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 Mock Exam Test 43 Questions Bank 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: 421:
Statement 1: Harmonic mean for data set: 8, 5, 16, 2, 25 is 4.89.
Statement 2: Geometric mean for data with different observations is higher than arithmetic mean and lower than harmonic mean.
Option A : Both the statements are correct.
Option B : Only one statement is correct.
Option C : None of the statements are correct.
Show/Hide Answer
Option C : None of the statements are correct.
Both the statements are incorrect. Statement 1 is incorrect as
HM =5/1(1/8)+(1/5)+(1/16)+(1/2)+(1/25))= 5.39.
Statement 2 is incorrect as GM is greater than HM and less than AM for data set with
different values – AM>GM>HM.
Also note that in case data set has same observations then AM=GM=HM.
CFA Level 1 Exam Question No: 422:
Two CFA candidates studying portfolio management makes to CFA Le Study с statements:
Statement 1: As the correlation decreases, the curvature of the between the two assets risk-return profile increases.
Statement 2: If two assets have perfect negative correlation, then formed combining these two assets will have risk of zero.
Option A: Both the statements are correct.
Option B: Only one statement is correct.
Option C: None of the statements are correct.
Show/Hide Answer
Option B : Only one statement is correct.
Statement 1 is correct. As the correlation decreases the curvature of the line increases i.e. it bulges leftwards.
Statement 2 is incorrect as all portfolios formed
Free CFA Level 1 Mock Exam Question No: 423:
A Company invests $15,000 in a project which IS expected to generate following cashflows:
Year 1: $4,000
Year 2: $6,000
Year 3: $7,000
If discount rate is 5%, calculate payback period and discounted payback period of the project.
Option A: Payback Period: 2.71 years and Discounted Payback Period: 3.05 years
Option B: Payback Period: 2.71 years and Discounted Payback Period: 2.95 years
Option C: Payback Period: 2.50 years and Discounted Payback Period: 2.95 years
Show/Hide Answer
Option B :2.71 years 2.95 years
CFA Level 1 Free Practice Question No: 424:
A highly diversified equity portfolio comprises of 100 securities of which 20% is government owned companies while balance is privately owned.60% of government owned companies are dividend paying stock whereas 70% of private companies pays dividend. You are required to compute:
1. Probability of selecting a company at random which is government owned and pays dividend.
2. Probability of selecting company which is government owned or pays dividend.
Option A: 1: 0.20 2: 0.76
Option B: 1: 0.12 2: 0.76
Option C: 1: 0.12 2: 0.68
Show/Hide Answer
Option B : 1: 0.12 2: 0.76
Free CFA Practice Question No:425:
Jerome Corporation reports following data:
- Target debt-equity ratio of 0.3.
- Risk-free rate of return of 3%,
- Equity beta of 1.5,
- Market risk premium of 6.5%,
- WACC of Company is 10.5% and
- Marginal tax rate is 30%
You are required to calculate the before-tax cost of debt.
Option A: 8.5%
Option B: 7.76%
Option C: 7.5%
Show/Hide Answer
Option C : 7.5%
CFA Level 1 Sample Question No: 426:
For a skewed distribution, what is the minimum percentage of the observations that will lie between +2.5 standard deviation from mean using Chebyshev’s inequality?
Option A: 75%
Option B: 84%
Option C: Cannot be computed as distribution is skewed.
Show/Hide Answer
Option C : 84%
Free CFA Level 1 Quiz Question NO: 427:
Zimmer is planning to invest his wealth and has selected three securitieswith following risk-return characteristics:
Security Expected return
Security Expected return Expected risk
A 12% 8%
B 16% 10%
C 22% 13%
If the portfolio standard deviation is 7, diversification ratio is:
Option A: 0.68
Option B: 0.70
Option C: 0.65
Show/Hide Answer
Option A : 0.68
Free CFA Level 1 Quiz Question NO: 428:
PETER HARO, CFA IS AN ANALYST WORKING FOR FORTUNAINVESTORS IN THE COUNTRY A, LAWS OF WHICH PROHIBIT ACCEPTANCE OF ACCEPTANCE OF ANY GIFT FROM THE VENDOR. GEORGINA HAPEMAN, CFA HAS EVIDENCE THAT PETER HAS BEEN RECEIVING GIFTS FROM A VENDOR.
GEORGINA SHOULD
Option A: DISSOCIATE HERSELF FROM THE ACTIVITY, ASK FORTUNA TO PERSUADE PETER TO CEASE THE ACTIVITY.
Option B: DISSOCIATE HERSELF FROM THE ACTIVITY, ASK FORTUNA TO PERSUADE PETER TO CEASE THE ACTIVITY.
Option C: DISSOCIATE HERSELF FROM THE ACTIVITY, ASK FORTUNA TO PERSUADE PETER TO CEASE THE ACTIVITY, AND INFORM CFA INSTITUTE.
Show/Hide Answer
Option A : DISSOCIATE HERSELF FROM THE ACTIVITY, ASK FORTUNA TO PERSUADE PETER TO CEASE THE ACTIVITY.
Free CFA Practice Question No: 429:
An analyst has gathered following information about a Company:
Company’s cost of debt capital (before tax), preference capital and equity capital are 4%, 6.6% and 10% respectively.
Company has total of $60,000 in form of debt, $30,000 in form preference stock and $1,10,000 in form of equity capital.
Firms effective tax rate is 20%.
Calculate WACC (Weighted average cost of capital) of firm.
Option A: 8.10%
Option B: 6.63%
Option C: 7.45%
Show/Hide Answer
Option C : 7.45%
CFA Mock Exam Free Question No: 430:
Sasha Haro, CFA is a portfolio manager for Investa Asset management. He issues marketing material which states that Investahas been awarded best investment management firm in industry by Wall street journal. The fact is, this award was given two years ago and this year the award is assigned to another firm. This statement was erroneously carried over from last years marketing material and by the time Sasha catches the mistake, the material was distributed to lot of clients. Which of the following is accurate?
Option A: This is a violation of standard I(C) as Sasha should have known this before marketing material is distributed to clients
Option B: This is not a violation of standard I(C) as Sasha didn’t made the misrepresentation intentionally.
Option C: This is a violation as awards from journals cannot be mentioned in performance material.
Show/Hide Answer
Option B : This is not a violation of standard I(C) as Sasha didn’t made the misrepresentation intentionally.
