CFA® Level I practice questions

An investment manager's client offers a bonus for next year's outperformance. The employer approves verbally, and the client emails the proposed terms. Under the Standards, what must the manager do before accepting?

A portfolio manager faces a dilemma that no rule she remembers covers: a long-standing client asks her to delay a trade so the client's relative can buy first. Using a structured decision-making framework, her first step should be to:

An investment pays $2,000, $2,500 and $3,000 at the end of years 1, 2 and 3, respectively. At a 6% effective annual discount rate, its present value is closest to:

A portfolio rises from 100 to 110, immediately receives a contribution of 90, and then ends the second equal-length period at 180. Its cumulative time-weighted return is:

Many small sellers offer differentiated products and entry barriers are low. The market is best described as:

At the profit-maximizing output, a price-taking firm earns revenue of 72, incurs variable cost of 54 and fixed cost of 30. In the short run it should most likely:

Revenue is 960 and cost of sales is 624. Gross profit margin is:

An acquirer pays 500 cash for 100% of a business. Identifiable assets have fair value 620 and assumed liabilities have fair value 180. There is no previous interest. Goodwill is:

An investor owns fully paid shares in an ordinary limited-liability corporation and has given no personal guarantees. If the corporation fails, the investor's loss on those shares is ordinarily limited to:

A business earns pretax profit of 100 and distributes all of its after-tax profit to its owners. The corporate tax rate is 25% and owners pay 20% tax on dividends. If the business is a corporation, the owners keep:

A company omits a dividend on cumulative preferred shares. Before paying common dividends in a later period, it generally must:

An index contains only companies X and Y with market capitalizations of 300 and 700. X rises 10% and Y falls 2%, with no corporate actions. Index return is:

A loan repays part of principal with each scheduled payment. Compared with an otherwise similar bullet loan, it has:

A bond contract limits the issuer's ability to incur additional secured debt. The restriction primarily protects existing bondholders against:

An investor enters a long forward contract on 100 shares at 40 per share. At maturity, the investor is obligated to:

An investor writes a European put with strike 38 and receives premium 3. At expiry the underlying is 32. Ignoring financing, the writer's profit is:

A hedge fund prohibits investor redemptions during the first two years after subscription. This provision is a:

A property fund reports infrequent appraisal-based valuations. Relative to timely transaction-based prices, its measured return series may show:

A client must pay a fixed tuition bill in three months. This requirement is most directly a:

Asset X has volatility 12% and asset Y 18%, with correlation -1. A fully invested portfolio without short sales has zero volatility when its weight in X is: