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Thread: FREE CFA Level 1 sample questions everyday for December 2010 candidates

  1. #321
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    Q 81

    Im completely lost would someone with better understanding pls Explain to us
    Possibly give us a reading number

    Thanks

  2. #322
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    Explanation to Q.81:

    Definition of Dollar Duration:
    The change in the dollar value of a bond for every 1% change in its yield.

    The formula to calculate this is:
    Dollar Duration = Duration * Price / 100

    Takalani's earlier explanation that the duration of Zero Coupon Bonds equals its time to maturity is correct. So,
    Duration = 10

    The question says:
    Face value = $1 million
    YTM = 5%

    Price (Market Value of the bond) = Face Value/(1+YTM)^No. of years
    Price = ($1 million)/(1+0.05)^10 = $613913.25

    Using the formula,
    Dollar Duration = Duration * Price / 100 = (10 X 613913.25)/100 = 61,391.33

    Ans. 81 is C.

  3. #323
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    Thanks a million for Explanation Sougatab

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    The Answer to the below question is C and not B as published.

    Quote Originally Posted by vbadmin View Post
    ================================================== =====================================
    Today's question (Questions and answers are provided by Austal Group)

    Q#69. Which of the following statements about accounting treatments under IFRS and U.S. GAAP are most accurate regarding the periodic valuation of identifiable intangible assets and marketable securities classified as available for sale, respectively?

    Identifiable intangible assets................Available-for-sale securities
    A. U.S. GAAP permits upward revaluation....Carried at market value
    B. U.S. GAAP permits upward revaluation....Carried at amortized cost
    C. IFRS permits upward revaluation............Carried at market value

    ================================================== =====================================
    Hi Forum,

    Answer "B" is wrong, we correct it with answer "C" and the reason remains the same. "Under IFRS and U.S. GAAP, identifiable intangible assets are reported on the balance sheet at their cost less accumulated amortization. However, a significant difference is that U.S. GAAP does not permit upward revaluations of intangible assets. The accounting treatment for available-for-sale securities is the same under IFRS and U.S. GAAP. These securities are carried on the balance sheet at their fair market values. Unrealized gains and losses are not recognized on the income statement, but are included in other comprehensive income"

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    Q#82 Answer: (B)

    The total return on the position equals the gain on the futures position plus the return on the Treasury bills: $1,000,000 + ($20,000,000

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    Q#83 Answer is C

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    Q#83 Answer: (C)

    Market-neutral funds take long and short positions but attempt to offset them to hedge against market moves.

    Long/short funds take both long and short positions but do not try to offset them.

    Event-driven funds focus on unique market opportunities, not offsetting positions.

    ================================================== =====================================
    Today's question (Questions and answers are provided by Austal Group)

    Q#84. Agrawal is considering the purchase of Star heights, a 300-unit apartment complex. He has hired Jackson, CFA, to advise him on the investment. Jackson has estimated the following data for Star height

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    Q#85. Which of the following bonds bears the greatest price impact if its yield declines by one percent? A bond with:

    A) 30-year maturity and selling at 70.


    B) 30-year maturity and selling at 100.


    C) 10-year maturity and selling at 70.

  9. #329
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    Quote Originally Posted by sudip View Post
    Q#85. Which of the following bonds bears the greatest price impact if its yield declines by one percent? A bond with:

    A) 30-year maturity and selling at 70.


    B) 30-year maturity and selling at 100.


    C) 10-year maturity and selling at 70.
    Sudip,

    We generally post questions provided by our Content Partners in this thread. Please post your questions at this thread:
    http://www.daulatguru.com/finance-fo...37-CFA-Level-1

    Thanks,
    Team DG

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    Q#84 Answer: (B)

    NOI = rental income

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