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Free CFA-Level-I Exam Braindumps (page: 194)

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PDF with 3963 Questions

What is the Net Present Value of this series of annual cash flows using an interest rate of 15% per year: Year
0: <$10,000>, Year 1: $5,000, Year 2: $5,000, Year 3: $7,500? (Note that the <> are used to indicate a negative number).

  1. $2,981.21
  2. $5,077.49
  3. $3,059.92
  4. $3,224.98
  5. $3,104.37

Answer(s): C

Explanation:

On the BAII Plus, press CF 2nd CLRWork 10000 +/- ENTER DownArrow 5000 ENTER DownArrow DownArrow 5000 ENTER DownArrow DownArrow 7500 ENTER DownArrow DownArrow 2nd Quit. Then press NPV 15 ENTER DownArrow CPT. On the HP12C, press these keys: 10000 CHS BlueShift CFo 5000 BlueShift CFj 5000 BlueShift CFj 7500 BlueShift CFj Then press 15 i, YellowShift NPV. The "DownArrow" represents the downward-pointing arrow on the top row of the BAII Plus keyboard.



The following are the weekly amounts of welfare payments made by the federal government to a sample of six families: $139, $136, $130, $136, $147 and $136. What is the range?

  1. $52
  2. None of these answers
  3. $14
  4. $17
  5. $0

Answer(s): D

Explanation:

Range = 147 - 130 = 17



A board of directors consists of eight men and four women. A four member search committee is to be chosen at random to recommend a new company president. What is the probability that all four members of the search committee will be women?

  1. None of these answers
  2. 1/16 or 0.0625
  3. 1/495 or 0.002
  4. 1/8 or 0.125
  5. 1/120 or 0.00083

Answer(s): C

Explanation:

4/12*3/11*2/10*1/9 = 1/495



You are evaluating 5 portfolio managers (A, B, C, D, and E) whose Sharpe ratios are 0.25, 0.41, 0.92, 0.78, and 0.51, respectively. Which manager would most risk-averse investors prefer?

  1. C.
  2. A.
  3. E.
  4. None of these answers is correct.

Answer(s): A

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. Thus, the manager with the highest Sharpe ratio is generating the largest return in excess of the risk free rate, per unit of risk assumed. This is manager C, with a Sharpe ratio of 0.92.






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