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

  1. #341
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    Q# 89 Answer is C

    Once Preference Share are Classified as Redeemable, There is an obligation to Repay interest

    -Interest Expense on the Interest Coverage Ratio will increase, but the EBIT will remain unchanged**
    -Equity will reduce by X Amount which will increase the DEBT/Liability
    -Reduction in equity with the Asset remaining unchanged** will result in an Increase in Leverage Ratio

    **Assuming all remain constant
    Whats your opinion Guys.

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    Q#89 Answer: (C)

    Classification of redeemable preference shares as debt as opposed to equity increases the company

  3. #343
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    Q#90 Answer: (A)

    When a lease is classified as an operating lease, a non-current asset is recognized and depreciated on the lessor

  4. #344
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    Q#91 Answer: (B)

    When a lease is classified as a finance lease, a long-lived asset is recognized and depreciated on the lessee

  5. #345
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    I think ans to 92 is C.

  6. #346
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    Q#92 Answer: (B)

    Recognition of a finance lease as opposed to an operating lease by the lessor results in the same total net income, higher total CFI over the lease term and higher taxes in the early years of the lease.

    ================================================== =====================================
    Today's question (Questions and answers provided by Elan Guides)

    Q#93. Which of the following statements is correct?

    A. All other factors constant, a bond with a higher coupon rate has higher interest rate risk and lower reinvestment risk than a bond with a higher coupon rate.
    B. All other factors constant, a bond with a lower coupon rate has higher interest rate risk and lower reinvestment risk than a bond with a higher coupon rate.
    C. All other factors constant, a bond with a higher coupon rate has lower interest rate risk and lower reinvestment risk than a bond with a higher coupon rate.

    ================================================== =====================================

  7. #347
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    Ans Q#93 is C.

  8. #348
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    Ans Q 93) might be B)
    All other factors constant, a bond with a lower coupon rate has higher interest rate risk and lower reinvestment risk than a bond with a higher coupon rate

  9. #349
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    Q#93 Answer: (B)

    All other factors constant, a bond with a lower coupon rate has higher interest rate risk and lower reinvestment risk than a bond with a higher coupon rate.

    ================================================== =====================================
    Today's question (Questions and answers provided by Elan Guides)

    Q#94. Under the biased expectations theory, if the yield curve is downward sloping, it definitely implies that:

    A. It is expected that short term interest rates will be higher in the future.
    B. It is expected that short term interest rates will remain at the same level in the future.
    C. It is expected that short term interest rates will be lower in the future.

    ================================================== =====================================

  10. #350
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    Answer to 94: C

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