CFA, Mock Exam A - Morning Session
What are the the nine major provisions of the Global Investment Performance
Standards (GIPS)? - Answer 1)Calculation Methodology
2)Composite Construction
3)Disclosure
4)Fundamentals of Compliance
5)Input Data
6)Presentation and Reporting
7)Private Equity
8)Real Estate
9)Wrap Fee/ (SMA) Separately Managed Account Portfolios.
What are the two primary principles of the CFA Institute Rules of Procedure for
Proceedings Related to Profressional conduct are? - Answer 1)Confidentiality of
proceedings
2) fair process to the member and candidates
In order to achieve compliance with GIPS Standards, it is recommended that firms -
Answer adopt the broadest, most meaningful definition of the firm
what are the six components of the CFA Code of Ethics - Answer 1)Professionalism
2)Integrity of Capital Markets
3)Duties to Clients
4)Duties to Employers
5)Investment Analysis, Recommendations, & Actions
6)Conflicts of Interest (must disclose)
Because Atlantic management thinks hedge funds are a fad, she does not inform her
supervisor about the hedge fund she created. This violates what standard - Answer
disclosure of conflicts
Gips Standards benefit what two main groups? - Answer Investment management firms
and prospective clients
The final stage of Alzheimer's is when individuals lose the ability to respond to their
environment, the ability to speak, and, ultimately, the ability to control movement.
Leisberg is the charismatic founder of Red Ribbon, and under his leadership the
company grew to become one of the largest in the industry. Upon learning this, what
should the analyst do? - Answer encourage Red Ribbon Mining management to
disclose the president's medical condition.
the minimum rate of return an investor must receive in order to accept an investment is
best described as the? - Answer required rate of return
, money-weighted rate of return (MWR) - Answer sensitive to the additions and
withdrawals of funds in a portfolio over the course of an investment.
---
If, at inception, investors A and B invest amounts of different size in the same fund but
then neither add nor withdraw any cash for two years, they will obtain exactly the same
MWR. In contrast, if investor A increases the investment in the fund at the end of year 1
and investor B does not make any additions or withdrawals, then Investor A will have a
lower MWR than investor B because in year 2 the fund underperformed with respect to
year 1
All else held constant, the width of a confidence interval for a population mean is most
likely to be smaller if the sample size is: - Answer Larger and the degree of confidence
is lower
A two-tailed test of the null hypothesis that the mean of a distribution is equal to 4.00
has a p-value of 0.0567. Using a 5% level of significance (i.e., α = 0.05), the best
conclusion is to: - Answer fail to reject the null hypothesis
A portfolio manager would like to calculate the compound rate of return on an
investment. Which of the following mean returns will he most likely use? - Answer
Geometric
A portfolio manager estimates the probabilities of the following events for a mutual fund:
Event A: the fund will earn a return of 5%.
Event B: the fund will earn a return below 5%.
The least appropriate description of the events is that they are: - Answer =exhaustive
(they are dependent and mutually exclusive(can not occur at the same time)
The effective annual yield (EAY) for an investment is 8.0%. Its bond equivalent yield is
closest to: - Answer EAY = (1 + YTM)365/t − 1
Semiannual yield to maturity, YTM = (1 + 0.08)0.5 − 1 = 0.03923 = 3.923%
Bond equivalent yield = 2 × YTM = 2 × 3.923% = 7.85%
Bayes' formula - Answer P(Event | Information) =
[P(Information|Event)/ *P(event)
P(Information)]
What are the the nine major provisions of the Global Investment Performance
Standards (GIPS)? - Answer 1)Calculation Methodology
2)Composite Construction
3)Disclosure
4)Fundamentals of Compliance
5)Input Data
6)Presentation and Reporting
7)Private Equity
8)Real Estate
9)Wrap Fee/ (SMA) Separately Managed Account Portfolios.
What are the two primary principles of the CFA Institute Rules of Procedure for
Proceedings Related to Profressional conduct are? - Answer 1)Confidentiality of
proceedings
2) fair process to the member and candidates
In order to achieve compliance with GIPS Standards, it is recommended that firms -
Answer adopt the broadest, most meaningful definition of the firm
what are the six components of the CFA Code of Ethics - Answer 1)Professionalism
2)Integrity of Capital Markets
3)Duties to Clients
4)Duties to Employers
5)Investment Analysis, Recommendations, & Actions
6)Conflicts of Interest (must disclose)
Because Atlantic management thinks hedge funds are a fad, she does not inform her
supervisor about the hedge fund she created. This violates what standard - Answer
disclosure of conflicts
Gips Standards benefit what two main groups? - Answer Investment management firms
and prospective clients
The final stage of Alzheimer's is when individuals lose the ability to respond to their
environment, the ability to speak, and, ultimately, the ability to control movement.
Leisberg is the charismatic founder of Red Ribbon, and under his leadership the
company grew to become one of the largest in the industry. Upon learning this, what
should the analyst do? - Answer encourage Red Ribbon Mining management to
disclose the president's medical condition.
the minimum rate of return an investor must receive in order to accept an investment is
best described as the? - Answer required rate of return
, money-weighted rate of return (MWR) - Answer sensitive to the additions and
withdrawals of funds in a portfolio over the course of an investment.
---
If, at inception, investors A and B invest amounts of different size in the same fund but
then neither add nor withdraw any cash for two years, they will obtain exactly the same
MWR. In contrast, if investor A increases the investment in the fund at the end of year 1
and investor B does not make any additions or withdrawals, then Investor A will have a
lower MWR than investor B because in year 2 the fund underperformed with respect to
year 1
All else held constant, the width of a confidence interval for a population mean is most
likely to be smaller if the sample size is: - Answer Larger and the degree of confidence
is lower
A two-tailed test of the null hypothesis that the mean of a distribution is equal to 4.00
has a p-value of 0.0567. Using a 5% level of significance (i.e., α = 0.05), the best
conclusion is to: - Answer fail to reject the null hypothesis
A portfolio manager would like to calculate the compound rate of return on an
investment. Which of the following mean returns will he most likely use? - Answer
Geometric
A portfolio manager estimates the probabilities of the following events for a mutual fund:
Event A: the fund will earn a return of 5%.
Event B: the fund will earn a return below 5%.
The least appropriate description of the events is that they are: - Answer =exhaustive
(they are dependent and mutually exclusive(can not occur at the same time)
The effective annual yield (EAY) for an investment is 8.0%. Its bond equivalent yield is
closest to: - Answer EAY = (1 + YTM)365/t − 1
Semiannual yield to maturity, YTM = (1 + 0.08)0.5 − 1 = 0.03923 = 3.923%
Bond equivalent yield = 2 × YTM = 2 × 3.923% = 7.85%
Bayes' formula - Answer P(Event | Information) =
[P(Information|Event)/ *P(event)
P(Information)]
