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Free CFA-Level-I Exam Braindumps (page: 205)

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PDF with 3963 Questions

The first card selected from a standard 52 card deck was a king. If it is returned to the deck, what is the probability that a king will be drawn on the second selection?

  1. 1/4 or 0.25
  2. 1/13, or 0.077
  3. None of these answers
  4. 1/3 or 0.33
  5. 12/13, or 0.923

Answer(s): B

Explanation:

There are still 4 kings out of 52 in the pack. So 4/52 = 1/13. The first selection does not affect the second selection.



If your discount rate is 8% per year, calculate the present value of the following cash flows:

End of year 1: $2,200
End of year 2: $3,000
End of year 3: $7,300

  1. $11,239
  2. $14,155
  3. $9,876
  4. $10,404

Answer(s): D

Explanation:

The present value = 2,200/1.08 + 3,000/(1.08^2) + 7,300/(1.08^3) = 10,404



A firm's treasurer estimates that the firm will need about $15 million in 3 years' time to allow the acquisition of a growing software firm. If the firm can invest in the capital market at the risk-free rate of7% per year and wants to make sure it has the necessary funds available in 3 years, how much does it need to invest today?

  1. $12.244 million
  2. $11.964 million
  3. $12.113 million
  4. $13.642 million

Answer(s): A

Explanation:

The amount needed today equals 15/(1.07^3) = $12.244 million



A tire manufacturer advertises that "one-half of our new all-season radial tire last at least 50,000 miles. An immediate adjustment will be made on any tire that does not last 50,000 miles." You purchased four of these tires. What is the probability that all four tires will wear out before traveling 50,000 miles?

  1. None of these answers
  2. 1/10, or 0.10
  3. 1/4, or 0.25
  4. 1/16, or 0.0625
  5. 1/64, or 0.0156

Answer(s): D

Explanation:

1/2*1/2*1/2*1/2 = 1/16 where 1/2 is the probability that a tire will wear our before 50,000 miles.






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