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Free CFA-Level-I Exam Braindumps (page: 244)

Page 243 of 991
PDF with 3963 Questions

What annual interest rate, compounded annually, will cause a deposit of $850 to become $1,475 in 10 years?

  1. 5.67%
  2. 7.60%
  3. 7.88%
  4. 4.65%
  5. 5.50%

Answer(s): A

Explanation:

On the BAII Plus, press 10 N, 850 PV, 1475 +/- FV, 0 PMT, CPT I/Y. On the HP12C, press 10 n, 850 PV, 1475 CHS FV, 0 PMT, i. Make sure that the BAII Plus has the P/Y value set to 1.



A researcher has decided to create a frequency distribution using the following classes:
30-45, 45-60, 60-75, 76 & over.
The selection of this set involves which of the following?

  1. non-overlapping classes.
    II. open-ended classes.
    III. equal class intervals
  2. III only
  3. I only
  4. I & III only
  5. II & III only
  6. II only

Answer(s): E

Explanation:

Note that "76 & over" is an open-ended class. Also, the classes are overlapping (for e.g., the classes "30-45" and "45-60" have the point "45" in common).



The mean of a normally distributed group of weekly incomes of a large group of executive is $1,000 and the standard deviation is $100. What is the z-score for an income of $1,100?

  1. -0.90
  2. 2.00
  3. None of these answers
  4. 1.683
  5. 1.00

Answer(s): E

Explanation:

z = (x-u)/sigma = 1100 - 1000/100 = 1.



A mining firm has purchased a derivative security to partially hedge itself against the losses caused by fluctuations in a base metal price. The security pays a million dollars if the metal price falls below $2 per pound. Otherwise, it pays $100,000. If the expected rate of return on the security is 21% and the security costs $400,000, what is the probability that the metal price will remain above $2 per pound?

  1. 42.66%
  2. 61.1%
  3. 57.33%
  4. 46.87%

Answer(s): C

Explanation:

If p is the probability of the metal price remaining above $2/pound, then the expected total return on the derivative security is (p * 100,000 + (1-p)*1,000,000)/400,000 = (10-9p)/4. Since the expected return is given to be 21%, we get (10-9p)/4 = 1.21. Therefore, p = 57.33%.






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