# Free CFA Level 1 practice question bank for June 2011 exam

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• 01-03-2011, 01:23 PM
sfernezian
A20 - b
• 02-03-2011, 09:30 AM
DG Mod
Q20 Ans B:
If you know the geometric return for the individual year, you can find the total return over the 2 year period.

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

Q21. What is the money market yield for a 90 day T-bill having bank discount yield of 3%

A. 12%
B. 3.023%
C. 12.37%

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• 02-03-2011, 12:47 PM
sfernezian
A21 - b
• 03-03-2011, 11:08 AM
Q21 Ans B:

Bank discount yield = (D/F)*(360/90) => discount will be equal to 0.75. So the bond is selling at 99.25.

So money market yield = (0.75/99.75)*(360/90) = 3.0227%

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

Q22. A US T-bill has 90 days to maturity and face value \$100,000. The market price is \$99,150. The annual money market yield on the bill is approximately:

A. 0.03429
B. 0.00857
C. 0.03400

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• 03-03-2011, 04:04 PM
sfernezian
A22 - a
• 04-03-2011, 08:49 AM
DG Mod
Q22 Ans A :
RMM = (850/99150)*(360/90) = 3.429%

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

Q 23 A 90-day U.S. Treasury bill with a face value of \$100,000 sells for \$98,500 when issued. Assuming an investor holds the bill to maturity, the investor’s money market yield is closest to:

A. 1.52%
B. 1.5%
C. 6.09%

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• 04-03-2011, 12:54 PM
sfernezian
A 23 - c
• 05-03-2011, 09:52 AM
DG Mod
[COLOR=darkred][FONT=Tahoma]Money market yield = [(100,000/98,500)
• 05-03-2011, 11:00 PM
sfernezian
A23 - a
• 06-03-2011, 11:59 AM
Q24 Ans A:

Since there is no default risk; only liquidity risk need to be considered and only for 1 year,

so the required rate of return will be 3.5%+2%. =5.5%

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

Q25. A man completed 30 years today and he is planning to retire at the age of 50. He has estimated that he will be alive till the age of 80 and he require \$5000 per month during the retirement period. Before retiring he keep money in an investment account which provides 10% per annum return , but he transfers all the wealth in risk free savings account on retirement, which provides only 5% return.

How much should he save monthly in an investment account so that he is able to fulfill his wish? He will start depositing the money in his retirement account from the end of this month.

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