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

by DG Mod
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79,728

Sticky: Dear Members, Simplilearn had agreed to...

Dear Members,

Simplilearn had agreed to provide CFA L-1 questions for one month only (till 14th March). We thank Simplilearn team for helping the CFA L-1 aspirants by providing the good sample...
2. Thread: Free CFA Level 1 Practice Questions for December 2012 exam

by DG Mod
Replies
75
Views
68,699

Q9 Answer C For finding the odds for; without...

For finding the odds for; without following the formula; we should think of odds for as
Probability the event will occur : Probability the event will NOT occur

=> Probability that...
3. Thread: Free CFA Level 1 Practice Questions for December 2012 exam

by DG Mod
Replies
75
Views
68,699

Q8 Answer A First arrange the returns in...

First arrange the returns in ascending order
-10%, -5%, 2%, 3%, 4%, 7%, 8%, 10%, 12%, 18%

Now we need to find the position at which we will get the 4th quintile.
4th quintile is...
4. Thread: Free CFA Level 1 Practice Questions for December 2012 exam

by DG Mod
Replies
75
Views
68,699

Q7 Answer C Will the answer be the arithmetic...

Will the answer be the arithmetic mean of the price for the 3 periods?
Let’s find the arithmetic mean, which will be (\$100+\$125+\$80) = \$305/3 = \$101.67
Let’s try to build the...
5. Thread: Free CFA Level 1 Practice Questions for December 2012 exam

by DG Mod
Replies
75
Views
68,699

Q6 Answer B Rather than getting into...

Rather than getting into complication, let’s work from basic reasoning.

Let’s assume that you had invested \$100 in the stock at T=0.
Since the first year return is 100%, the...
6. Thread: Free CFA Level 1 Practice Questions for December 2012 exam

by DG Mod
Replies
75
Views
68,699

Q5 Answer A First Step: Find the semi-annual...

First Step: Find the semi-annual yield
Semi-annual yield = (1+EAY)^(1/2)– 1
=> Semi-annual yield = (1.05)^0.5 – 1 = 2.4695%

Second Step: Multiply the semi-annual yield by 2 to get...
7. Thread: Free CFA Level 1 Practice Questions for December 2012 exam

by DG Mod
Replies
75
Views
68,699

Q4 Answer B Step 1: Assume the face value to...

Step 1: Assume the face value to be \$100, we would like to find out the discount at which the T bill is trading

3.5 % = (D/100) * (360/120) => 3.5% = (D/100) * 3
=> D = 3.5% *...
8. Thread: Free CFA Level 2 practice question bank for June 2011 exam

by DG Mod
Replies
96
Views
107,546

Sticky: Q 37 Ans C: The best way to approach these...

Q 37 Ans C:

The best way to approach these kind of problems in the exam is to take the middle value given in the answer as the OAS and arrive at the option value from the binomial model. If the...
9. Thread: Free CFA Level 1 practice question bank for June 2011 exam

by DG Mod
Replies
180
Views
160,985

Q 91 Ans B: The statements specify the credit...

Q 91 Ans B:

The statements specify the credit enhancement ways. In Prefunded bonds some treasury securities are bought which are used to pay the coupon and the par value, since treasury is risk...
10. Thread: Free CFA Level 2 practice question bank for June 2011 exam

by DG Mod
Replies
96
Views
107,546

Sticky: Q 36 Ans B: Value of the bond at the upper...

Q 36 Ans B:

Value of the bond at the upper node after 1 year
= (108 * 0.5 + 108 * 0.5)/1.068548 = 101.0717

Since the bond can be put at \$101.5, the bond price cant be below 101.5 in the...
11. Thread: Free CFA Level 1 practice question bank for June 2011 exam

by DG Mod
Replies
180
Views
160,985

Q90 Ans C : Statement 1 has the first part...

Q90 Ans C :

Statement 1 has the first part correct that is the price rise will be lesser but it is not because the option price decreases but it is because the option price increases.
...
12. Thread: Free CFA Level 1 practice question bank for June 2011 exam

by DG Mod
Replies
180
Views
160,985

Q88 Ans B: First statement is correct. With...

Q88 Ans B:

First statement is correct. With regards to the second statement, a staggered board acts as a anti takeover mechanism. When a hostile bidder tries to acquire a company with a...
13. Thread: Free CFA Level 2 practice question bank for June 2011 exam

by DG Mod
Replies
96
Views
107,546

Sticky: Q34 Ans B: We can find out the value of the...

Q34 Ans B:

We can find out the value of the bond by discounting the
future payoff. In case of interest rate model, both the nodes have 0.5
probability of occurrence (unlike the stock binomial...
14. Thread: Free CFA Level 1 practice question bank for June 2011 exam

by DG Mod
Replies
180
Views
160,985

Q 86 Ans C : Country risk premium = Sovereign...

Q 86 Ans C :

Country risk premium = Sovereign Yield Spread * (Annualized std dev of developing country equity index) / (Annualized std dev of sovereign bond market in developed country currency)...
15. Thread: Free CFA Level 2 practice question bank for June 2011 exam

by DG Mod
Replies
96
Views
107,546

Sticky: Q32 Ans C: This is similar to the previous...

Q32 Ans C:

This is similar to the previous question, here we need to find out the present value factor for the rates which are after 90 days, 270 days and 450 days.

PV of rate after 90 days =...
16. Thread: Free CFA Level 2 practice question bank for June 2011 exam

by DG Mod
Replies
96
Views
107,546

Sticky: Q 31 Ans C: We will arrive at the present...

Q 31 Ans C:

We will arrive at the present value factors for the rates in the exhibit 1.

PV for 180 days = Z1 = \$1/ (1 + 4.5% * 180/360) = 0.9780

Similarly, we will arrive at the other...
17. Thread: Free CFA Level 1 practice question bank for June 2011 exam

by DG Mod
Replies
180
Views
160,985

Q 85 Ans B : Optimal capital structure is the...

Q 85 Ans B :

Optimal capital structure is the one which reduces WACC or in other terms increases firm value.

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18. Thread: Free CFA Level 2 practice question bank for June 2011 exam

by DG Mod
Replies
96
Views
107,546

Sticky: Ans 30 C: Since the interest rates have...

Ans 30 C:

Since the interest rates have changed (increased) the FRA would become more valuable to Swamp now. The best way to find out the value of the FRA is to determine the New FRA rate and...
19. Thread: Free CFA Level 1 practice question bank for June 2011 exam

by DG Mod
Replies
180
Views
160,985

Q 84 Ans C : When the company raised \$6...

Q 84 Ans C :

When the company raised \$6 million, the amount of debt raised was 1.8 million and equity raised was 4.2 million.
Since cost of equity is 12% for any amount raised till \$4 million,...
20. Thread: Free CFA Level 2 practice question bank for June 2011 exam

by DG Mod
Replies
96
Views
107,546

Sticky: Q28 Ans B: This takeover defense strategy is...

Q28 Ans B:
This takeover defense strategy is known as Pac man defense.

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Today's Question (Questions...
21. Thread: Free CFA Level 1 practice question bank for June 2011 exam

by DG Mod
Replies
180
Views
160,985

Q 82 Ans B: \$5 million is a sunk cost, \$15...

Q 82 Ans B:

\$5 million is a sunk cost, \$15 million is a opportunity cost

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Today's Question (Questions...
22. Thread: Free CFA Level 2 practice question bank for June 2011 exam

by DG Mod
Replies
96
Views
107,546

Sticky: Q26. Ans B: Let’s evaluate the proposed deal...

Q26. Ans B:

Let’s evaluate the proposed deal by Mr. Bhushan
Cash value = \$500 million
No of shares to be issued = \$50 million / 8 = 6.25 million
Value of Vizag steel after acquisition = (\$3000...
23. Thread: Free CFA Level 1 practice question bank for June 2011 exam

by DG Mod
Replies
180
Views
160,985

Q 80 Ans C: When the NPV is negative then we...

Q 80 Ans C:

When the NPV is negative then we should only accept mandatory project.

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Today's Question...
24. Thread: Free CFA Level 2 practice question bank for June 2011 exam

by DG Mod
Replies
96
Views
107,546

Sticky: Q25 Ans B: Since the synergy value is \$100...

Q25 Ans B:

Since the synergy value is \$100 million, it will be distributed to Salem’s shareholders and Vizag’s shareholders.

Value of Vizag before acquisition = 30 * 100 = \$3000 million
Value...
25. Thread: Free CFA Level 1 practice question bank for June 2011 exam

by DG Mod
Replies
180
Views
160,985

Q 79 Ans A: Operating lease increases the net...

Q 79 Ans A:

Operating lease increases the net profit in the initial years.

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Today's Question...
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