Multiple Choice Questions
The total dollar return on a share of stock is defined as the:
A. change in the price of the stock over a period of time.
B. dividend income divided by the beginning price per share.
C. capital gain or loss plus any dividend inco

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23
CHAPTER 12 Return, Risk, and the Security Market Line
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1. Portfolio Return (LO3, CFA1) According to the
CAPM, what is the rate of return of a portfolio with
a beta of

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7
CHAPTER 4 Overview of Security Types
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1. Money Market Securities (LO1, CFA1) Which
of the following is not a common characteristic of
money market securities?
. Sol

Multiple Choice Questions
Which one of the following is the best definition of a money market instrument?
A. corporate debt that matures in 90 days or less
B. bank savings account
C. investment issued by a financial institution that matures in 30 days or

Chapter 006
Common Stock Valuation
1. Which one of the following terms is used to identify the evaluation method that determines the value
of a stock by reviewing a firm's financial statement in conjunction with other financial and economic
information?
A

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5
CHAPTER 3 The Investment Process
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1. Investment Objectives (LO1, CFA8) An individual
investors investment objectives should be expressed
in terms of:
. Risk and ret

Multiple Choice Questions
A brokerage account in which purchases can be made using credit is referred to as which type
of account?
A. clearing
B. funds available
C. cash
D. call
E. margin
The call money rate is the:
A. rate investors' pay on margin loans.

Chapter 009 Interest Rates
Multiple Choice Questions
. Which one of the following is the interest rate that the largest commercial banks charge their most
creditworthy corporate customers for short-term loans?
A. discount
B. Federal funds
C. prime
D. bid

CHAPTER 10
Multiple Choice Questions
Which one of the following is the correct definition of a coupon rate?
A. semi-annual interest payment / par value
B. annual interest / par value
C. annual interest / market value
D. semi-annual coupon / bond price
E.

Chapter 005
The Stock Market
High Color Detergent is issuing new shares of stock which will trade on NASDAQ. If Sue
purchases 300 of these shares, the trade will occur in which one of the following markets?
A. primary
B. secondary
C. third
D. fourth
E. ov

Chapter 004 Mutual Funds
An investment company:
A. specializes in investing funds on behalf of a financial institution.
B. is a closed-end fund that invests in real estate.
C. pools funds from individual investors.
D. is a specific type of a bank.
E. is a

Chapter 008 Behavioral Finance and the Psychology of Investing
Multiple Choice Questions
Which one of the following is the basis for prospect theory?
A. Investors react differently to prospective gains and losses.
B. Investors make cognitive errors.
C. So

Multiple Choice Questions
CHAPTER 07
. Which one of the following states that investors cannot consistently earn positive excess returns?
A. market return hypothesis
B. current market hypothesis
C. efficient market hypothesis
D. risk-return theory
E. exce

Map of Fundamentals of Investments(6e)to the CFA Exam Curriculum
by Dr. Steven D Dolvin, CFA
This spreadshet provides a map that links the 2010 CFA Exam content to Fundamentals of Investments, 6e. This tab provides a general overview
of overall coverage,

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39
CHAPTER 20 International Portfolio Investment
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1. Foreign Exchange (LO1, CFA3) Foreign Exchange
rate shows the relationships between:
. Two countries interest rate

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37
CHAPTER 19 Government Bonds and Mortgage-Backed Securities
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1. Zero Coupon Bonds (LO2) What is the yield to
maturity (YTM) on a zero coupon bond?
. The interest ra

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35
CHAPTER 18 Corporate Bonds
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1. Trust Certificates (LO1, CFA1) An airline elects
to finance the purchase of some new airplanes using
equipment trust certificates. Unde

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1. Fund Types (LO1, CFA2) Which mutual fund type
1
will most likely incur the smallest tax liability for its
investors?
. Index fund
a
b
. Municipal bond fund
c. Income fund
d
. Growth fu

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3
CHAPTER 2 Diversification and Risky Asset Allocation
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1. Diversification (LO3, CFA6) Netcap has an
expected return of 25 percent and Jmart has an
expected return of 20

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1. Stock Indexes (LO4, CFA2) Which of the follow1
ing indexes includes the largest number of actively
traded stocks?
. The Nasdaq Composite Index.
a
b
. The NYSE Composite Index.
c. The Wils

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1. Dividend Discount Model (LO1, CFA7) A share
1
of stock will pay a dividend of $1.00 one year from
now, with dividend growth of 5 percent thereafter. In
the context of a dividend discount model, t

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b
. Invest in an actively managed mutual fund whose
manager searches for underpriced stocks.
c. Invest in an index fund.
d. Examine the financial statements for a company
to find stocks that are

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2. Duration (LO4, CFA6) Which of the following
1
states the correct relationship between Macaulay
duration and modified duration?
. Modified duration 5 Macaulay duration/
a
(1 1 YTM/2)
b
. Mod

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2. Behavioural Finance Concepts (LO1, CFA2)
1
Which of the following topics related to behavioural
finance deals with the idea that investors experience
more pain from a loss than pleasure from a co

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1. Fisher Hypothesis (LO4, CFA4) The Fisher
1
hypothesis essentially asserts which of the following?
. Nominal interest rates follow inflation.
a
b
. Real interest rates follow inflation.
c.

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25
CHAPTER 13 Performance Evaluation and Risk Management
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1. Beta and Standard Deviation (LO2, CFA3) Beta
and standard deviation differ as risk measures in that
beta mea

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27
CHAPTER 14 Options
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1. Option Contracts (LO1, CFA2) Which of the
following is not specified by a stock option contract?
. The underlying stocks price.
a
b
. The

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29
CHAPTER 15 Option Valuation
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1. Black-Scholes Model (LO2, CFA2) The only variable in the Black-Scholes option pricing model that
cannot be directly observed is the

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31
CHAPTER 16 Futures Contracts
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1. Futures versus Forward Contracts (LO1, CFA2)
Which of the following statements is true regarding
the distinction between futures cont

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33
CHAPTER 17 Projecting Cash Flow and Earnings
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1. Balance Sheet Assets (LO2, CFA11) White
Company assets as of December 31, 2010:
Cash and cash equivalents
4.
5.