Introduction to Multifactor Models Question Bank
LO.a: Describe arbitrage pricing theory (APT), including its underlying assumptions and
its relation to multifactor models.
1. Which of the following statements about arbitrage pricing theory (APT) is most
Equity Valuation: Application and Processes Question Bank
LO.a: Define valuation and intrinsic value and explain sources of perceived mispricing.
1. Which of the following statements is most likely correct?
A. An investment is expected to yield abnormal p
Correlation and Regression Question Bank
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LO.a: Calculate and interpret a sample covariance and a sample correlation coefficient and
interpret a scatter plot.
1. Based on the scatter plots shown below, which of the following statements is mos
Industry and Company Analysis Question Bank
LO.a: Compare top-down, bottom-up, and hybrid approaches for developing inputs to
equity valuation models.
1. Pharma Inc. is a large-cap company in the pharmaceutical industry. Rudy is an analyst at
Bears Invest
Intercorporate Investment Q Bank
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LO.a: Describe the classification, measurement, and disclosure under International
Financial Reporting Standards (IFRS) for 1) investments in financial assets, 2) investments
in associates, 3) joint ventures,
Time Series Analysis Question Bank
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LO.a: calculate and evaluate the predicted trend value for a time series, modeled as either
a linear trend or a log-linear trend, given the estimated trend coefficients.
1. For a log linear trend model, the
Return Concepts Question Bank
LO.a: Distinguish among realized holding period return, expected holding period return,
required return, return from convergence of price to intrinsic value, discount rate, and
internal rate of return.
1. The price and payout
The Term Structure and Interest Rate Dynamics Question Bank
LO.a: Describe relationships among spot rates, forward rates, yield to maturity, expected
and realized returns on bonds, and the shape of the yield curve.
1. If you are given the 2-year, 3-year a
Evaluating Quality Of Financial Report Question Bank
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LO.a: Demonstrate the use of a conceptual framework for assessing the quality of a
companys financial reports.
1. Company ABCs financial statements adhere to generally accepted accounting
Economic Growth Question Bank
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LO.a: Compare factors favoring and limiting economic growth in developed and
developing economies.
1. Which of the following is least likely a factor that limits economic growth in developing
countries?
A. Low s
Valuation and Analysis: Bonds with Embedded Options Question Bank
LO.a: Describe fixed-income securities with embedded options.
1. Bonds with an issuer option are:
A. callable bonds.
B. putable bonds.
C. extendible bonds.
2. A call option that can only be
Simulations Question Bank
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LO.a: Describe steps in running a simulation.
1. While running a simulation, which of the following step comes after the Check for
correlation across variables step?
A. Determine probabilistic variables.
B. Define p
Changing Investment Objectives Question Bank
LO.a: Evaluate the disclosure of investment objectives and basic policies and determine
whether they comply with the CFA Institute Standards of Professional Conduct.
LO.b: Describe appropriate actions needed to
Currency Exchange Rates Question Bank
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LO.a: Calculate and interpret the bidask spread on a spot or forward foreign currency
quotation and describe the factors that affect the bidoffer spread.
1. Which of the following factors will most likel
Multinational Operations Question Bank
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LO.a: Distinguish among presentation (reporting) currency, functional currency, and local
currency.
1. Analyst 1: The preferred functional currency for subsidiaries that are mostly independent of
the pa
Employee Compensation Question Bank
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LO.a: Describe the types of post-employment benefit plans and implications for financial
reports.
1. Which of the following statements about defined benefit and defined contribution pension
plans is least
Pricing and Valuation of Forward Commitments Question Bank
LO.a: Describe and compare how equity, interest rate, fixed-income, and currency forward
and futures contracts are priced and valued.
1. Which of the following statements is most likely accurate?
Free Cash Flow Valuation Question Bank
LO.a: Compare the free cash flow to the firm (FCFF) and free cash flow to equity (FCFE)
approaches to valuation.
1. John Doe is an analyst at Brickrock Capital. He is estimating the value of Horti Goods Ltd.,
an appl
Multiple Regression- Question Bank
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Questions 1 6 deal with the following learning outcomes:
LO.a: Formulate a multiple regression equation to describe the relation between a
dependent variable and several independent variables and determine
The Arbitrage-Free Valuation Framework Question Bank
LO.a: Explain what is meant by arbitrage-free valuation of a fixed-income instrument:
1. The arbitrage opportunity which is based on the idea that the value of the whole should equal
the sum of the part
Corporate Governance Question Bank
LO.a: Describe objectives and core attributes of an effective corporate governance system
and evaluate whether a companys corporate governance has those attributes.
1. The least likely objective of corporate governance i
Discounted Dividend Valuation Question Bank
LO.a: Compare dividends, free cash flow, and residual income as inputs to discounted cash flow
models and identify investment situations for which each measure is suitable.
1. Which of the following situations i
Preston Partners Question Bank
LO.a: Evaluate the practices and policies presented.
LO.b: Explain the appropriate action to take in response to conduct that violates the CFA
Institute Code of Ethics and Standards of Professional Conduct.
1. While analyzin
Residual Income Valuation Question Bank
LO.a: Calculate and interpret residual income, economic value added, and market value
added.
1. Jackson Co. reported annual earnings of $1500. Its current book value of equity is $10,000
and it has a cost of equity
Code of Ethics and Standards of Professional Conduct
LO.a: Describe the structure of the CFA Institute Professional Conduct Program and the
process for the enforcement of the Code and Standards.
1. Who among the following is responsible for the enforcemen
Credit Analysis Models Question Bank
LO.a: Explain probability of default, loss given default, expected loss, and present value of
the expected loss and describe the relative importance of each across the credit spectrum.
1. Which of the following stateme
Mergers and Acquisitions Question Bank
LO.a: Classify merger and acquisition (M&A) activities based on forms of integration and
relatedness of business activities.
1. Bell Software Inc. is purchased by PLE Pipes such that Bell Software ceases to exist; al
Market Risk Question Bank
LO.a: Explain the use of value at risk (VaR) in measuring portfolio risk.
1. Which of the following statements is least accurate regarding VaR?
A. VaR gives the probability of the minimum amount that one can lose over a certain p
Private Real Estate Investments Question Bank
LO.a: Classify and describe basic forms of real estate investments.
1. Which of the following is most likely correct for investment in REIT shares? Investment in
shares of REITs, compared with direct investmen
Capital Budgeting Question Bank
LO.a: Calculate the yearly cash flows of expansion and replacement capital projects and
evaluate how the choice of depreciation method affects those cash flows.
The following information relates to questions 1 and 2.
SZL Co