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Free CFA-Level-I Exam Braindumps (page: 219)

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PDF with 3963 Questions

The quarterly compounded rate is 8% quoted on an annualized basis. The equivalent annually compounded rate is:

  1. 8.00%
  2. 8.24%
  3. 8.16%
  4. 7.95%

Answer(s): B

Explanation:

To solve such problems, think about investing a dollar for a year. The final amount should be the same under both the quotations. Under annually compounded rate, r, $1 grows to 1+r in 1 year. Under quarterly compounding, it grows to (1+0.08/4)^4 = 1.0824. Since these two should be equal, we get 1+r = 1.0824, giving r = 8.24%. Note that the annually compounded rate must be larger than the quarterly rate, ruling out (d) automatically.



The least squared regression minimizes the:

  1. adjusted R-square.
  2. absolute value of the distance between the observed points and the regression line.
  3. explained variance.
  4. the square of the distance between the observed points and the regression line.

Answer(s): D

Explanation:

The least squared regression minimizes the square of the distance between the observed points and the regression line.



You are faced with a counting problem in which the number of outcomes is infinite. The counting method you should use is:

  1. The multinomial formula.
  2. The multiplication rule.
  3. The binomial formula.
  4. None of these answers is correct.

Answer(s): D

Explanation:

If the number of outcomes is infinite, a counting method should not be used at all, and the question cannot be answered with counting methods. None of the above is the correct response.



A joint probability is expressed symbolically as:

  1. P(A | B).
  2. P(B | AB).
  3. P(AB).
  4. P(A or B).

Answer(s): C

Explanation:

A joint probability takes the form of P(AB), the probability that a an event A and an event B will both happen.






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