30 Questions
What percentage of data in a normal distribution lies within 2 standard deviations of the mean?
95%
What is the probability that a portfolio with an expected mean annual return of 10% and a standard deviation of 5% will lose money next year?
15.87%
What is the main advantage of using the normal distribution in business settings?
It allows us to estimate the likelihood of certain events.
What percentage of data in a normal distribution lies within 1 standard deviation of the mean?
68%
What is the characteristic of the normal distribution shown in Figure 11?
Symmetry
What is the expected return of the portfolio if the standard deviation is 5% and the client loses money next year?
-5%
What is the primary purpose of the Schweser Study Tools?
To supplement the original readings set forth by CFA Institute
What is the scope of the topics covered in the Schweser Study Tools?
All topics covered in the 2023 Level I CFA Study Guide
What is the relationship between the authors of the referenced readings and the Schweser Study Tools?
The authors have not endorsed or sponsored the study tools
What is the purpose of the FOREWORD section?
To provide an introduction to the study tools
What is the significance of the page that has been left intentionally blank?
It is a deliberate design choice
What is the relationship between the Schweser Study Tools and the 2023 Level I CFA Study Guide?
The study tools are supplementary to the study guide
What happens to the interest and principal components of a loan payment over time?
The interest decreases and the principal increases.
What is the present value of a perpetuity that pays $5 per year forever, discounted at 8%?
$62.50
If you own a stock that pays $3 dividends per year forever, and the appropriate discount rate is 12%, what is the present value of the stock?
$25
What is the relationship between the present value of an annuity due and the present value of an ordinary annuity?
The present value of an annuity due is greater than the present value of an ordinary annuity.
If a stock pays $1 dividends per year forever, and the appropriate discount rate is 6%, what is the present value of the stock?
$16.67
What is the present value of a perpetuity that pays $10 per year forever, discounted at 15%?
$66.67
At what price can local retailers sell a bag of gerbil bedding to ensure out-of-town suppliers won't compete?
$1.00
Why do local suppliers want to sell gerbil bedding at the highest possible price?
To maximize profits
What is the total cost of shipping gerbil bedding to the local market for out-of-town suppliers?
$0.75
Why can't suppliers compete on quality or service in the local gerbil bedding market?
Because customers don't care about the label
What is the key factor that determines the supply of gerbil bedding in the local market?
Local suppliers' production capacity
What makes the supply of gold chains different from that of gerbil bedding?
Gold chains are shipped from anywhere in the world
What is the result of the formula B = 1000 (1.10)^5 – 1000?
$3,271.49
What is the effective interest rate of an account with a nominal interest rate of 12% and 1 compounding period per year?
6.17%
What happens to the effective rate of interest when the number of compounding periods per year increases, assuming a constant nominal rate of interest?
It increases
What is the total value of an inheritance consisting of an annuity of $17,250 that will last 20 years, a lump sum payment of $250,000 that will occur in six years, and a lump sum payment of $675,000 that will occur in thirteen years, assuming a 12% interest rate?
$410,198
What is the mode of a calculator that is used to calculate the present value of an annuity?
END mode
What is the result of the formula –10,000 / (8 × (1 – (1 + 8/100)^(-5)))?
$58,666.01
This quiz is based on the 2023 Level I CFA Study Guide by CFA Institute. It covers various topics from the original readings, but accuracy is not guaranteed. Use it in conjunction with the original readings.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
