Hi CFA Aspirants, welcome to AKVTutorials. Are you preparing for CFA Level 1, 2, 3 exams for making a career in CFA (Charted Financial Analyst). According to CFA Wikipedia, CFA The Chartered Financial Analyst (CFA) program is a postgraduate professional certification offered internationally by the American-based CFA Institute. A candidate who successfully completes the program and meets other professional requirements is awarded the “CFA charter” and becomes a “CFA charter holder”. Therefore, you need CFA Study Notes and Free CFA Level 1 Sample Quiz 40 Questions Answer Keys AMBIPi
In this article, you will get Free CFA Level 1 Mock Exam Practice Questions.
Free CFA Level 1 Mock Practice Exam Questions Bank
Free CFA Level 1 Practice Question No: 391:
Variables X and Y are perfectly negatively correlated. Given only this information, if you run a regression of Y against X, which of the following is/are true?
I. The intercept term is zero.
II. The slope equals 1.
III. R-square equals 1.
IV. The percentage of unexplained variance equals 100%.
Option A: I only.
Option B: III & IV.
Option C: IV only.
Option D: I & II.
Option E: III only.
Option F: I & II.
Option G: II only.
Option E : III only.
If Y = aX + b, then X and Y are perfectly negatively correlated for anyvalue of b and any negative value of a. Hence, given the information in the question, the slope must be negative but not necessarily equal to 1 and the intercept term cannot be determined. Since the correlation coefficient is 1, R-square is also 1, as expected, since all the variation in Y can be explained by variation in X. Note that the percentage of unexplained variance equals zero.
CFA Level 1 Exam Question No: 392:
If you make an initial deposit $500 now into an account, an additional deposit of $800 in 2 years, and a final deposit of $300 in 4 years, how much is in your account in 5 years? Assume the account earns interest at 8% per year, compounded annually.
Option A: $2,120.04.
Option B: $2,408.29.
Option C: $2,066.43.
Option D: $1,905.51.
Option E: $2,331.88.
Option C : $2,066.43.
Solve this question by working several compound interest problems, moving each dollar amount over to year 5. On the BAII Plus, press 5 N, 8 I/Y, 500 PV, 0 PMT, CPT FV, which yields $734.66. Then press STO 1, 3 N, 800 PV, CPT FV, which yields $1,007.77. Then press + RCL 1 = STO 1. Then press 1 N, 300 PV, CPT
FV, which yields $324.00. Then press + RCL 1 = to see the answer. On the HP12C,
press 5 n, 8 i, 500 PV, 0 PMT, FV. Then press STO 1, 3 n, 800 PV, FV. Then press RCL 1 + STO 1. Then press 1 n, 300 PV, FV. Then press RCL 1 + to see the answer.
Note that the answer will be displayed as a negative number. Also note that the value of “N* for each dollar amount is based on the distance from year 5. Make sure the BAIl Plus has the P/ value set to 1.
Free CFA Level 1 Mock Exam Question No: 393:
Which of the following statements regarding confidence levels and/or tests of significance is/are false? Choose the best answer.
Option A: In most hypothesis tests, the significance level is set equal to 0.10, 0.05, or 0.01.
Option B: All else equal, the probability of a Type I error decreases as the level of confidence increases.
Option C: The probability of a Type I error is denoted by the Greek letter alpha.
Option D: The confidence level of a hypothesis test can be found by subtracting the level of significance from the number one. the level of significance from the number one.
Option E: More than one of these answers is false.
Option F: The significance level of a test is equal to the power of a test.
Option F : The significance level of a test is equal to the power of a test.
Remember that the power of the test is equal to (1 – Type II error probability). This is because in most hypothesis tests, the level of significance, denoted by alpha, is set equal to the probability of a Type I error. Statisticians are primarily concerned with the probability of a Type I error, and rarely specify the probability of a Type Il error. Determining the probability of a Type II error, which is defined as the act of incorrectly failing to reject the null hypothesis, is inherently difficult to determine. The probability, of a Type I error, however, can be determined with relative ease. A Type I error is defined as the act of incorrectly rejecting the null hypothesis. The remaining answers are all correct.
CFA Level 1 Free Practice Question No: 394:
In an investment environment, an initial outlay of $1 grows to $1.23 in 3 years. If you are expecting a cash inflow of $500 in 3 years, what’s the present value of the cash flow to you?
Option A: $431.2.
Option B: $452.25.
Option C: $406.5.
Option D: $615.
Option C : $406.5.
The discount factor for 3 years is 1/1.23. Hence, the PV of $500 in 3 years is 500/1.23 = 406.5.
Free CFA Practice Question No: 395:
The median and the mode of the sample: 3, 2, 4, 5, 6, 99, 99, 100 equal:
Option A: 99, 6.
Option B: 6, 99.
Option C: 5, 99.
Option D: 5.5, 99.
Option D : 5.5, 99.
The mode equals the most common observation; in this case, it is
99. If the number of observations is even, the median is the mean of the two middle observations. In this dataset, arrange the data in ascending order and select the 4th and 5th observations. These happen to be 5 and 6. The median is then 5.5.
CFA Level 1 Sample Question No: 396:
What is the proportion of the total area under the normal curve within plus and minus two standard deviation?
Option A: 68%.
Option B: 95%.
Option C: 99.7%.
Option D: None of these answers are correct.
Option E: 34%.
Option B : 95%.
95% of the area under the curve lies within plus and minus one standard deviation of the mean.
Free CFA Level 1 Quiz Question NO: 397:
Suppose the probability that oil prices will rise any given quarter is 0.51, and the probability that oil prices will stay level or decline is 0.49. If oil prices rise, GNP will contract by 1% with 80% probability, and expand by 0.5% with 20% probability. If oil prices decline or stay level, GNP will expand 3% with a 75% probability and contract 0.5% with a 25% probability. What is the expected change in GNP in the next quarter?
Option A: +0.68%.
Option B: -0.86%.
Option C: +0.86%.
Option D: -0.68%.
Option A : +0.68%.
We need the total probability rule for expected value, for which the formula is E(X) = E(X | S_1) * P(S_1) + E(X IS_2) ” P(S_2) + … + E(X IS_n) * P(S_n). Here, E(X) is the expected change in GNP. S_1 is the event that oil prices rise, and S_2 is the event that oil prices fall. Therefore, E(X) = 0.51 * (- 1% *80% + 0.5%*20%) + 0.49 * (3% *75% – 0.5%*25%) = 0.68%, an expansion.
Free CFA Level 1 Quiz Question NO: 398:
If you already have $500 in a savings account, how much must you deposit 4 years from now in order to have $5,000 in 8 years, assuming the account earns interest at 10% per year, compounded annually?
Option A: $4,500.00.
Option B: $732.05.
Option C: $2,683.02.
Option D: $3,415.07.
Option E: $2,332.54.
Option C : $2,683.02.
The way to approach this question is to find the PV today of the $5,000 amount, determine the difference between this PV and the existing $500 amount in the account, and then move this difference out to the 4 year from now point. On the BAll Plus, press 8 N, 10 I/Y, 0 PMT, 5000 FV, CPT PV. Then press + 500 =. Then press PV, 4 N, CPT FV to see the answer. On the HP12C, press 8 n, 10 i, 0 PMT, 5000 FV, PV. Then press 500 +. Then press PV, 4 n, FV to see the answer. Make sure the BAII Plus has the PI value set to 1.
Free CFA Practice Question No: 399:
The joint probability of events A and B occurring equals 0.11. The probability of neither A nor B occurring equals 0.64. If P(A) equals 0.24, the probability of B occurring equals
Option A: 0.46.
Option B: 0.29.
Option C: 0.51.
Option D: 0.23.
Option D : 0.23.
We are given that P(neither A nor B) = 0.64, P(A and B) = 0.11 and P(A) = 0.24. The probability of neither A nor B occurring equals one minus the probability of either A or B occurring i.e. P(neither A nor B) = 1 – P(A or B). Thus, P(A or B) = 1 – P(neither A nor B) = 1 – 0.64 = 0.36. Now, P(A or B) = P(A) + P(B) – P(A and B) Therefore, P(B) = P(A or B) – P(A) + P(A and B) = 0.36 – 0.24 + 0.11 = 0.23.
CFA Mock Exam Free Question No: 400:
If you deposit $150 a month, beginning next month, for 20 years into an account paying 6% per year, compounded monthly, how much is in your account after the last deposit?
Option A: $70,343.82.
Option B: $48,833.09.
Option C: $49,904.67.
Option D: $143,582.01.
Option E: $69,306.13.
Option E : $69,306.13.
On the BAll Plus, press 240 N, 6 divide 12 = I/Y, 0 PV, 150 PMT, CPT FV. On the HP12C, press 240 n, 6 ENTER 12 divide i, 0 PV, 150 PMT, FV. On the BAll Plus, make sure the value of P/Y is set to 1. Note that the answer is displayed as a negative number.