CFA Level 1, Mock Exam A: Afternon
Session
GIPS Standards - Answer
In cases where applicable local laws governing calculation and presentation of
investment performance conflict with the GIPS standards, firms are: - Answer required
to comply with local regulations and make full disclose of the conflict to claim GIPS
compliance
Vishal Chandarana, an unemployed research analyst, recently registered for the CFA
Level I exam. After two months of intense interviewing, he accepts a job with a stock
brokerage company in a different region of the country. Chandarana posts on a social
media blog how being a CFA candidate really helped him get a job. He also notes how
relieved he was when his new employer didn't ask him about being fired from his former
employer. Which CFA Institute Code of Ethics or Standards of Professional Conduct did
Chandarana least likely violate? - Answer reference to the CFA Program
Miranda Grafton, CFA, purchased a large block of stock at varying prices during the
trading session. The stock realized a significant gain in value before the close of the
trading day, so Grafton reviewed her purchase prices to determine what prices should
be assigned to each specific account. According to the Standards of Practice
Handbook, Grafton's least appropriate action is to allocate the execution prices: -
Answer across the participating client accounts pro rata on the basis of account size
Lawrence Hall, CFA, and Nancy Bishop, CFA, began a joint research report on Stamper
Corporation. Bishop visited Stamper's corporate headquarters for several days and met
with all company officers. Prior to the completion of the report, Bishop was reassigned
to another project. Hall utilized his and Bishop's research to write the report but did not
include Bishop's name on the report because he did not agree with and changed
Bishop's conclusion included in the final report. According to the CFA Institute
Standards of Practice Handbook, did Hall most likely violate any CFA Institute
Standards of Professional Conduct? - Answer no
Which of the following groups is most likely responsible for maintaining oversight and
responsibility for the Professional Conduct Program (PCP) - Answer CFA Institute
Board of Governors
When can a party, nonmember or firm, most likely claim compliance with the CFA
Institute Code of Ethics and Standards of Professional Conduct? Once they have: -
Answer ensure that their code and ethics meets the principles of the code and
standards
Q. Sisse Brimberg, CFA, is responsible for performance presentations at her investment
firm. The presentation that Sisse uses states that when making performance
presentations her firm:
, CFA Level 1, Mock Exam A: Afternon
Session
deducts all fees and taxes;
uses actual and simulated performance results; and
bases the performance on a representative individual account. - Answer a weighted
composite for all similar discretionary portfolios
EAR - Answer (1 + periodic interest rate)m − 1
bank discount yield, rbd - Answer rBD = (D/F)×(360t)
discrete random variable - Answer IS A RANDOM VARAIBLE THAT CAN TAKE ON AT
MOST A CONTABLE NUMBER OF POSSIBLE VALUES
(hpr) holding period return - Answer (P1 − P0 + D1)/P0
empirical probability - Answer a probability estimated from data as a relative frequency
of occurrence
standard error - Answer standard deviation/sqroot(n)
failure to reject a false null hypothesis - Answer type II error
Q. The least accurate statement about measures of dispersion for a distribution is that
the: - Answer the arithmetic sum of the deviations around the mean will always equal
zero, not one
Which sampling-related bias is most likely to result in finding apparent significance
when none exists? - Answer data mining bias
When working backward from the nodes on a binomial tree diagram, the analyst is
attempting to calculate: - Answer an expected value as of today
It is most likely that the distance between the outer bands of Bollinger Bands will be
farthest apart when - Answer when price volatility is higher
Economic profit - Answer accounting profit - total implicit opportunity costs
Accounting profit = Total revenue − Total variable costs − Total fixed costs
Total opportunity costs = opportunity cost of capital + opportunity cost of labor
the paasche index - Answer Paasche index
=180×2.92+750×3.12+250×3.00180×3.12+750×2.18+250×2.90×100=123.75
Session
GIPS Standards - Answer
In cases where applicable local laws governing calculation and presentation of
investment performance conflict with the GIPS standards, firms are: - Answer required
to comply with local regulations and make full disclose of the conflict to claim GIPS
compliance
Vishal Chandarana, an unemployed research analyst, recently registered for the CFA
Level I exam. After two months of intense interviewing, he accepts a job with a stock
brokerage company in a different region of the country. Chandarana posts on a social
media blog how being a CFA candidate really helped him get a job. He also notes how
relieved he was when his new employer didn't ask him about being fired from his former
employer. Which CFA Institute Code of Ethics or Standards of Professional Conduct did
Chandarana least likely violate? - Answer reference to the CFA Program
Miranda Grafton, CFA, purchased a large block of stock at varying prices during the
trading session. The stock realized a significant gain in value before the close of the
trading day, so Grafton reviewed her purchase prices to determine what prices should
be assigned to each specific account. According to the Standards of Practice
Handbook, Grafton's least appropriate action is to allocate the execution prices: -
Answer across the participating client accounts pro rata on the basis of account size
Lawrence Hall, CFA, and Nancy Bishop, CFA, began a joint research report on Stamper
Corporation. Bishop visited Stamper's corporate headquarters for several days and met
with all company officers. Prior to the completion of the report, Bishop was reassigned
to another project. Hall utilized his and Bishop's research to write the report but did not
include Bishop's name on the report because he did not agree with and changed
Bishop's conclusion included in the final report. According to the CFA Institute
Standards of Practice Handbook, did Hall most likely violate any CFA Institute
Standards of Professional Conduct? - Answer no
Which of the following groups is most likely responsible for maintaining oversight and
responsibility for the Professional Conduct Program (PCP) - Answer CFA Institute
Board of Governors
When can a party, nonmember or firm, most likely claim compliance with the CFA
Institute Code of Ethics and Standards of Professional Conduct? Once they have: -
Answer ensure that their code and ethics meets the principles of the code and
standards
Q. Sisse Brimberg, CFA, is responsible for performance presentations at her investment
firm. The presentation that Sisse uses states that when making performance
presentations her firm:
, CFA Level 1, Mock Exam A: Afternon
Session
deducts all fees and taxes;
uses actual and simulated performance results; and
bases the performance on a representative individual account. - Answer a weighted
composite for all similar discretionary portfolios
EAR - Answer (1 + periodic interest rate)m − 1
bank discount yield, rbd - Answer rBD = (D/F)×(360t)
discrete random variable - Answer IS A RANDOM VARAIBLE THAT CAN TAKE ON AT
MOST A CONTABLE NUMBER OF POSSIBLE VALUES
(hpr) holding period return - Answer (P1 − P0 + D1)/P0
empirical probability - Answer a probability estimated from data as a relative frequency
of occurrence
standard error - Answer standard deviation/sqroot(n)
failure to reject a false null hypothesis - Answer type II error
Q. The least accurate statement about measures of dispersion for a distribution is that
the: - Answer the arithmetic sum of the deviations around the mean will always equal
zero, not one
Which sampling-related bias is most likely to result in finding apparent significance
when none exists? - Answer data mining bias
When working backward from the nodes on a binomial tree diagram, the analyst is
attempting to calculate: - Answer an expected value as of today
It is most likely that the distance between the outer bands of Bollinger Bands will be
farthest apart when - Answer when price volatility is higher
Economic profit - Answer accounting profit - total implicit opportunity costs
Accounting profit = Total revenue − Total variable costs − Total fixed costs
Total opportunity costs = opportunity cost of capital + opportunity cost of labor
the paasche index - Answer Paasche index
=180×2.92+750×3.12+250×3.00180×3.12+750×2.18+250×2.90×100=123.75
