9.86%.
9.42%.
Question not answered

EAR = (1 + periodic interest rate)
m
– 1 = [1 + (0.09 / 365)]
365
– 1 = 0.094162, rounded to 9.42%.
CFA Level I
"The Time Value of Money," Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, and David
E. Runkle
Sections 3.2, 3.3
Question
68 of 120
The belief that trends and patterns tend to repeat themselves and are, therefore, somewhat
predictable
best
describes:
arbitrage pricing theory.
technical analysis.
weak-form efficiency.
Question not answered
Technical analysts believe that trends and patterns tend to repeat themselves and are, therefore,
somewhat predictable.
CFA Level I
"Technical Analysis," Barry M. Sine and Robert A. Strong
Section 2.1
Question
69 of 120
Assume that a stock's price over the next two periods is as shown below.
Time = 0
Time = 1
Time = 2
S
0
= 100
S
u
= 110
S
uu
= 121
S
d
= 92
S
ud
,
du
= 101.20
S
dd
= 84.64
The initial value of the stock is $100. The probability of an up move in any given period is 40%,
and the probability of a down move in any given period is 60%. Using the binomial model, the
probability that the stock's price will be $101.20 at the end of two periods is
closest
to:
48%.
16%.
24%.
Question not answered
Across two periods, there are four possibilities: an up move followed by an up move ($121.00 end
value), an up move followed by a down move ($101.20 end value), a down move followed by an
up move ($101.20 end value), and a down move followed by a down move ($84.64 end value).
The probability of an up move followed by a down move is 0.40
×
0.60 = 0.24. The probability of a
down move followed by an up move is 0.60
×
0.40, which also = 0.24. Both of these sequences
result in an end value of $101.20. Therefore, the probability of an end value of $101.20 is 48%.
Alternatively, the following formula could be used:
where
n
= 2 (number of periods)

x
= 1 (number of up moves:
ud
and
du
)
p
= 0.40 (probability of an up move)
CFA Level I
“Common Probability Distributions,” Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto,
and David E. Runkle
Section 2.2
Question
70 of 120
Which of the following
most
accurately describes a distribution that is more peaked than normal?
Platykurtotic
Leptokurtotic
Mesokurtotic
Question not answered
A distribution that is more peaked than normal is called leptokurtotic.
CFA Level I
"Statistical Concepts and Market Returns," Richard A. DeFusco, Dennis W. McLeavey, Jerald E.
Pinto, and David E. Runkle
Section 9
Question
71 of 120
If two events,
A
and
B
, are independent and the probability of
A
does not equal the probability
of
B
[i.e., P(
A
)
≠
P(
B
)], then the probability of Event
A
given that Event
B
has occurred [i.e.,
P(
A
│
B
)] is
best
described as:
P(
A
).
P(
B
│
A
).
P(
B
).
Question not answered
Two events,
A
and
B
, are independent if and only if P(
A
│
B
) = P(
A
) or, equivalently, P(
B
│
A
) = P(
B
).
The wording of the question precludes P(
A
) = P(
B
); therefore, P(
B
) and P(
B
│
A
) cannot be correct.
CFA Level I
"Probability Concepts," Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, and David E.

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