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A series of questions and answers from a cfa level 1 mock exam, covering topics such as ethics, financial reporting, economics, and quantitative methods. It includes questions about gips compliance, due diligence for third-party research, and the calculation of compound ror.
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Can you initiate coverage on a company that is a potential client? - Correct Answer Yes
GDP measures the - Correct Answer agg. income earned by all households, all companies, and the govt *it can also be defined as the market value of all final goods and services produced in the economy in a given period of time unemployment rate = - Correct Answer unemployed/labor force short run initial effect of demand pull inflation is an increase in: - Correct Answer commodity price (demand pull increases AD - this leads to an increase in commod. prices) a liquidity trap is associated with - Correct Answer deflation With stable inflation, a tight fiscal policy accompanied by easy monetary policy will - Correct Answer increase the private sector share of GDP if a company impairment loss reduces carrying value by 10%, the impairment loss is - Correct Answer a non-cash charge and will not affect CFO *D/A will increase and so will fixed Asset t/o specific ID - Correct Answer matching of physical flow of the particular items sold and is most suitable for high-end custom built motorcycles that are not ordinarily considered interchangeable "net revenue" refers to - Correct Answer revenue - volume discounts & estimated returns Dupont (short) - Correct Answer Net income / Rev x Rev / total assets x total assets /equity GAAP (b/s) - Correct Answer current assets must be presented before noncurrent assets *IFRS is opposite financial leverage ratio = - Correct Answer total assets / shareholder equity example of biased reporting - Correct Answer combining the results from two segments b/c it is difficult to interpret the profitability of each segment when are inherent risks in an investment evaluated in the financial statement analysis framework? - Correct Answer develop and communicate conclusions/recommendations
OTC market = - Correct Answer buy and sell orders are initiated from various locations through a communication network (bloomberg) a swap in which the investor receives a variable payment in line with market conditions and makes a fixed payment can be replicated by purchasing a: - Correct Answer floating rate bond financed using a fixed-rate bond forward contract = the price of the underlying minus the price of the - Correct Answer forward, discounted over the remaining term of the contract in a currency swap, the underlying principal amount is exchanged - Correct Answer at the end AND beginning of the swap Euro calls have a pos. relationship with - Correct Answer time to expiration RE sample selection bias - Correct Answer repeat sales index (only prop. sold is included which may not be representative)