Bennett pushed the trader and knocked him the ground

2 2019 Level I Mock Exam (B) AM

2019 LEVEL I MOCK EXAM (B) AM

B Candidate in the CFA Institute CFA Program

2019 Level I Mock Exam (B) AM 3

B Priority of transactions

B did not obtain consent to use the bank report.

C Priority of Transactions.

11 Chan Liu, CFA, is the new research manager at the Pacific MicroCap Fund. Liu observed the following activities after she published a research report on a thinly traded micro cap stock that included a “buy” recommendation:

B Remove her name from the micro cap stock research report.

C Publicly refute the false information posted on Internet forums.

13 Yao Tsang, CFA, has a large percentage of his net worth invested in the
Australian mining company Outback Mines, which he has held for many years. Tsang is in the process of moving to a new employer where he is responsible for initiating research on mining companies. Shortly after his move, Tsang is asked to complete a research report on Outback. In order to meet the CFA Institute Standards of Professional Conduct concerning his stock holding, which of the following actions is most appropriate for Tsang to take?

A No.

B Yes, because she failed to detect Longtree’s actions.

16 Which of the following statements does not accurately represent the objectives of Global Investment Performance Standards (GIPS)? The GIPS standards:

A comply with all updates, interpretations, and clarifications.

B make negative assurance disclosures when presenting the firm’s performance.

C the investment professional’s natural desire to do the right thing.

19 Monte Carlo simulation is best described as:
A providing a distribution of possible solutions to complex functions. B a restrictive form of scenario analysis.

C 4.4%.

21 If a paired comparison test of mean differences supports rejecting the null hypothesis, then the:
A independence of the samples is statistically significant.

C unconditional at each node.

23 By definition, the probability of any Event E is a number between: A zero and positive infinity.

A Reduction in the degree of confidence
B Increase in the sample size

A 10.89%.

B 10.80%.

B Fibonacci ratio percentage retracement composed of three smaller waves.

B £2,525.

C £2,542.

33 The following information is available:
New Zealand dollar (NZD) to British pound (GBP) spot exchange rate: 2.0979
Libor interest rates for the British pound: 1.6025%

8 2019 Level I Mock Exam (B) AM

DCU: domestic currency units

B Regulating cross- border trade relationships on a global scale
C Providing low interest rate loans to developing countries
36 Which of the following is least likely to be a valid function/characteristic of money? Money:
A provides a store of wealth.

B can be adjusted almost immediately.

C minimize interference with consumer choices.

39 Which of the following statements with respect to Giffen and Veblen goods is least accurate?

A Giffen goods are “inferior,” whereas Veblen goods are “high- status” goods.

The economy is most likely in which of the following phases?

B Laspeyres index.

C Paasche index.

C current financial condition.

45 The following information is available about a conglomerate and one of its reportable operating segments:

B assets.

C revenue.

C internally consistent.

49 To evaluate the potential effect of an innovative and unique type of business transaction on financial statements, an analyst’s best approach is to:
A monitor the actions of standard setters and regulators.

The stocks selected would be most appropriate for portfolios for which type of investors?

C the same.

53 The following information is available for a manufacturing company:

B $0.3 lower.

C the same.

56 At the end of the year, a company revalued its manufacturing facilities, increas- ing their carrying amount by 12%. There had been no prior downward revalua- tion of these facilities. The revaluation will most likely cause the company’s: A return on assets to increase.

B return on equity to decline.

B licenses.

C goodwill.

B US GAAP, intangibles must be valued at historical cost.

B gain of 186,000.

C gain of 301,000.

C 2.8.

63 In an acquisition, the interests of minority shareholders are best protected through the use of:
A sell- out rights.

B Supervisory and management boards have overlapping membership.

A Common stock
B Preferred stock
C Bonds

14 2019 Level I Mock Exam (B) AM

B 12.5.

C 12.3.

2019 Level I Mock Exam (B) AM 15

The firm’s degree of total leverage (DTL) is closest to:
A 1.43.

A Commercial paper
B Collateralized loans
C Uncommitted lines
74 A financial adviser gathers the following information about a new client:

Based on the above information, which of the following best describes this client?

C 1.50.

78 A portfolio manager generated a rate of return of 15.5% on a portfolio with beta of 1.2. If the risk- free rate of return is 2.5% and the market return is 11.8%, Jensen’s alpha for the portfolio is closest to:
A 1.84%.

C legal risk.

80 A risk metric that measures how different an actual investment outcome could be from what the investor expects is most likely a:
A vega.

B $49.50.

C $55.56.

2019 Level I Mock Exam (B) AM 17

B $49.20.

B Consumers are more likely to defer purchases of products of defensive com- panies than of cyclical companies.

C Non- cyclical companies tend to underperform cyclical companies.

B decrease.

increase. C
89 An internal evaluation of the trading behavior of three fund managers of a mutual fund company during the past year has revealed the following:

A Manager Y
B Manager X
C Manager Z
90 A company that pursues differentiation as its competitive strategy is most likely to emphasize:
A strong market research.

B efficient operating and reporting systems.

C $20.57.

92 The MSCI All Country World Index is best described as a: A broad market equity index.

B Reconstitution can dramatically affect prices of both current and prospec- tive constituents.

96 For two equally rated speculative grade bonds, what factor is least likely to account for differences in their valuation?

A Severity of loss
B Probability of default
C Perceived creditworthiness of the companies
97 A credit analyst observes the following information for Alpha Co. at fiscal years ending 20X1 and 20X2.

Additional information

98 Credit spreads are most likely to narrow during:
economic contractions. A
B a period of flight to quality.

C economic expansions.

101 Consider a five- year option- free bond that is priced at a discount to par value.

Assuming the discount rate does not change, one year from now the value of the bond will most likely:
A stay the same.

C 1.178%.

104 A bond is selling for 98.2. It is estimated that the price will fall to 96.6 if yields rise 30 bps and that the price will rise to 100.1 if yields fall 30 bps. Based on these estimates, the effective duration of the bond is closest to:
A 1.78.

C 6.18.

106 The factor least likely to influence the yield spread on an option- free, fixed- rate bond is a change in the:
A credit risk of the issuer.

C increases as market risk increases.

108 Which of the following statements best describes changes in the value of a long forward position during its life?

B fixed payment and receiving a different fixed payment.

C fixed payment and receiving a variable payment.

B transforms the underlying asset’s performance.

C passes through the underlying asset’s returns.

114 Compared to traditional investments, alternative investments least likely demonstrate which of the following characteristics?

A Narrow manager specialization
B Underlying investments that are illiquid
C A high degree of regulation
115 Capital provided for companies moving toward operation but before com- mercial manufacturing and sales have occurred best describes which stage in venture capital investing?

C Investors require a higher return than investors in publicly traded equity.

118 Commodity futures prices are most likely in backwardation when: A interest rates are high.

120 Alternative investments that rely on estimates rather than observable market prices for valuation purposes are most likely to report:
A returns that are understated.

B volatility of returns that is understated.