Test Prep CFA® Level I Chartered Financial Analyst CFA-Level-I Dumps in PDF

Free Test Prep CFA-Level-I Real Questions (page: 126)

You are examining a group of 4 stock analysts within an industry. The average stock analyst correctly predicts the direction of a given stock 51% of the time. For these analysts, their accuracy has been 40%, 50%, 60%, and 70%. What is the mean absolute deviation of their accuracy from the average?

  1. 12%.
  2. 10%.
  3. 15%.
  4. 9%.

Answer(s): B

Explanation:

The mean absolute deviation = the sum of (as i goes from 1 to n) of the absolute value of (X_i - Xbar), divided by n. Here, we have [|40% - 51%| + |50% - 51%| + |60% - 51%| + |70% - 51%|]/4 = [11% + 1% + 9% + 19%] / 4 = 40%/4 = 10%.



Assume the least squares equation is Y' = 10 + 20X. What does the value of 20 indicate?

  1. For each unit increased in Y, X increases by 20
  2. Y intercept
  3. None of these answers
  4. For each unit increased in X, Y increases by 20

Answer(s): D

Explanation:

The regression is written as Y' = a + bX. The letter "a" is the Y intercept and b is the slope of the line. Y' is the predicted value of Y given a specific value of X. Here b = 20.



How much would you need to deposit today in order to be able to withdraw $2,500 in 2 years and $1,500 in 5 years, if the account has nothing in it today and interest is 8% per year, compounded annually?

  1. $2,722.33
  2. $3,429.36
  3. $3,164.22
  4. $4,000.00
  5. $3,378.18

Answer(s): C

Explanation:

Work this question as two compound interest problems. On the BAII Plus, press 2 N, 8 I/Y, 0 PMT, 2500 FV, CPT PV, which yields $2,143.35. Then press STO 1. Then press 5 N, 1500 FV, CPT PV, which yields $1,020.87. Then press + RCL 1 = to see the answer. On the HP12C, press 2 n, 8 i, 0 PMT, 2500 FV, PV. Then press STO 1. Then press 5 n, 1500 FV, PV. Then press RCL 1 + to see the answer. Note that the answer will be displayed as a negative number.



How many monthly deposits of $50, beginning next month, will you need to make into an account that pays 6% per year, compounded monthly, before you will have $20,000?

  1. 110.59
  2. 201.49
  3. 400.00
  4. 220.27
  5. 287.71

Answer(s): D

Explanation:

On the BAII Plus, press 6 divide 12 = I/Y, 0 PV, 50 PMT, 20000 +/- FV, CPT N. On the HP12C, press 6 ENTER 12 divide i, 0 PV, 50 PMT, 20000 CHS FV, n. Note that the HP12C will display 221 as the answer. Make sure the BAII Plus has the value of P/Y set to 1.



What annual interest rate, compounded annually, would cause a series of 10 deposits of $1,000 to accumulate to $18,000, if the first deposit is made one year from today?

  1. 14.49%
  2. 12.52%
  3. 12.69%
  4. 11.84%
  5. 35.82%

Answer(s): B

Explanation:

On the BAII Plus, press 10 N, 0 PV, 1000 PMT, 18000 +/- FV, CPT I/Y. On the HP12C, press 10 n, 0 PV, 1000 PMT, 18000 CHS FV, i. Make sure that the BAII Plus has the P/Y value set to 1.



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