单选题There is a 40% chance that the economy will be good next year and a 60% chance that it will be bad. If the economy is good, there is a 50 percent chance of a bull market, a 30% chance of a normal market, and a 20% chance of a bear market. If the economy is bad, there is a 20% chance of a bull market, a 30% chance of a normal market, and a 50% chance of a bear market. What is the probability of a bull market next year?
单选题Several years ago Samuel Bergen, CFA, co-founded an investment club. The club has not actively traded the account for at least a year and does not plan to resume active trading of the account. Bergen's employer requires an annual disclosure of employee stock ownership. Bergen discloses all of his personal trading accounts, but does not disclose his holdings in the investment club. Which CFA Institute Standards of Professional Conduct has Bergen violated?
单选题In order to generate cash, Company A securitized its accounts receivable through a special purpose entity. Company B pledge its accounts receivable to a local bank in order to secure a short-term loan. Assuming Company A and Company B are identical in all other respects, which company has higher operating cash flow and which company has higher financing cash flow?
higher operating cash flow higher financing cash flow
① Company A Company A
② Company A Company B
③ Company B Company B
单选题Which of the following statements about risk is least likely correct?
单选题At 1 January, 2008, an option-free 8 percent annual coupon bond, with 10 years to maturity and a par value of $1000, had a discount rate of 9 percent. On 1 January 2009, the discount rate had decreased to 8.5 percent because of an upgrade in the bond's rating. If interest is paid annually, the portions of the bond's price change from 2008 to 2009 attributable to the passage of time and the rating upgrade respectively, are closet to: Passage of time Rating upgrade ①A. -$4.23 $29.35 ②B. -$4.23 $33.58 ③C. $4.23 $29.35
单选题Which type of risk is positively related to expected excess returns according to the CAPM?
单选题Steven, CFA, manages a portfolio for Derek, a very wealthy client.
Derek's portfolio is well diversified with a slight tilt toward capital
appreciation. Derek requires very little income from the portfolio. Recently
Derek's brother, Simon, has become a client of Steven. Steven proceeds to invest
Simon's portfolio in a similar manner to Derek's portfolio based on the fact
that both brothers have a similar lifestyle and are only two years apart in age.
Which of the following statements is most likely correct?
A. Steven violated the Code and Standards by knowingly creating a conflict
of interest between Derek's and Simon's portfolios.
B. Steven violated the Code and Standards by failing to determine Simon's
objectives and constraints prior to investing his portfolio.
C. Steven did not violate the Code and Standards.
单选题Using the one-year holding period and multiple-year holding period dividend discount model (DDM), calculate the change in value of the stock of Monster Burger Place under the following scenarios. First, assume that an investor holds the stock for only one year. Second, assume that the investor intends to hold the stock for two years. Information on the stock is as follows:
Last year"s dividend was $2.50 per share.
Dividends are projected to grow at a rate of 10.0% for each of the next two years.
Estimated stock price at the end of year 1 is $25 and at the end of year 2 is $30.
Nominal risk-free rate is 4.5%.
The required market return is 10.0%.
Beta is estimated at 1.0.
The value of the stock if held for one year and the value if held for two years are:
Year one Year two
①A. $25.22 $35.25
②B. $27.50 $35.25
③C. $25.22 $29.80
A. ①B. ②C. ③
单选题The most likely reason derivative markets have flourished is that A. derivatives are easy to understand and use. B. derivatives have relatively low transaction costs. C. the pricing of derivatives is relatively straightforward.
单选题Which of the following sources of credit would an analyst most likely associate with a borrower of the lowest credit quality?
单选题In order for effective price discrimination to occur the seller must:
A. face a demand curve with a negative slope.
B. maximize revenue by selling at the highest price possible.
C. be able to advertise the product among customers.
单选题The term "automatic stabilizers" refers to the fact that: A. legislators automatically change the tax structure and expenditure programs to correct upswings and downswings in business activity. B. with given tax rates and expenditure policies, a rise in national income tends to produce a surplus, while a decline tends to result in a deficit. C. government expenditures and tax receipts automatically balance over the course of the business cycle, although they may be out of balance in any single year.
单选题The Laffer curve begins at:
A. zero tax revenues and ends at zero tax revenues.
B. zero tax revenues and ends at maximum theoretical tax revenues.
C. minimum tax revenues and ends at maximum theoretical tax
revenues.
单选题An analyst gathered the following information:
Taxable security, quoted yield 9.8%
Tax-exempt security, quoted yield 5.7%
Investor"s marginal tax rate 35%
For the tax-exempt security, the investor"s tax-equivalent yield is closest to
单选题An American option is more valuable than a European option on the same dividend paying stock with the same terms because the: A. European option contract is not adjusted for stock splits and stock dividends and does not conform to the Black-Scholes model and is often mispriced. B. American option can be exercised from date of purchase until expiration, but the European option can be exercised only at expiration. C. American options are traded on U. S. exchanges, which offer much more volume and liquidity.
单选题A firm has $3 million in outstanding 10-year bonds, with a fixed rate of 8 percent ( assume annual payments). The bonds trade at a price of $92 per $100 par in the open market. The firm's marginal tax rate is 35 percent. What is the after-tax component cost of debt to be used in the weighted average cost of capital (WACC) calculations?
单选题Different type of capital markets have different functions. Which of the following describes the most direct function of: primary capital markets? secondary capital markets? A. Source of liquidity Security underwriting B. Source of new capital Source of liquidity C. Source of new capital Security underwriting
单选题Suppose the correlation between the returns of Belgian stocks and US stocks increased. Assuming that the standard deviations of the countries' stock returns remain unchanged, which of the following will occur? A. Risk estimates (standard deviations) for portfolios containing both U. S. and Belgian stocks will increase B. The beta for Belgian stocks from a U.S. perspective will increase C. A and B
单选题If a company has a current ratio of 2, the effect of repaying $150000 in short-term borrowing will most likely decrease:
单选题In a frequency distribution histogram, the frequency of an interval is given by the: A. width of the corresponding bar. B. height multiplied by the width of the corresponding bar. C. height of the corresponding bar.