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Free CFA-Level-I Exam Braindumps (page: 169)

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Assume you buy a computer for $1,450 and agree to pay for it with 36 monthly payments of $55, beginning next month. What is the size of the final payment needed at month 36 to completely pay off the computer, if the interest rate you are being charged is 16% per year, compounded monthly?

  1. $0.00
  2. $184.31
  3. $217.88
  4. $187.14
  5. $174.39

Answer(s): B

Explanation:

This question describes a situation often called a balloon payment. On the BAII Plus, press 36 N, 16 divide 12 = I/Y, 1450 PV, 55 +/- PMT, CPT FV. On the HP12C, press 36 n, 16 ENTER 12 divide i, 1450 PV, 55 CHS PMT, FV. The answer is shown as a negative number. Make sure the BAII Plus has the value of P/Y set to 1.



A positively skewed distribution:

  1. has fat tails.
  2. is skewed to the right.
  3. has a large variance.
  4. is skewed to the left.

Answer(s): B

Explanation:

In a positively skewed distribution, large values are more common than correspondingly small values. This skews the distribution to the right, moving the mean to the right of the median.



Which of the following is/are true ?

  1. Type I error is the event in which we reject the null when it is false.
    II. Type II error occurs when we accept the null when it is false III. Type I error occurs if we accept the alternative when it is false.
    IV. Type II error is the event where we reject the alternative when it is true.
  2. II, III & IV
  3. II only
  4. IV only
  5. I only
  6. II & IV
  7. I, II & IV
  8. I, II & III
  9. III only

Answer(s): A

Explanation:

Type I error is the event in which we reject the null when it is true. This is the same as accepting the alternative when it is false. Type II error is the event in which we fail to reject the null when it is false. This is the same as rejecting the alternative when it is true.



If you owe a debt of $1,000 today and also owe $2,000 in 24 months, what single payment could you make 15 months from today that would pay off both of these debts, if interest is assessed at 8% per year, compounded monthly?

  1. $2,988.71
  2. $2,751.62
  3. $3,041.93
  4. $3,000.00
  5. $1,980.86

Answer(s): A

Explanation:

To solve this question, set the problem up as the sum of two compound interest calculations. Move the $1,000 from today over to month 15 and add it to the $2,000 brought back from month 24 to month 15. On the BAII Plus, press 15 N, 8 divide 12 = I/Y, 1000 PV, 0 PMT, CPT FV which yields $1,104.80. Then press STO 1. Then press 9 N, 2000 FV, CPT PV, which yields $1,883.91. Finally press + RCL 1 = to see the answer. On the HP12C, press 15 n, 8 ENTER 12 divide i, 1000 PV, 0 PMT, FV. Then press STO 1. Then press 9 n, 2000 FV, PV. Finally press RCL 1 + to see the answer. Make sure the BAII Plus has the value of P/Y set to 1.






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