT FV. Then press STO 1. Then press 3 N, 3000 PV, CPT FV. Then press + RCL 1 = for the answer. On the HP12C, press 6 n, 8 i, 5000 PV, 0 PMT, FV.
Then press STO 1. Then press 3 n, 3000 PV, FV. Then press RCL 1 + for the answer.



A study by the National Park Service revealed that 50% of the vacationers going to the Rocky Mountain region visit Yellowstone Park, 40% visit the Tetons and 35% visit both. What is the probability that a vacationer will visit at least one of these magnificent attractions?

  1. None of these answers
  2. 0.55
  3. 0.95
  4. 0.05
  5. 0.35

Answer(s): B

Explanation:

0.5 + 0.4 - 0.35 = 0.55






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