Latest CFA CFA-Level-I First Attempt, Exam real Dumps Updated [Jan-2024]
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NEW QUESTION # 454
What is the effect on the basic earnings per share (EPS) equation when the proceeds received from the exercise of a warrant must be used to retire debt?
- A. No adjustment is necessary.
- B. The numerator and denominator must be adjusted.
- C. The denominator must be adjusted, but not the numerator.
Answer: B
Explanation:
The exercise of the warrant increases the weighted number of shares in the denominator.
The retirement of debt will increase net income in the numerator since the firm will pay less interest.
NEW QUESTION # 455
In calculating diluted earnings per share, which of the following should not be considered?
- A. The amount of cash dividends declared on cumulative preferred shares
- B. The number of common shares resulting from the assumed conversion of outstanding debentures
- C. The amount of cash dividends declared on common shares
Answer: C
Explanation:
Dividends on common shares are never included in calculating EPS.
NEW QUESTION # 456
Which of the following is/are true about a cyclical industry?
I). It produces discretionary products, the consumption of which is dependent on economic optimism.
II). Its earnings track and amplify the business cycle.
III). It achieves an above-average rate of return even if the economy is in a recession.
- A. I and II.
- B. I, II and III.
- C. II and III.
Answer: A
NEW QUESTION # 457
Increasing the confidence level, while keeping other values constant, has what effect on the width of the confidence interval?
- A. The error of estimate decreases; therefore, the width of the interval decreases.
- B. The error of estimate increases; therefore, the width of the interval increases.
- C. There is not enough information to determine the effect.
Answer: B
NEW QUESTION # 458
Suppose that P(A) = 0.9, P(B) = 0.8, and P(B|A) = 0.6. Find P(A|B).
- A. 0.675
- B. 0.480
- C. 0.720
Answer: A
Explanation:
First one finds that P(AB) = P(B|A)P(A) = 0.54, then P(A|B) = P(AB)/P(B) = 0.54/0.80 =
0 .675.
NEW QUESTION # 459
________ is an unsecured obligation of the issuing company.
- A. A indenture
- B. The deed of trust
- C. A debenture
Answer: C
NEW QUESTION # 460
Price takers face:
- A. constant marginal revenue.
- B. constant total revenues.
- C. falling marginal revenues.
Answer: A
Explanation:
When price is constant, marginal revenue is equal to price and is constant as well.
NEW QUESTION # 461
A percentile score of 40 indicates that a person
- A. answered 40% of the questions correctly on the test;
- B. knows 40% of the material covered by the examination;
- C. has earned a score equal to or better than 40% of the people in his class.
Answer: C
NEW QUESTION # 462
Securities that are replaced by on-the-run issues are known as
- A. stripped treasury securities.
- B. off-the-run issues.
- C. treasury strips.
Answer: B
NEW QUESTION # 463
Which of the following statements is/are TRUE?
I). The stated interest rate is a quoted interest rate that does not account for compounding within the year.
II). The periodic rate is the quoted interest rate per period and is equal to the stated annual interest rate divided by the number of compounding periods per year.
III). The effective annual rate is the amount to which a unit of currency will grow in a year with interest on interest included.
- A. I and III.
- B. I, II and III.
- C. II and III.
Answer: B
Explanation:
The stated interest rate is a quoted interest rate that does not account for compounding within the year. The periodic rate is the quoted interest rate per period and is equal to the stated annual interest rate divided by the number of compounding periods per year. The effective annual rate is the amount to which a unit of currency will grow in a year with interest on interest included.
NEW QUESTION # 464
Operating profit is equal to ________.
- A. earnings before income taxes.
- B. net sales minus cost of goods sold.
- C. gross profit minus selling and administrative expenses.
Answer: C
Explanation:
Operating profit is equal to gross profit minus selling and administrative expenses.
NEW QUESTION # 465
Suppose that a monopolist is currently producing at an output at which marginal revenue equals
$ 100 and marginal cost equals $500. The monopolist will maximize profits (or minimize losses) by:
- A. decreasing price, increasing quantity.
- B. increasing price, decreasing quantity.
- C. increasing price, increasing quantity.
Answer: B
Explanation:
Marginal revenue is less than marginal cost. Thus the monopolist should produce less. At a lower quantity, price can be increased.
NEW QUESTION # 466
Which of the following is an example of ordinal data?
- A. ocean temperature at seven beaches along the east coast of the U.S.
- B. 1st, 2nd, and 3rd place finishers of the 2000 Boston Marathon
- C. morning commute (in miles) of teachers at Midtown High School
Answer: B
NEW QUESTION # 467
If marginal cost is increasing but is less than average total cost, what do we know about average total cost?
- A. Any of these could be true.
- B. Average total cost is decreasing.
- C. Average total cost is increasing.
Answer: B
Explanation:
If marginal cost, the change in total cost divided by the change in quantity, is less than average total cost, the average must decrease. The fact that marginal cost is increasing is irrelevant; as long as the change is smaller than the average, the average must fall.
NEW QUESTION # 468
If the issuing company is considered to be of high risk and it may be years before the issuing company goes public, it is likely to issue ______ preferred shares.
- A. participating.
- B. cumulative.
- C. convertible.
Answer: C
Explanation:
Convertibles are particularly attractive to those investors who want to participate in the rise of hot growth companies while being insulated from a drop in price should the stocks not live up to expectations.
NEW QUESTION # 469
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