[Jan 09, 2024] Pass CFA Level CFA-Level-I Exam With 2200 Questions [Q759-Q780]

QUESTION 759
The value of an option-free, 10-year, 7.5% coupon bond is $1,035. A bond indenture specifies terms of the put privilege, the put privilege having a value of $12.25. The value of the putable bond is:

QUESTION 760
If a security just experienced a double bottom pattern, its price is then expected to:

QUESTION 761
Which of the following statements characterizes an operating lease?

QUESTION 762
A sample of 5 persons with hypertension underwent a special blood-pressure-reducing treatment program which resulted in the following values giving reduction in systolic blood pressure for these persons (i.e. the scores give SBP after treatment – SBP before treatment): -5, 10, 20, 5, 10.
Suppose for a second sample of 5 persons, the sample mean is 10, and the sample variance is 25. Then which of the following statements about this second sample is not correct?

QUESTION 763
Evans Company owns 4.5 million shares of stock of Frazier Company classified as available-for-sale.
During 2003, the fair value of those shares increased by $9 million. What effect did this increase have on
Evans’ 2003 financial statements?

QUESTION 764
Cash payments for interest 15 Retirement of common stock 38 Cash payments to merchandise suppliers 85 Sale of equipment 35 Payment of dividends 38 Purchase of land 10 Cash payment for salaries 38 Cash collections from customers 271 Purchase of equipment 45
What are cash flows from investing activities?

QUESTION 765
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.

QUESTION 766
On a survey questionnaire, students were asked to indicate their class rank in college. If there were only four choices from which to choose, which measure(s) of central tendency would be appropriate to use for the data generated by that questionnaire item?

QUESTION 767
If nonrecurring charges are really prior year expenses taken too late, then the practice of ignoring nonrecurring charges and focusing on recurring operating income results in

QUESTION 768
A futures contract whose underlying good is U.S. Treasury bills would be classified as a(n) ________ contract.

QUESTION 769
BWT, Inc. shows the following data in its financial statements at the end of the year. Assume all securities were outstanding at the beginning of the year:
6.125% convertible bond, convertible into 33 shares of common stock. Issue price $1,000, 100
*
bonds outstanding.
6.25% convertible preferred stock, $100 par, 2,315 shares outstanding. Convertible into 3.3
*
shares of common stock, Issue price $100
8% convertible preferred stock, $100 par, 2,572 shares outstanding. Convertible into 5 common
*
shares, Issue price $80
9,986 warrants are outstanding with an exercise price of $38. Each warrant is convertible into 1
*
share of common.
Average market price of common is $52.00 per share. Common shares outstanding at the
*
beginning of the year were 40,045.
Net Income for the period was $200,000, while the tax rate was 40%.
*
How many new shares had to be issued to facilitate warrant conversion?

QUESTION 770
An analyst has gathered the following information about a company:
Balance Sheet
Assets Cash 100 Accounts Receivable 750 Marketable Securities 300 Inventory 850 Property, Plant &
Equip 900 Accumulated Depreciation (150) Total Assets 2750
Liabilities and Equity Accounts Payable 300 Short-Term Debt 130 Long-Term Debt 700 Common Equity
1 000 Retained Earnings 620 Total Liab. and Stockholder’s equity 2750
Income Statement
Sales 1500 COGS 1100 Gross Profit 400 SG&A 150 Operating Profit 250 Interest Expense 25 Taxes 75
Net Income 150
What is the inventory turnover ratio?

QUESTION 771
Which of the following steps in process to sell a stock short are FALSE?

QUESTION 772
The probability that events A and B do not occur simultaneously equals 0.77. The probability of neither A nor B occurring equals 0.38. If P(A) equals 0.26, the probability of B occurring equals ________.

QUESTION 773
Which statement about portfolio diversification is correct?

QUESTION 774
A cumulative frequency distribution on days absent during a calendar year by employees of a manufacturing company is shown below.

How many employees were absent more than five days?

QUESTION 775
At the end of 2010, a firm changes its depreciation method from the double-declining balance method to straight line. The firm only has one asset, a building that cost $4,000,000 and has a salvage value of $200,000 after a life of 20 years. The tax rate is 20%. The asset was purchased in January of
2 008. What will be the cumulative effect of the change on the 2010 depreciation resulting from the years
2 008 and 2009?

QUESTION 776
Which of the following best explains why the return on assets (ROA) ratio may show distorted increases over time?

QUESTION 777
Trevor hears from his wife who has just spoken to the wife of the CEO of Company QAS, that they are about to fire the CFO of QAS. Trevor immediately sells his shares in QAS. In terms of The Standards of
Professional Conduct per Standard II(A) Material Non-Public Information, has Trevor violated the
Standard?

QUESTION 778
An options investor purchases one foreign currency call option on Swiss francs (SF). The call has the following characteristics:
Type of option: call option Underlying asset: SF62,500 (62,500 Swiss francs) Exercise price: $0.61 per SF
Premium: $0.003 per SF Expiration date: December
By taking a LONG position in this call option, the investor has:

QUESTION 779
An analyst has collected the following data about a firm:
Receivables turnover = 10 times Inventory turnover = 8 times Payables turnover = 12 times
What is the average receivables collection period, the average inventory processing period, and the average payables payment period respectively? (Assume 360 days in a year)

QUESTION 780
Which of the following statements regarding duration and a bond’s price volatility is (are) correct?
I). Duration is a linear estimate of a bond’s price change given an expected change in market interest rates.
II). Duration actually underestimates a bond’s price increase and decrease given an expected change in market interest rates.
III). The combined effect of a bond’s duration and convexity will be greater than a bond’s expected change related to duration alone.
IV). Convexity is an attempt to mitigate the error included with the duration measure.
A I and II
B. I and IV.
C. III and IV.