CFA LEVEL 1 TESTS COMPILATION BUNDLE

Price change based on convexity correct answer: -duration(change in yield)+1/2(convexity)(change in yield)^2 Effective Duration correct answer: Required if a bond has embedded options: [(v-)-(v+)]/[2V0(change in curve)] Modified Duration correct answer: [(v-)-(v+)]/[2V0(change in yield)] ...

A priori probability correct answer: A probability based on logical analysis rather than on observation or personal judgment. Abnormal profit correct answer: Equal to accounting profit less the implicit opportunity costs not included in total accounting costs; the difference between total reven...

Current Ratio correct answer: Current Assets divided by current liabilities Quick Ratio correct answer: Cash plus marketable securities plus receivables divided by current liabilities Cash Ratio correct answer: Cash plus marketable securities divided by current liabilities Defensive Inte...

faithful representation, substance over form, prudence, neutrality, completeness correct answer: According to the IFRS what are the 5 qualities of financial information that improve reliability Costs can be reliably measured correct answer: According to IFRS what condition must be met for reven...

Addition Rule of Probability correct answer: ADDITION: P(A or B) = P(A) + P(B) - P(AB) Roy's Safety First Criterion correct answer: Safety First Ratio = (E(R) - Rₜ) / σ Larger ratio is better If (Rₜ) is risk free rate, then it becomes Sharpe Ratio Sharpe Ratio correct answer: Sh...

Financial Statement Analysis Framework correct answer: provides an overview of the methodology used by analysts to consistently analyze financial statements 1. articulate the purpose and context of analysis 2. collecting data 3. process the data 4. analyzing and interpreting the processed dat...

nominal risk free rate equals... correct answer: real risk free rate + expected inflation required interest rate on a security correct answer: nominal risk free rate + default risk premium + liquidity premium + maturity risk premium EAR or APY correct answer: (1+periodic rate)^m - 1 alwa...

What are the 4 types of measurement scales? correct answer: 1. Nominal Scales 2. Ordinal Scales (Assigned to a category) 3. Interval Scales (Relative ranking) 4. Ratio Scales (Equal differences between scale values) NOIR When do we use geometric and arithmetic means to analyze investment ret...

What are the seven standards of professional conduct? (LOS 1.b) correct answer: I: Professionalism II: Integrity of Capital Markets III: Duties to Clients IV: Duties to Employers V: Investment Analysis, Recommendations, and Actions VI: Conflicts of Interest VII: Responsibilities as a CFA Inst...

In situations where the laws of a member or candidate's country of residence, the local laws of regions where the member or candidate does business, and the Code and Standards specify different requirements, the member or candidate must abide by: A. local law or the Code and Standards, whicheve...

For a positive integer n, the product of the first n positive integers; 0 factorial equals 1 by definition. n factorial is written as n!. correct answer: n Factorial Monetary value of economic resources used in performing an activity. These can be explicit, out-of-pocket, current payments, or an...