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【单选】
Consider the following graph of a distribution for the prices of various bottles of champagne.
Which of the following statements regarding the distribution is least accurate?
A. The distribution is negatively skewed.
B. The mean value will be less than the mode.
C. Point A represents the mode.
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【单选】
Consider the following graph of a distribution for the prices for various bottles of California-produced wine.
Which of the following statements about this distribution is least accurate?
A. Approximately 68% of observations fall within one standard deviation of the mean.
B. The graph could be of the sample $16, $12, $15, $12, $17, $30 (ignore graph scale).
C. The distribution is positively skewed.
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【单选】
Claude Bellow, CFA, is an analyst with a real-estate focused investment firm. Today, one of the partners e-mails Bellow the following table and requests that he “run some numbers.” The table below gives five years of annual returns for Marley REIT (real estate investment trust) and a large urban apartment building. Marley REIT invests in commercial properties. (Note: For this question, calculate the mean returns using the arithmetic mean.)
Table 1: Annual returns (in %)
Asset
Year 1
Year 2
Year 3
Year 4
Year 5
Marley REIT
15.0
8.0
13.0
9.0
13.0
Apartment Bldg
10.0
-1.0
8.0
8.0
9.0
One of the office assistants begins to “run some numbers,” but is then called away to an important meeting. So far, the assistant calculated the variance of the apartment building returns at 15.76%. (He assumed that the returns given represent the entire population of returns.) Now, Bellow must finish the work.
Bellow should conclude that the standard deviation of the:
A. apartment building, if the given returns represent a sample of returns, is 19.70%.
B. apartment building, if the given returns represent a sample of returns, is 4.44%.
C. REIT, assuming the given returns represent the entire population, is 2.97%.
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【单选】
Michael Philizaire is studying for the Level I CFA examination. During his review of measures of central tendency, he decides to calculate the geometric average of the appreciation/deprecation of his home over the last five years. Using comparable sales and market data he obtains from a local real estate appraiser, Philizaire calculates the year-to-year percentage change in the value of his home as follows: 20, 15, 0, -5, -5. The geometric return is closest to:
A. 4.49%.
B. 11.60%.
C. 0.00%.
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【单选】
Miranda Cromwell, CFA, buys ₤2,000 worth of Smith & Jones PLC shares at the beginning of each year for four years at prices of ₤100, ₤120, ₤150 and ₤130 respectively. At the end of the fourth year the price of Smith & Jones PLC is ₤140. The shares do not pay a dividend. Cromwell calculates her average cost per share as [(₤100 + ₤120 + ₤150 + ₤130) / 4] = ₤125. Cromwell then uses the geometric mean of annual holding period returns to conclude that her time-weighted annual rate of return is 8.8%. Has Cromwell correctly determined her average cost per share and time-weighted rate of return?
Average cost
Time-weighted return
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【单选】
Robert Mackenzie, CFA, buys 100 shares of GWN Breweries each year for four years at prices of C$10, C$12, C$15 and C$13 respectively. GWN pays a dividend of C$1.00 at the end of each year. One year after his last purchase he sells all his GWN shares at C$14. Mackenzie calculates his average cost per share as [(C$10 + C$12 + C$15 + C$13) / 4] = C$12.50. Mackenzie then uses the internal rate of return technique to calculate that his money-weighted annual rate of return is 12.9%. Has Mackenzie correctly determined his average cost per share and money-weighted rate of return?
Average cost
Money-weighted return
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【单选】
Jack Smith, CFA, is analyzing independent investment projects X and Y. Smith has calculated the net present value (NPV) and internal rate of return (IRR) for each project:
Project X: NPV = $250; IRR = 15%
Project Y: NPV = $5,000; IRR = 8%
Smith should make which of the following recommendations concerning the two projects?
A. Accept both projects.
B. Accept Project X only.
C. Accept Project Y only.
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【单选】
Sarah Kelley, CFA, is analyzing two mutually exclusive investment projects. Kelley has calculated the net present value (NPV) and internal rate of return (IRR) for each project:
Project 1: NPV = $230; IRR = 15%
Project 2: NPV = $4,000; IRR = 6%
Kelley should make which of the following recommendations concerning the two projects?
A. Accept Project 1 only.
B. Accept both projects.
C. Accept Project 2 only.
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【单选】
Viroqua DeSoto, CFA, is reading a discussion in an online forum about the construction and purpose of composites in performance reporting. She finds these statements from participants:
Statement 1: The purpose of composites is to let investors know how well a firm has performed managing different types of securities or investment strategies.
Statement 2: A managed portfolio should have a performance history of at least one year before the firm assigns it to a composite.
With respect to both statements:
A. both are correct.
B. both are incorrect.
C. only one is correct.
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【单选】
In 1995, the CFA Institute sponsored and funded the Global Investment Performance Standards (GIPS) in response to:
A. an increase in insider trading.
B. a need to address issues, such as portability of investment results.
C. both of the reasons listed here.
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【单选】
Which of the following statements regarding CFA Institute Global Investment Performance Standards (GIPS) is CORRECT? A firm that employs members of CFA Institute:
A. must choose to comply with either the Performance Presentation Standards (PPS) or GIPS.
B. is not required to conform to the GIPS.
C. must comply with the GIPS only within the United States.
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【单选】
Compliance with the CFA Institute Performance Presentation Standards (PPS) or the Global Investment Performance Standards (GIPS) is:
A. the only way to comply with Standard V(B), Performance Presentation.
B. required by the Code of Conduct.
C. the best way to comply with Standard V(B), Performance Presentation.
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【单选】
Susan Nielsen, CFA, works for a rating agency which competes directly with S&P and Moody’s. Her friend, Lance Parker, works for the same company but in a different department which is involved in advisory services for structured products. Nielsen frequently receives pressure from Parker to "put a positive face" on client ratings to help him sell advisory services. She is reluctant to discuss client ratings with Parker and tries to avoid the topic. She consults her company’s compliance department and learns that there are no policies or procedures to discourage Nielsen and Parker from sharing information and is encouraged to consider his advice on company ratings. Nielsen should most likely:
A. advise her firm to develop firewalls and protections to allow the different departments to function independently and avoid talking with Parker about client ratings.
B. continue to consult with Parker on company ratings as the compliance department’s position is that there is no conflict.
C. advise regulators of the potential conflict of interest and seek legal counsel.
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【单选】
After a very successful quarter of high investment returns, Judy O’Berry, CFA, receives several gifts from grateful clients. O’Berry considers the gifts to be of novelty or sentimental value only, but she hears rumors that several junior employees are jealous of the attention she received for the group’s efforts. She decides to consult the company’s compliance rules on gifts and is surprised to learn her firm has no established rules. She consults the Standards of Practice Handbook, and then submits proposed rules on gifts to her company’s compliance department. These rules should contain all of the following EXCEPT:
A. a formal value limit based on local customs.
B. restrictions on all types business entertainment.
C. a requirement to disclose the gift.
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【单选】
John McNeal, CFA, has a friend named Stan Green, a journalist at Investment News, a weekly magazine. In one of their conversations, Green tells McNeal about material nonpublic problems at Brightstar.com, a heavily traded firm. Green has written a special article about Brightstar.com’s problems that will appear in the next issue of Investment News. According to the Standards, can McNeal act on the information Green has shared with him?
A. Yes, McNeal can trade on the information but should ask Green to disseminate the information immediately.
B. No, McNeal cannot trade on the information.
C. Yes, McNeal can trade on the information, because it is already public.
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【单选】
The Konkol Company implements a new methodology for portfolio valuation that is licensed to them by ABC Statistics. Konkol complies with the CFA Institute Code and Standards by:
A. discussing the new methodology with the clients, in its entirety.
B. not discussing the new methodology with clients because there is no need to, as it will not change their risk and yield preferences.
C. discussing the new methodology with clients only when a change in the security selection process is involved.
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【单选】
While copying some of her research materials at work, Mary Jones comes across a few incomplete research notes written by one of her colleagues. As a result of reading the notes, and without further review, Jones immediately changes one of her stock recommendations from sell to buy. Which of the following CFA Institute Standards has Jones violated?
A. Standard III(A), Loyalty, Prudence, and Care.
B. Standard V(A), Diligence and Reasonable Basis.
C. Standard I(B), Independence and Objectivity.
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【单选】
Patricia Spraetz is the chief financial officer and compliance officer at Super Selection Investment Advisors. Super Selection is a medium-sized money management firm which has incorporated the CFA Institute Code of Ethics and Standards of Practice into the firm's compliance manual.
Karen Jackson is a portfolio manager for Super Selection. She is not a CFA charterholder. Jackson is friendly with David James, president of AMD, a rapidly growing biotech company. James has provided Jackson with recommendations in the biotech industry, which she buys for her own portfolio before buying them for her clients. For three years, Jackson has also served on AMD's board of directors but has never notified Super Selection of this fact. She has received options and fees as compensation.
Recently, the board of AMD decided to raise capital by voting to issue shares to the public. This was attractive to board members (including Jackson) who wanted to exercise their stock options and sell their shares to get cash. When the demand for initial public offerings (IPO) diminished, just before AMD's public offering, James asked Jackson to commit to a large purchase of the offering for her portfolios. Jackson had previously determined that AMD was a questionable investment but agreed to reconsider at James' request. Her reevaluation confirmed the stock to be overpriced, but she nevertheless decided to purchase AMD for her clients' portfolios.
Which of the following statements is NOT correct?
A. Jackson violated Standard IV(B) regarding Disclosure of Additional Compensation by not disclosing additional compensation in the form of cash and stock options received from AMD, as its board member to her employer.
B. Jackson did not violate Standard III(A) on Fiduciary Duty to clients because she was bound by her fiduciary duty to AMD and its stockholders as a board member. Therefore, when she reversed her decision to buy AMD shares for Super Selection's clients, portfolios on James' request, her obligation to AMD took precedence.
C. Jackson violated Standard VI(A) regarding Conflicts of interest by not disclosing her board membership and ownership of stock options to her employer.
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【单选】
Marc Feldman, CFA, is manager of corporate investor relations for a high-tech startup, zippy.com, in Boise, Idaho. Feldman learns that Larry Smith, controller, is altering the accounting records. Feldman advises some of his personal friends to sell short zippy.com. This action:
A. constitutes a violation of the Standard concerning prohibition against misrepresentation.
B. constitutes the use of material nonpublic information and is a violation of the Code and Standards.
C. constitutes professional misconduct but not the use of nonpublic information and is a violation of the Code and Standards.
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【单选】
Rachel Young, CFA, is making preparations to start a competitive business before terminating her relationship with her employer, a large money management company. Young asks Dot Wiggins, CFA, to consider joining her. In subsequent discussions with Young, Wiggins learns that Young has not disclosed to her employer ownership of stocks that Young recommended. She also learns that Young has used excerpts from research reports by others with only a slight change in wording without acknowledging the source. Wiggins declines Young’s offer to join the new business but does not dissociate herself from the violations. According to CFA Institute Standards of Professional Conduct, which of the following statements is NOT correct?
A. Wiggins violated Standard I(A) Knowledge of the Law, because she did not dissociate herself from the violations.
B. Young violated Standard IV(A) Loyalty to Employer, because she was making preparations to start a competitive business before terminating her relationship with her employer.
C. Young violated Standard I(C) Misrepresentation, because she did not acknowledge the source of excepts that she used in research reports.
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【单选】
If the Chief Investment Officer of an investment advisory firm also is a CFA charterholder, which of the following statements is CORRECT?
A. The firm must comply with the CFA Institute Global Investment Performance Standards only if it states that it follows the Standards.
B. The firm must present an historical composite.
C. All performance results that are presented must comply with the CFA Institute Global Investment Performance Standards.
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【单选】
While attending his wife’s office party, Donald North, CFA, overhears two top executives from Parker Industries discussing that the company’s Board of Directors just approved to omit its cash dividend due to unexpected losses during the quarter. Parker has paid a quarterly dividend for the past ten years. The next day, North calls his broker and instructs her to sell short Parker’s common stock.
While in a coffee shop, Diane South, CFA, overhears two top executives from Ryland Products say that their company is about to be acquired by another company for a substantial premium over the market price. The next day, South calls her broker and instructs him to buy 500 shares of Ryland’s common stock.
Which of the following statements about whether North and South violated Standard II(A), Material Nonpublic Information, is CORRECT?
A. North violated Standard II(A) but South did not violate Standard II(A).
B. Neither North nor South violated Standards II(A).
C. Both North and South violated Standard II(A).
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【单选】
Jennifer Gates is an individual portfolio manager who only uses mutual funds for her clients; she has therefore never created a portfolio of stocks. She enters an Internet chat room on investments and starts answering questions about investments. She states in the chat room that she has a CFA designation. One woman in particular is interested and questions her about the viability of creating her own stock portfolio. Gates feels that this would be a mistake because she only has $150,000 to invest, and states, "I have experience creating stock portfolios, and it does not make sense to do so with only $150,000." The woman she has chatted with sends her an e-mail and eventually becomes a client of hers. Gates has:
A. violated the Standards by soliciting business over the Internet.
B. violated the Standards by misrepresenting her experience.
C. not violated the Standards.
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【单选】
Dan Jeffries is a portfolio manager who is being sued by one of his clients for inappropriate investment advice. The Professional Conduct Program of CFA Institute is investigating Jeffries for the same offense. Jeffries settles the lawsuit with the client while the Professional Conduct Program investigation is ongoing. When the Professional Conduct Program staff questions Jeffries about the problematic investment advice, Jeffries claims he cannot talk about it because doing so would violate the confidentiality of his client. Jeffries has:
A. not violated the Standards by executing the settlement agreement or by refusing to talk about the case with the Professional Conduct Program.
B. violated the Standards by refusing to talk about the case with the Professional Conduct Program, but not by executing the settlement agreement.
C. violated the Standards by executing the settlement agreement, but not by refusing to talk about the case with the Professional Conduct Program.
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【单选】
June Carter passed Level III of the CFA examination in June but will not complete her work experience requirement until August of next year. Carter can state on her resume that she:
A. passed Levels I, II, and III of the CFA examination.
B. will be a CFA charterholder in August of next year as long as she is on track to complete her work experience.
C. is a CFA in waiting.
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【单选】
Milton Baker, CFA, prepares a research report on the dynamics of a stock price. In his study, he uses a considerable number of information sources, both outside sources and his company’s own research papers, prepared for both internal and public use. The report will first be distributed at the monthly department meeting and then later will be published on the company’s Internet site. He thinks that he may have neglected to mention some of his sources in his reference list but decides that he needs to be concerned about full disclosure of his sources only for the public version of the report, so he will wait to revise his work until after the monthly meeting but before it is published on the internet site. Which Standards does Baker NOT comply with?
A. Standard I(C), Misrepresentation, I(B), Independence and Objectivity, and I(A), Knowledge of the Law.
B. Standard I(C), Misrepresentation, and I(A), Knowledge of the Law.
C. Standard I(C), Misrepresentation, only.
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【单选】
Todd Gregory has been recently hired as the head of compliance for Speed Capital. He decides the firm should precisely follow the recommendations of the CFA Institute Standards of Professional Conduct to ensure integrity within the firm. Which of the following is NOT a compliance procedure that Speed should put in place?
A. A requirement that investment personnel should clear all personal investments to identify possible conflicts.
B. A requirement that employees provide duplicate confirmations of personal investing transactions.
C. A requirement of disclosure of all investment holdings of friends and family members of employees on an annual basis.
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【单选】
Amanda Brad, CFA, is a security analyst at UpTrend, Inc. During a routine visit to a beauty salon, she learns that a major cosmetic company, Lorean, is expected to present a revolutionary formula for facial cream. Brad buys Lorean stock for her portfolio and prepares a special report on the company. Brad also makes a call to Hillary Lang, another security analyst at UpTrend, to inform her about the news. Lang starts trading on her clients’ portfolios. Brad’s report states that given the on-going research activity at Lorean within the last months, investors can expect some successful new products and a sharp increase in the price of the stock. Lang’s actions:
A. violate the Standard of Objectivity and Independence.
B. violate the Standards because she trades on inside information.
C. violate the Standard of Fair Dealing.
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【单选】
Noah Johnson, CFA, is a broker with a money management company, Factor, Inc. In a conversation with Tom Williams, Johnson describes the activities of Factor and discusses the characteristics of portfolio construction. Which of the following statements would NOT, on its face, be considered a misrepresentation?
A. Factor guarantees the portfolio will achieve its goal return.
B. If Williams is not satisfied with the current target return, Johnson can always improve it by increasing his T-bills share.
C. The portfolio securities were carefully selected by Factor to minimize Williams' risk.
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【单选】
Patricia Cuff is the chief financial officer and compliance officer at Super Selection Investment Advisors, an organization that has incorporated the CFA Institute Code of Standards into the firm's compliance manual. Karen Trader is a portfolio manager for Super Selection. Trader is friendly with Josey James, president of AMD, a rapidly growing biotech company. Trader has served on AMD's board of directors for the last three years. James has asked Trader to commit to a large purchase of AMD stock for Trader’s clients’ portfolios. Trader had previously determined that AMD was a questionable investment but agreed to reconsider. Her reevaluation deemed the stock to be overpriced, but Trader nevertheless decides to purchase for her portfolios. Which standard was least likely violated?
A. V(A) Diligence and Reasonable Basis.
B. III(A) Loyalty, Prudence, and Care.
C. III(B) Fair Dealing.
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