You are given a risk-free rate of 3% per year, a portfolio return of -11% per year, and a standard deviation of portfolio return is 20% per year. What is the Sharpe measure of risk-adjusted performance?
Answer(s): A
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 (-11% - 3%) / 20% = -14/20 = -0.7.
If the underlying theory suggests that the value of an estimated variable is less than a particular number, it is appropriate to use:
Answer(s): B
When an observation is made and we see a value less than the threshold suggested by the theory, we would like to known the probability of getting the smaller value due simply to chance rather than to the event being driven by the theory. For this, we need to known the left-tail probabilities under the null hypothesis.
If you owe 3 debts ($100 due 6 months from now, $500 due 8 months from now, and $1,000 due 11 months from now), what single payment can you make today to settle them, if interest is assessed at 10% per year, compounded monthly?
Find the answer to this question by solving 3 compound interest problems. On the BAII Plus, press 6 N, 10 divide 12 = I/Y, 0 PMT, 100 FV, CPT PV, which yields $95.14. Then press STO 1. Then press 8 N, 500 FV, CPT PV, which yields $467.88. Then press + RCL 1 = STO 1. Then press 11 N, 1000 FV, CPT PV, which yields $912.76. Press + RCL 1 = to see the answer. On the HP12C, press 6 n, 10 ENTER 12 divide i, 0 PMT, 100 FV, PV. Then press STO 1. Then press 8 n, 500 FV, PV. Then press RCL 1 + STO 1. Then press 11 n, 1000 FV, PV. Press RCL 1 + to see the answer. Make sure the BAII Plus has the P/Y value set to 1.
What is the level of significance?
Answer(s): E
The level of significance and the type I error are both the probability of rejecting the null hypothesis when it is actually true.
What can we say if the coefficient of determination is 0.94?
We cannot tell anything about the direction of the relationship from the coefficient of determination or r- squared.
Post your Comments and Discuss Test Prep CFA-Level-I exam prep with other Community members:
Our website is free, but we have to fight against AI bots and content theft. We're sorry for the inconvenience caused by these security measures. You can access the rest of the CFA-Level-I content, but please register or login to continue.