# Thread: Free CFA Level 1 Practice Questions for June 2013 exam

1. Question of the day: 19th Feb,2013

All of the following are characteristics of a well functioning securities market EXCEPT:

A)Internal information efficiency which can lead to variable and higher transaction costs.
B)It would provide timely and accurate information and transaction data.
C)It would provide liquidity (marketability, price continuity. and depth).

2. Originally Posted by Simplilearn
Question of the day: 19th Feb,2013

All of the following are characteristics of a well functioning securities market EXCEPT:

A)Internal information efficiency which can lead to variable and higher transaction costs.
B)It would provide timely and accurate information and transaction data.
C)It would provide liquidity (marketability, price continuity. and depth).
The transaction costs should be lower with information efficiency.
Ans: A

3. The correct option is A
Internal efficiency is a characteristic of a welt-functioning securities market. However, this should lead to the lowest possible transaction cost not higher costs.

4. Question of the day: 22nd Feb,2013

Portfolios located to the right of the market portfolio on the capital market line are:

A)Lending portfolios.
B)Low-risk portfolios.
C)Leveraged portfolios.

5. The correct option is C
The only way an investor can achieve a portfolio to the right of the market portfolio is to borrow at the risk-free rate and invest the proceeds in the market portfolio;100% of the investor's wealth plus the borrowed funds are invested in the market portfolio.

6. Question of the day: 23rd Feb,2013

Suppose that the probability of A is 0.30 and the probability of B is 0.40, if A and B are independent events, what is the probability of A or B?

A)0.58
B)0.7
C)0.12

7. Originally Posted by Simplilearn
Question of the day: 23rd Feb,2013

Suppose that the probability of A is 0.30 and the probability of B is 0.40, if A and B are independent events, what is the probability of A or B?

A)0.58
B)0.7
C)0.12
Two events, A and B, are independent if the fact that A occurs does not affect the probability of B occurring.

When two events, A and B, are independent, the probability of both occurring is:
P(A and B) = P(A) · P(B)

So the answer is 0.12.

8. Great explanation Neetu!

9. The correct option is A
Since A and B are independent events P(AB) = P(A)*P(B) = 0.30 x 0.40 = 0.12, so P(A or B) = P(A) + P(B) - P(AB) = 0.30+0.40-0.12=0.58.

10. Question of the day: 25th Feb,2013

Mr. Good, CFA, is fund manager at Great Fund. Mr. Good notices in Great Fund's marketing material that the value of the assets under management in the fund is listed at a higher than actual value. The Marketing Manager of the fund justifies that the discrepancy is minor and the material when printed was correct. To avoid violating the CFA Institute Standards of Professional Conduct, Mr. Good should least likely take which of the following actions?

A)Report the discrepancy to the Professional Conduct Program of CFA Institute.
B)Provide correct information to his clients.
C)Ask the marketing manager to correct the information at the earliest.

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