[UPDATED 2022] Read CFA-Level-I Study Guide Cover to Cover as Literally [Q587-Q605]

Q587. The examination of the statistical association between stock prices and earnings of many firms at a single point of time is an example of a:

Q588. Greenbelt Processors had a beginning inventory of 798 units valued at a cost of 34,895. It purchased
4 ,474 units of new inventory worth 195,402 during the year. A year-end audit revealed that it had 853 units on hand.
If Greenbelt uses the weighted average cost method, what was its COGS for the year?

Q589. “Normal profits” exist when economic profits are

Q590. You invest $100 in a risky asset with an expected rate of return of 12% and a standard deviation of
1 5% and a T-bill with a rate of return of 5%. What percentages of your money must be invested in the risk-free asset and the risky asset, respectively, to form a portfolio with a standard deviation of 6%?

Q591. Which statement is false?

Q592. The arrangement between Delphi and GE Capital allows Delphi to finance its accounts payable through GE Capital. In the period when GE Capital pays the amounts due from Delphi to its vendors
Delphi reclassifies these items from accounts payable to short-term loans. The reclassification results in a(n) ________ in Delphi’s operating cash flow in that period. In the subsequent period Delphi repays GE
Capital, the outflow of the cash is reported as a ______ activity.

Q593. Suppose that events A, B, C, and D are independent, and have probabilities of 0.25, 0.50, 0.40, and
0 .30, respectively. What is P (ABCD)?

Q594. If a given score is at the 30th percentile for reference group A and the 60th percentile for reference group B, which of the following is most likely true?

Q595. An inverse-floater has coupon rate = Maximum [(18% – 2.5r) or 0], where r is the 6-month LIBOR rate.

Q596. Even though Mary’s income is very low, she makes sure that she purchases enough milk for her family to drink. As her income rises, she does buy more milk. Which graph in Figure 5.3 best represents
Mary’s Engel curve for milk?

Q597. The crowding-out model implies that budget deficit will

Q598. Main Street contains 8 traffic lights. The lights work independently of each other and the probability one of the lights is green is 60%. The probability of travelling Main Street without stopping for a light is
_ ___% (to the nearest 0.1%)

Q599. How does increasing the measure of days sales in payables (DSP) affect operating and financing cash flows?
Operating | Financing

Q600. Asset allocation is:

Q601. Which of the following statements is false with respect to factors that influence the attractiveness of financing with warrants and convertibles?

Q602. An analyst examines many different pieces of nonpublic, nonmaterial information regarding a firm and comes to a significant conclusion. According to the ______ theory, the analyst can act on this conclusion.

Q603. Your firm’s EPS last year was $1.00. You expect sales to increase by 15 percent during the coming year. If your firm has a degree of operating leverage equal to 1.25 and a degree of financial leverage equal to 3.50, then what is its expected EPS?

Q604. Which of the following are reasons why budget deficits may lead to increase in the nominal interest rate?
I). increased demand for loanable funds.
II). rational expectation of future tax increases or spending cuts.
III). inflation.

Q605. Good Z can be bought and sold on both Market #1 and Market #2. Which of the following sets of prices for Good Z conform(s) to the no-arbitrage principle?
I). Market #1 = $75, Market #2 = $75
II). Market #1 = $125, Market #2 = $115
III). Market #1 = $87, Market #2 = $87