教案历年mock题目月cfa level

Questions1~18Relateto Questions19~32Relateto Questions33~44Relateto Questions45~68RelatetoFinancial Questions69~76RelatetoCorporate Questions77~88RelatetoEquity Questions89~94Relateto Questions95~106Relate LastName: FirstName: LastName: FirstName: Date: Questions1~18RelatetoDardenCrux,CFA,aportfoliomanageratSWIFTAssetManagement.,(SWIFT)callsafriendtojoinhimfordinner.Thefriend,afinancialystatCyberKinetics(CK),declinestheinvitationandexinssheisperformingduediligenceonOrcaElectronics,aCKisabouttoacquire.Afterthephonecall,CruxsearchestheInternetforanynewsoftheacquisitionbutfindsnothing.AfterverifyingthatOrcaisonSWIFT'sapprovedstocklist,CruxpurchasesOrca'scommonstockandcalloptionsforselectiveSWIFTs.Twoweekslater,CKannouncesitsintentiontoacquireOrca.Thenextday,CruxsellsalloftheOrcasecurities,givingthefundaprofitof$3million.WhatactionshouldCruxmostlikelyhavetakentoavoidviolatinganyCFAInstituteStandardsofProfessionalConduct?PurchasethestockandcalloptionsforallTradeonlyafteryzingthestockdiligentlyandRefusetotradebasedontheAccordingtotheGIPSstandardsaverificationreportconfirmsallofthefollowingexceptprocessesandproceduresaredesignedtocalculateandpresentcompliantperformancespecificcompositepresentationsareafirmhascompliedwithallfirm-widecompositeconstructionAlexanderNewton,CFA,isthechiefcomplianceofficerforMillsInvestmentNewtoninstitutesanewrequiringtheproratadistributionofnewsecurityissuestoallestablisheddiscretionaryaccountsforwhichthenewissuesareappropriate.Thealsoprovidesfortheexclusionofnewlyestablisheddiscretionaryaccountsfromthedistributionuntiltheyhavereachedtheirone-monthdate.Thisisdisclosedtoallexistingandpotentials.DidNewtonmostlikelyviolateanyCFAInstituteStandardsofProfessionalConduct?No,becausethehasbeen ydisclosedtoallexistingand No,becausetheallocationisnotinequitableundertheWhichofthefollowingleastlikelyreflectsthetwoprimaryprinciplesoftheCFAInstituteRulesofProcedureforProfessionalConduct?ityofFairprocesstothememberandPublicdisclosureofdisciplinaryVishalChandarana,anunemployedresearch yst,recentlyregisteredfortheCFALevelIexam.Aftertwomonthsofintenseinterviewing,heacceptsajobwithastockbrokerageinadifferentregionofthecountry.ChandaranapostsonabloghowbeingaCFAcandidatereallyhelpedhimgetajob.Healsonoteshowrelievedhewaswhenhisnewemployerdidnotaskhimaboutbeingfiredfromhisformeremployer.WhichCFAStandardsofProfessionalConductdidChandaranaleastlikelyLoyaltytoMirandaGrafton,CFA,purchasedalargeblockofstockatvaryingpricesduringthetradingsession.Thestockrealizedasignificantgaininvaluebeforethecloseofthetradingday,soGraftonreviewedherpurchasepricestodeterminewhatpricesshouldbeassignedtoeachspecificaccount.AccordingtotheStandardsofPracticeHandbook,Grafton'sleastappropriateactionistoallocatetheexecutionprices:onafirst-in,first-outbasiswithconsiderationofbundlingordersforacrosstheparticipatingaccountsatthesameexecutionacrosstheparticipatingaccountsprorataonthebasisofaccountNoorMawar,CFA,managesatrustfundwhosebeneficiaryisanorphaned18-year-student.Theinvestmentdictatesthattrustassetsareexpectedtoprovidethestudentwithastable,low-risksourceof euntilshereachestheageof30years.Basedoninformationfromablog,thestudentasksMawartoinvestinanewbusinessventurethatsheexpectswillprovidehighreturnsoverthenextfiveyears.Mawarignorestherequest,insteadsecuringconservativeinvestmentstoprovidesufficient e.DidMawarmostlikelyviolatetheCFAInstituteStandardsofProfessionalConduct?No,because 'sobjectiveswereNo,becausetheinvestmenttimeframedoesnotmatchtheinvestmentUmiGrabbo,CFA,isahighlyregardedportfoliomanagerforAtlanticAdvisors,amid-sizedmutualfundfirminvestingindomesticsecurities.Shehaswatchedthehedgefundboomandonnumerousoccasionssuggestedherfirmcreatessuchafund.Seniormanagementhasrefusedtocommitresourcestohedgefunds.Attractedbypotentialhigherfeesassociatedwithhedgefunds,Grabboandseveralotheremployeesbegindevelopmentoftheirownhedgefundtoinvestininternationalsecurities.Grabboandhercolleaguesarecarefultoworkonthefunddevelopmentonlyontheirowntime.BecauseAtlanticmanagementthinkshedgefundsareafad,shedoesnotinformhersupervisoraboutthehedgefundcreation.AccordingtotheStandardsofPracticeHandbook,GrabboshouldmostlikelyaddresswhichoneoftheCodesandStandardsimmediay?DisclosureofPriorityofTheGlobalInvestmentPerformanceStandards(GIPS)weredevelopedforthebenefitprospectiveFromthepointofviewofaninvestor,unethicalbehaviorbyinvestmentprofessionalsmostlikelyleadtowhichoftheIncreasedwillingnesstoacceptRiseinthedemandforDemandforahigherDuringanon-site visit,MarshaWard,CFA,accidentallyoverheardthechiefexecutiveofficerofStargazer,Inc.discussingthe 'stenderoffertopurchaseDynamicaEnterprises,aretailerofStargazerproducts.AccordingtotheCFAInstituteStandardsofProfessionalConduct,Wardmostlikelycannotusetheinformationbecause:itrelatestoatendershedoesnothaveareasonableandadequatebasisfortakinginvestmentitwasoverheardandmightbeconsideredAccordingtotheCFAInstituteCodeofEthicsandStandardsofProfessionalConduct,tradingonmaterialnonpublicinformationisleastlikelytobepreventedbyestablishing:altradingJamesWoods,CFA,isaportfoliomanageratABCSecurities.Woodshasreasonablegroundstobelievehiscolleague,SandraClarke,aCFALevelIIcandidate,isengagedinunethicaltradingactivitiesthatmayalsobeinviolationoflocalsecuritieslaws.WoodsisnotClarke'ssupervisor,andheractivitiesdonotimpactWoodsoranyoftheportfoliosforwhichheisresponsible.BasedontheCodeandStandards,the mendedcourseofactionisforWoodsto:reportSandraClarketotheappropriateernmentalorregulatorynottakeanyactionbecauseheisnotdirectlyreportSandraClarketoABC'stradingsupervisororcomplianceRebeccaWongisenrolledtotaketheLevelICFAexam.HerfriendWilliamLeung

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LevelIstudymaterialsfromawell-knownCFAreviewprogramthepreviousyear.Leungmadeaphotocopyofthepreviousyear'scopyrightedmaterialsandsoldittoWongtohelpherstudy.WhomostlikelyviolatedtheCFAInstituteCodeofEthicsoranyStandardsofProfessionalConduct?NeitherOnlyLeungBothWhichofthefollowingisnotacomponentoftheCFAInstituteCodeofPracticeandencourageotherstopracticeinaprofessionalandethicalmannerthatwillreflectcreditonthemselvesandtheprofession.PromotefinancialintegrityandseektopreventandpunishabusesinthefinancialcetheintegrityoftheinvestmentprofessionandtheinterestsofsaboveyourownalInordertoprovideinvestorswithamorecomprehensiveviewofafirm'sperformance,thecurrentGIPSstandardsincludesnewprovisionsrelatedto:theuniquecharacteristicsofeachassetallaspectsofperformancevariousmeasuresofAlbertNyakenda,CFA,wasdrivingtoa'sofficewherehewasexpectedtocloseamulti-million-dollardeal,whenhewaspulledoverbyatrafficmanalthoughhedidnotbelievehehadviolatedanytrafficlaws.WhenNyakendarealizedthemannnedtowronglytickethimforspeeding,heofferedtobuyhim"lunch"sothathecouldquicklygettohis'soffice.Thelunchwouldcostsignificantlymorethantheticket.Thealternativewastogotothestationandfileacomintofbeingwronglyaccusedthatwouldalsoinvolvegoingtocourtthenextdaytopresenthiscase.DidNyakendamostlikelyviolatetheCFAInstituteCodeofEthics?No,becausethecostoflunchismorethantheNo,becausehewaswronglyFundamentalAssetManagersclaimscompliancewiththeCFAInstituteGlobalInvestmentPerformanceStandards(GIPS)andmanagesbothdiscretionaryandnon-discretionaryaccounts.WhenconstructingasinglecompositeforFundamental,JumaDzuyaincludesalldiscretionary,fee-payingaccountswithbothvalueandgrowthstrategies.DoesthecompositeconstructedbyDzuyamostlikelymeetthecriteriaoftheGIPSstandards?No,becauseofnon-similarinvestmentNo,becausenon-discretionaryaccountsarenotQuestions19~32Relateto Thearithmeticandgeometricmeanarecalculatedforthesamedata.Ifthereisvariabilityinthedata,comparedwiththearithmeticmean,thegeometricmeanwillmostlikelybe:Whentestingahypothesis,thepowerofatestisbestdescribedasprobabilityofrejectingatruenullsameasthelevelofsignificanceoftheprobabilityofcorrectlyrejectingthenullIftwoevents,AandB,areindependentandtheprobabilityofAdoesnotequaltheprobabilityofB[i.e.,P(A)≠P(B)],thentheprobabilityofEventAgiventhatEventBhasoccurred[i.e.,P(A│B)]isbestdescribedas:CumulativeProbabilitiesforaStandardNormalP(Z≤x)=N(x)forx≥0orP(Z≤z)=N(z)forz≥xor0……Avariableisnormallydistributedwithameanof5.00andavarianceof4.00.Usingtheexcerptabovefromthecumulativedistributionfunctionforthestandardnormalrandomvariabletable,theprobabilityofobservingavalueof–0.40orlessisclosestto:ThedollardiscountonaUSTreasurybillwith91daysuntilmaturityis$2,100.Thefacevalueofthebillis$100,000.Thebankdiscountyieldofthebillisclosestto:ValuationProbabilityof1234AnystappliesValuationProbabilityof1234Ifthereare1,200potentialinvestments,thenumberexpectedtosimultaneouslypassallfourscreensisclosestto:InvestorAandInvestorBinvestinafundfortwoYearYearFundMoney-WeightedRateofInvestorGiventheinformationinthetable,whichofthefollowingisleastlikelytobeanexnationforthedifferencebetweenthetwomoney-weightedratesofreturn?InvestorBdecreasedtheinvestmentinthefundattheendofyear1whereasinvestorAdidnotmakeanyadditionsorwithdrawals.InvestorAincreasedtheinvestmentinthefundattheendofyear1whereasinvestorBdidnotmakeanyadditionsorwithdrawals.Theinvestorsinvesteddifferentamountsatinceptionandafterwarddidnotmakeanyadditionsorwithdrawals.IftheprobabilityforaneventZis14%(i.e.,P(Z)=14%),theoddsforZareclosestAfinancialcontractofferstopay€1,200permonthforfiveyearswiththefirstpaymentmadeimmediay.Assuminganannualdiscountrateof6.5%,compoundedmonthlythepresentvalueofthecontractisclosestto:WhichofthefollowingisbestdescribedasadiscreterandomTheexpectedannualreturnontheNikkei225IndexoverthenextTheexpectedpercentagechangeinacountry'sgrossnationalproductforthenextThenumberofdaysonwhichtheDJIAexperiencedanincreasesinceAssumingnoshortselling,adiversificationbenefitismostlikelytooccurwhenthecorrelationsamongthesecuritiescontainedintheportfolioare:greaterthanequaltolessthanProbabilityofProbabilityofPeriodReturnifUsingthebinomialmodel,theprobabilitythatthestock'spricewillbe$39.60attheendoftwoperiodsisclosestto:PriorEPSexceedEPSequalPriorEPSexceedEPSequalEPSarelessthanSeveraldaysbeforereleasingitsearningsstatement,the announcesacutinitsdividend.Giventhisnewinformation,theystreviseshisopinionregardingthelikelihoodthatthe willhaveEPSbelowtheconsensusestimate.Heestimatesthelikelihoodthewillcutthedividend,giventhatEPSexceeds/meets/fallsbelowconsensus,asreportedProbabilitiestheCutsDividends,ConditionalEPSExceeding/Equaling/FallingbelowP(Cutdiv│EPSP(Cutdiv│EPSP(Cutdiv│EPSTheystthusdeterminesthattheunconditionalprobabilityforacutinthedividend,P(Cutdiv),isequalto23.75%.UsingBayes'formula,theupdated(posterior)probabilitythat'sEPSarebelowtheconsensusisclosestWhentwomutuallyexclusiveprojectswithconventionalcashflowsarebeingranked,thenetpresentvalue(NPV)andinternalrateofreturn(IRR)decisionrulesaremostlikelytowhenthe:projectshavesimilartimingofcashprojects'investmentsareofdifferentprojectshavemultipleQuestions33~44RelatetoAdecreaseinaverageweeklyinitialclaimsforunemploymentismostlikelyindicativeaneconomicrecoveryaneconomicdownturnthebusinesscyclereachingitsSuccessfuladvertisingandproductdifferentiationaremostlikelytohaveapositiveimpactontheeconomicprofitsofaproducerunder:monopolisticperfectIfthetydemandedofpearsfallsby4%whenthepriceofapplesdecreasesby3%,thenapplesandpearsarebestdescribedas:inferiorWhichcharacteristicisafirmleastlikelytoexhibitwhenitoperatesinamarketwithadownwardslodemandcurve,manycompetitors,andzeroeconomicprofitsinthelongNopricingLowbarrierstoHoldingtheworking-agepopulationconstant,ifthelaborparticipationratedeclineswhilethenumberofpeopleemployedremainsunchanged,theunemploymentratewillmostremainWhichofthefollowingisleastlikelytobeacharacteristicofaGiffengood?substitutioneffectisdemandcurveslopeseeffectisExternalities,inreferencetoaparticulargood,aremostlikelytosomeoneotherthanbuyersandStagflationisbestdescribedasaneconomicsituationinvolvinghighinflationandeconomicaggregateThemonthlydemandcurveforyingtennisataparticularclubisgivenbythefollowingequation:PTennisMatch=9–0.20×QTennisMatch.Theclubcurrentlychargesmembers$4.00toyamatchbutisconsideringaddingamembershipfee.Iftheclubcontinuestochargethesameperycharge,themostthatitwillbeabletochargeasamembershipfeeisclosestThepriceofagoodfallsfrom$15to$13.Giventhisdeclineinprice,thetydemandedofthegoodrisesfrom100unitsto120units.Theown-priceelasticityofdemandforthegoodisclosestto:Theelasticityofdemandforagoodismostlikelygreaterthegoodisatheadjustmenttoapricechangetakesalongeralesserproportion eisspentontheInacountrywithahighlevelof e,asdomestic erises,itismostlikelythatanincreasewilloccurin:privatesavingandthetradethefiscalQuestions45~68RelatetoFinancial Whichofthefollowingbestdescribesauseofthebalancesheet? 'sbalanceincludesdetailonitscashreceiptsandpaymentsmadeduringaprovidesdetailonitsoverallfinancialpositionattheendofaspecifieshowmuchrevenueitgeneratedduringaWhichofthefollowingstatementsbestdescribesatrialbalance?Atrialbalanceisaorcomputerfilethat:containsallbusinesstransactionsrecordedintheorderinwhichtheyshowsallbusinesstransactionsbylistsallaccountbalancesataparticularpointinAnincreaseinwhichofthefollowingitemswouldmostlikelyresultinanincreaseina'squickratio,allelsebeingheldequal?CurrentWhichofthefollowingisbestdescribedasanecessarycharacteristicforaneffectivefinancialreportingframework?ConsistencyinthemeasurementbasisusedacrossthebalanceUniformtreatmentoftransactionsbydifferent acquiresalicensefor$6,500withtherighttousethelicenseforfourManagementexpectstoderivebenefitsfromthelicenseforthreeyearsandusesthestraight-lineamortizationmethod.AccumulatedamortizationattheendofYear2isclosestTheconvergenceofglobalaccountingstandardshasadvancedtoadegreethattheSecurities&ExchangeCommissionintheUnitedStatesnowmandatesthatforeignprivateissuerswhouseIFRSmayreportunder:U.S.GAAPorunderIFRSwithareconciliationtoU.S.U.S.GAAPwithvoluntarysupplementalreportingunderU.S.GAAPorunderAllelsebeingequal,ifthepurchasepriceofinventoryisincreasing,a thataccountsforitsinventoryunderlast-in,first-out(LIFO)insteadoffirst-in,first-out(FIFO)ismostlikelytohavea:lowernetcashflowfromoperatinglowermarketvaluationofitscommonhigherdebt-to-equityTheuseofestimatesinfinancialreportingisbestdescribedafactorthatreducestheunderstandabilityoffinancialavoidablethroughsophisticatedaccountingandauditingacceptabledespitetheriskofmanipulationbyThefollowingdataisavailableontwocompaniesthatoperateinthesameMetric($XYCostofgoodsInterestResearch&developmentWhichofthefollowingstatementsismostappropriate?Bettermarginperformancewillbereportedby:YatboththegrossmarginandoperatingmarginYatthegrossmarginlevelandXattheoperatingmarginXatthegrossmarginlevelandYattheoperatingmarginWhichofthefollowingstatementsismostaccuratewithrespecttothejurisdictionunderlyingfinancialreporting? aretypicallyprivatesector,self-regulatedTherequirementtopreparefinancialreportsinaccordancewithspecifiedaccountingstandardsistheresponsibilityofstandard-settingbodies.Standard-settingbodieshaveauthoritybecausetheyarerecognizedby WhichofthefollowingstatementsismostaccurateabouttheresponsibilitiesofanauditorforapubliclytradedfirmintheUnitedStates?Theauditormust:statethatthefinancialstatementsarepreparedaccordingtogenerallyacceptedaccountingexpressanopinionabouttheeffectivenessof 'sinternalcontrolensurethatthefinancialstatements fromerror,fraud,orillegalAnaccountingthatrecordstransactionsintheorderinwhichtheyoccurisbestdescribedasa:generalgeneraltrialTotalcontractTotalcontractEstimatedcosttocompleteEstimatedexpensesforYearEstimatedexpensesforYearActualcostsincurredwere£150,000and£51,000inYears1and2,respectively.Therecognizesrevenueusingthe pletionmethodbasedonexpensesincurred.Therevenuethe willrecognizeinYear2isclosestto:Notestofinancialstatementsmostlikelyadiscussionofsignificanttrends,eventsanduncertaintiesthataffecttheoperatingsupplementaryinformationaboutaccountingpolicies,methodsandanauditor'sopinionastothefairpresentationofthefinancialThefollowingdataisavailableon forthecurrent EndingretainedOpeningretained willmostlikelyreportother e(OCI)(in£'000)asgainofgainoflossofUnderInternationalFinancialReportingStandards(IFRS),whichofthefollowingfinancialstatementelementsmostaccurayrepresentsinflowsofeconomicresourcestoa Thenotestothefinancialstatementsofa reportingunderU.S.GAAPcontainsthefollowinginformationfortheyear2014:Ignoringtheeffectsof etaxes,theexpensingofpreviouslycapitalizedinterestmostlikelycausesthe 'scashflowfromoperationstobe:Asof31December(€Asof31December(€Note18.FinancialandOperatingFinancialTheimplicitinterestrateonfinanceleasesfor2014wasOperatingLeaseCommitmentsasof31December2014(€*After2019,allleasepaymentsareassumedtobethesameasinDue1JanuaryDue1JanuaryDue1JanuaryDue1JanuaryDue1JanuaryTotaloffutureleasepaymentsIfthe weretocapitalizeitslong-termleases,itsadjustedlong-termdebt-to-assetsratioasoftheendofDecember2014wouldbeclosestto:ForwhichofthefollowingassetsisitmostappropriatetotestforimpairmentatleastApatentwithalegallifeof20Atrademarkwithanindefiniteexpected ystgathersthefollowinginformationabout LIFOreserveasof31DecemberLIFOreserveasof31DecemberMarginaltaxIfthe hadusedthefirst-in,first-out(FIFO)methodinsteadoflast-in,first-out(LIFO),its2014net ewouldmostlikelyhavebeen:$21,000$30,000$9,000Note12:BroadcastDuring2014,Note12:BroadcastDuring2014,successfullydisposedofbroadcastlicensesthatwereforsaleforA$37,900(netbookvalueofA$23,500).Basedonthesuccessfulcompletionofthatsale,theimpairmentlossestakenin2012onotherlicenseshavebeenreversed,restoringthoseintangibleassetstotheiramortizedhistoricalcost.Broadcastlicensesareamortizedoveraperiodof15–25Thenoteleadsan ysttobelievethattherapidreversaloftheimpairmentlossrelatedtothebroadcastlicensesaroseasanattemptbymanagementtomanageearnings.Iftheyst'sbeliefiscorrect,herysisoftheoriginal2013financialstatementsmostlikelyhaveshownthat,comparedwiththeeconomicrealityin2013, understatedfixedassetunderstatedoverstatednetprofitForwhichofthefollowinginventoryvaluationmethodsisthegrossprofitmarginleasttobethesameunderbothaperpetualinventorysystemandaperiodicinventorySpecificWhichofthefollowingstatementsbestdescribestheroleoftheInternationalOrganizationofSecuritiesCommissions(IOSCO)?TheIOSCOistheoversightbodytowhichtheInternationalAccountingStandardsBoard(IASB)assistsinattainingthegoalofcross-bordercooperationincombatingviolationsofsecuritiesisresponsibleforregulatingfinancialmarketsofmemberSelectedInformationRelatedtotheCeramics Endof2014($CarryingamountofUndiscountedexpectedfuturenetcashSelectedInformationRelatedtotheCeramics Endof2014($CarryingamountofUndiscountedexpectedfuturenetcashPresentvalueofexpectedfuturenetcashFairvalueofRevisedestimateofuseful4DepreciationStraightRevisedestimateofresidualIftheaboveinformationandestimatesproveaccurate,thedepreciationexpensethatshouldbereportedfor2015relatedtothentwillbeclosestto:$306$256$213Questions69~76RelatetoCorporateWhencomputingtheweightedaveragecostofcapital(WACC)andassumingafixed-ratenon-callablebondiscurrentlysellingaboveparvalue,thebefore-taxcostofdebtisclosesttoyieldtocurrentcoupon has100millionsharesoutstanding.Thesharepriceofa 'sstockis£15justpriortoannouncinga£100millionexpansionaryinvestmentinanewntandestimatesthatthepresentvalueoffutureafter-taxcashflowswillbe£150million.ysts,however,estimatethenewnt'sprofitabilitywillbelowerthan 'sexpectations.'sstockpricewillmostincreasebylessthan£0.50perdropbelow£15pershareduetothecannibalizationofrevenuefromthenewincreasebythenewnt'snetpresentvalueper hasanequitybetaof1.4andis60%fundedwithdebt.Assumingataxrateof35%,the ’sassetbetaisclosestto:Thefollowinginformationisavailablefor BondsarepricedatparandhaveanannualcouponrateofPreferredstockispricedat$8.18andpaysanannualdividendofCommonequityhasabetaofTherisk-rateis4%andthemarketpremiumisCapitalstructure:Debt=30%;Preferredstock=15%;Commonequity=ThetaxrateisTheweightedaveragecostofcapital(WACC)for isclosestThecostofwhichsourceofcapitalmostlikelyrequiresadjustmentfortaxesinthecalculationofafirm’sweightedaveragecostofcapital?CommonWhichofthefollowingtransactionsismostlikelytoaffecta 'sfinancialleveragePaymentofa9%stockAnincreaseincashdividendsCompletionofapreviouslyannounced1-for-20reversestockWhencomputingthecashflowsforacapitalproject,whichofthefollowingisleastlikelytobeincluded?OpportunityFinancingGiventhefollowinginformationaboutadebt-to-equityratio(D/E)oftaxrateofcostofdebtof8%,costofequityofThefirm’sweightedaveragecostofcapital(WACC)isclosestQuestions77~88RelatetoEquityAnequityfundmanagerisconsideringamarketindexastheben arkforhisportfolio,andhehasthefollowingpreferences:theindexshouldhaveacontrariansharesheldbycontrollingshareholdersshouldbedividendsshouldbeincludedintheweightingofconstituentsecurities;theweightsofconstituentsecuritiesshouldnotbearbitrarilydeterminedbytheindexWhichofthefollowingweightingsofindicesbestmeetsthefundmanager’sFloat-adjustedmarketAtraderwhoownssharesofastockcurrentlytradingat$100persharecesa‘GTC,$90,limit$85sell’order(GTCmeansgoodtillcancelled).Assumingthespecifiedstopconditionissatisfiedandtheorder esexecuted,whichofthefollowingstatementsismostaccurate?Theorder esamarketorderwhenthepricefallsbelow$85andremainsvalidforTheorderwillbeexecutedateither$90orThetraderfacesaumrealizedlossofNumberofBeginningShare($)EndofPriceperShareDividendNumberofBeginningShare($)EndofPriceperShareDividendPeriod($)ABCAmarkethasthefollowinglimitordersstandingonitsbookforaparticularBid(#ofLimitOffer(#ofLimit1122334455Ifatradersubmitsanimmediate-or-cancellimitbuyorderfor700sharesatapriceof$20.50,theaveragepricethetraderwouldpayisclosestto:Theadvantagestoaninvestorowningconvertiblepreferencesharesof mostlesspricevolatilitythantheunderlyingcommonanopportunitytoreceiveadditionaldividendsifthe 'sprofitsexceedapre-specifiedpreferencedividendsthatarefixedcontractualobligationsof Theeconomicequilibriuminterestrateinawell-functioningfinancialsystemismostdeterminedthetimeconsumptionpreferencesofcentralbankthesupplyanddemandofAtraderbuysastockat$30andwantstolimitdownsiderisk.Whichofthefollowingorderswillmostlikelyguaranteethathecansellthestockat$25?(GTCmeansgoodtillcancelled)GTC,stop$25,limit$25sellPutoptionbuymarketorderwithastrikepriceofGTC,stop$25,marketsellNumberofPurchasepriceperLeveragePositionholdingSixSalepriceperCallNumberofPurchasepriceperLeveragePositionholdingSixSalepriceperCallmoney5%per$0.40/Theinvestor’stotalreturnonthisinvestmentoverthemarginholdingperiodisclosestWhichofthefollowingstatementsismostaccuratewithrespecttorebalancingandreconstitutionofsecuritymarketindices?Aprice-weightedindexrequiresrebalancingmorethanamarket-capitalization-weightedEqual-weightedindicesrequirefrequentTurnoverwithinanindexresultsfromareconstitutionbutnotfromAtraderbuysastockat$64onmarginwithaleverageratioof2.5andamaintenancemarginof30%.Belowwhatpricewillamargincallmostlikelyoccur?Thebehavioralbiasinwhichinvestorstendtoavoidrealizinglossesbutratherseektorealizegainsisbestdescribedas:thedispositionmentalthegambler’sComparedwithitsmarket-value-weightedcounterpart,afundamental-weightedindexisleastlikelytohavea:momentumvaluecontrarianQuestions89~94RelatetoAccordingtoput-callparity,ifafiduciarycallexpiresinthemoney,thepayoffismostequaltodifferencebetweenthemarketvalueoftheassetandthefacevalueofthe marketvalueofthefacevalueofthe Inthebinomialmodel,thedifferencebetweentheupanddownfactorsbestrepresentsmoneynessofanvolatilityofthepseudoAninvestorpurchases100sharesofcommonstockat€50eachandsimultaneouslysellscalloptionson100sharesofthestockwithastrikepriceof€55atapremiumof€1peroption.Attheexpirationdateoftheoptions,thesharepriceis€58.Theinvestor'sprofitisclosestto:WhichofthefollowingderivativesisleastlikelytobeclassifiedasacontingentAcalloptionAcreditdefaultAfuturesAswapinwhichtheinvestorreceivesavariablepaymentinlinewithmarketconditionsandmakesafixedpaymentcanbestbereplicatedbypurchasinga:seriesofforwardcontracts,eachwithaninitialvalueofsetoflongfuturescontractswhicharematchedwithshortforwardfloatingratebondwhichisfinancedusingafixedrateTheunderlyinginaforwardrateagreementismostlikelyexchangegrowthrateofanequityinterestQuestions95~106Relate Comparedwithanotherwiseidenticaloption- bond,wheninterestratesfall,thepriceofacallablebondwill:risefallriseInthesecuritizationprocesswhichofthefollowingismostlikelyathirdpartytothetransaction?The:specialpurposesellerofthe financialForbondsthatareotherwiseidentical,theoneexhibitingthehighestlevelofpositiveconvexityismostlikelytheonethatis:Assumethefollowingannualforwardrateswerecalc