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Free CFA-Level-I Exam Braindumps (page: 185)

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PDF with 3963 Questions

John buys a house that costs $175,000 and agrees to pay for it with a 15 year mortgage at 7% per year, compounded monthly. What is John's monthly payment on the loan?

  1. $972.22
  2. $552.12
  3. $12,218.50
  4. $12,250.06
  5. $1,572.95

Answer(s): E

Explanation:

On the BAII Plus, press 180 N, 7 divide 12 = I/Y, 175000 PV, 0 FV, CPT PMT. On the HP12C, press 180 n, 7 ENTER 12 divide i, 175000 PV, 0 FV, PMT. Make sure the BAII Plus has the P/Y value set to 1.



Each salesperson in a large department store chain is rated either below average, average, or above average with respect to sales ability. Each salesperson is also rated with respect to his or her potential for advancement either fair, good, or excellent. These traits are the 500 salespeople were cross classified into the following table.

Sales Ability Potential for Advancement
Fair Good Excellent
Below Average 161222
Average 456045
Above Average 9372135

What is the probability that a salesperson selected at random will have average sales ability and good potential for advancement?

  1. 0.09
  2. None of these answers
  3. 0.12
  4. 0.525
  5. 0.30

Answer(s): C

Explanation:

Prob. of selecting a person with average sales ability: (45 + 60 + 45)/500 = 3/10. Prob. of selecting good potential amongst those with average sales ability: 60/150. Therefore: 3/10*6/15 = 0.12.



You are given a risk-free rate of 3% per year, a portfolio return of 8% per year, and a standard deviation of portfolio return of 22% per year. What is the Sharpe measure of risk-adjusted performance?

  1. 0.250.
  2. 0.234.
  3. 0.227.
  4. 0.222.

Answer(s): C

Explanation:

The Sharpe measure of risk-adjusted performance is equal to (rbar_p - rbar_f)/sigma_p, where rbar_p is the mean portfolio return, rbar_f is the mean risk-free return, and sigma_p is the standard deviation of portfolio return. In our case, we have (8% - 3%) / 22% = 5/22 = 0.227.



A random variable, X, has a mean of 10 and a standard deviation of 15. Another random variable, Y, is defined by Y = 2X + 3. Then, which of the following is/are true? I. The mean of Y is 33. II. The variance of Y is 30. III. The standard deviation of Y is 33. IV. X and Y are perfectly correlated.

  1. II and IV
  2. I, II and IV
  3. II only
  4. III and IV
  5. IV only
  6. III only
  7. I only

Answer(s): E

Explanation:

The mean of Y is 2*10 + 3 = 23. The standard deviation of Y is 2*15 = 30. Its variance is then equal to 30^2 = 900. Finally, since Y is a linear multiple of X, X and Y are perfectly correlated (positively, in this case)






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