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Thread: Free CFA Level 1 practice question bank for June 2011 exam

  1. #41
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    Q15 Ans B:

    EPS has grown from 50 to 78, therefore

    FV = 78,

    PV = -50;
    N = 5;
    PMT = 0;

    CPT -> I/Y => 9.3%

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    Today's Question (Questions and answers provided by Knowledge Varsity)


    Q 16 Over 6 months, a stock has monthly returns of 2.3%, -5.9%, 3.2%, 7.5%, -1.1%, and -1.6%. What is the stocks return over the 6 months?

    A. 0.77%
    B. 3.93%
    C. 0.644%

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  2. #42
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    Q. 16 answer is C.

  3. #43
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    A15 - b

  4. #44
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    New CFA Charterholders

    Congratulations to new CFA Charterholders!

    http://www.newcfa.org/#

  5. #45
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    Q16 Ans B:

    You should calculate using geometric return.
    (1+Total return) = (1+r1)*(1+r2) *(1+r3) *(1+r4) *(1+r5) *(1+r6)

    Total return = 1.0393

  6. #46
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    A17 - a

    Regarding Q16, it is asked to find the return for the period of 6 months. This is why we don't raise it to the power of anything. If it was asked to calculate the annual growth, we would have risen it to the power of 2.
    Remember, if the period adds up to 1 year (eg. 4 quarterly returns) and it's asked to calculate the annual compounded return, DON'T raise it to the power of 1/4.
    Hope this helps.

  7. #47
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    Q17 Ans A:



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    Today's Question (Questions and answers provided by Knowledge Varsity)

    Q18. Find the holding period return ,given the details below:

    Stock purchased for $100 on 1st January 2008
    Dividend of $5 received on 30th June 2008
    Stock sold on 30th June 2008 for $120

    A. 50%
    B. 25%
    C. 20%

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  8. #48
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    Q18 Ans B:
    Holding period return includes all the cash flow to the investor (dividends, proceeds from the sale etc)
    Here cash inflow is 100 and cash outflow is 120+5 = 125

    So, the holding period return is 25%

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    Today's Question (Questions and answers provided by
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    Q 19 You are managing portfolio of a client, where the client has given the decision making capability on when and how much to invest the money to you, that is the deposit and withdrawal of funds are completely under your control. You calculate the return for a period of 3 years, the time weighted return is 11% and money weighted return in 12%. You want to report your performance to the client, which measure of return you should use in your report?

    A. Time Weighted Return
    B. Money Weighted Return
    C. Either could be used

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  9. #49
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    A19 - c

  10. #50
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    Q19 Ans B:

    When both the timing and the amount of cash flow is under the control of portfolio manager, Money Weighted return is better measure

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    Today's Question (Questions and answers provided by Knowledge Varsity)

    Q20 For a portfolio held for more than 2 years:

    A. The yearly arithmetic mean return is individually sufficient to find the return over the entire period the portfolio is held.
    B. The yearly geometric mean return is individually sufficient to find the return over the entire period the portfolio is held.
    C. Both the yearly arithmetic and geometric mean returns are individually sufficient to find the return over the entire period the portfolio is held.

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