Free CFA CFA-Level-I Exam Dumps Questions & Answers

A bond is currently trading at 98.5 per 100 par, thus yielding 6.21%. It is estimated that the bond price will be 99.4 if rates decreased by 25 basis points and 97.8 if rates increased by 25 basis points. What is this bond's effective convexity?

• A.  43
• B.  162
• C.  81

Suppose that four different portfolios have produced the following returns over the past year: 10%,
3 0%, 5% and 15%.
I). The mean return is 15%.
II). The range is 25%.
III). The mean absolute deviation is 7.5%.
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IV). The variance is 87.5% .
V. The standard deviation is 9.354%.
Which statement(s) is/are FALSE?

• A.  III and V only.
• B.  None of the above.
• C.  II and IV only.

If the underlying theory suggests that the value of an estimated variable is greater than a particular number, it is appropriate to use:

• A.  a two-tailed test.
• B.  a left-tailed test.
• C.  a right-tailed test.

A mechanic is concerned that his very expensive pressure gauge is giving faulty readings. He measured 18 pressures with his gauge and then compared them with the actual pressure given. His gauge showed a mean of 120 psi with a standard deviation of 0.75 psi. The actual pressure was 122 psi.
The t test statistic is less than the critical value of t for a 90% confidence level. What should the mechanic infer from this?

• A.  The calibrated gauge understates the real pressure at a 95% confidence interval.
• B.  The gauge of the mechanic understates the real pressure at a 90% confidence interval.
• C.  The gauge readings of the mechanic do not differ from the actual pressure at a 90% confidence interval.

Consider a stock call option with the following characteristics:
Type of option: call option on stock Underlying asset: 100 shares of Coca Cola stock Exercise price: $60 per share Premium: $1.25 per share Expiration date: November
Let the current market price of Coca Cola stock be $62.75 per share. In this case, the call option:

• A.  is "in the money" with an intrinsic value of $2.75
• B.  is "out of the money" with an intrinsic value of $2.75
• C.  is "out of the money" with an intrinsic value of zero