MCQ Set 1.pdf

5/28/24, 11:29 AM [email protected] Switch account The name, email, and photo associated with your Google account will be recorded when you upload files and submit this form Section A: MCQ Questions (2 marks each; 60 marks total)...

5/28/24, 11:29 AM [email protected] Switch account The name, email, and photo associated with your Google account will be recorded when you upload files and submit this form Section A: MCQ Questions (2 marks each; 60 marks total) Section A covers CK1, CK2, CCIT1 Choose/fill in the most correct answer for each question. You can find draft sheet for calculation in the next section. Which of the following statements is most correct ? (Exchange-traded- 2 points funds) ETFs differ from index mutual fund as : ETFs are more tax-effective Mututal funds have lower fees Mutual funds pay out all dividends received Clear selection Which factor is most likely associated with stable market share? 2 points Low switching costs. Low barriers to entry. Slow pace of product innovation. Clear selection https://docs.google.com/forms/d/e/1FAIpQLSddmikS_adSb79a-vPOHHnwXmC6okvD11TZYCXjzALfQyb0-g/formResponse 1/12 5/28/24, 11:29 AM Which of the following statements is least correct? 2 points A separately managed account (SMA): Takes into account the specific tax needs of the investor. Provides investors with units in a pooled investment vehicle. Generally requires a higher minimum investment than mutual funds. Clear selection An analyst determines the intrinsic value of an equity security to be equal 2 points to $55. If the current price is $47, the equity is most likely: undervalued. fairly valued. overvalued. Clear selection Which of the following is not a financial intermediary? 2 points Cambodia derivatives exchange (CDX) Cambodia securities exchange (CSX) General department of taxation (GDT) Clear selection https://docs.google.com/forms/d/e/1FAIpQLSddmikS_adSb79a-vPOHHnwXmC6okvD11TZYCXjzALfQyb0-g/formResponse 2/12 5/28/24, 11:29 AM Which type of equity valuation model is most likely to be preferable when 2 points one is comparing similar companies? Relative valuation model. Discounted cash flow model. An asset-based valuation model Clear selection Which of the following statements is least accurate in describing a 2 points company’s market value? Management’s decisions do not influence the company’s market value. Increases in book value may not be reflected in the company’s market value. Market value reflects the collective and differing expectations of investors. Clear selection Surf City Software Company develops new surf forecasting software. It 2 points sells the software to Microsoft in exchange for 1,000 shares of Microsoft common stock. Surf City Software has exchanged a ________ asset for a ________ asset in this transaction. Financial / Real Real / Financial Real / Real Clear selection https://docs.google.com/forms/d/e/1FAIpQLSddmikS_adSb79a-vPOHHnwXmC6okvD11TZYCXjzALfQyb0-g/formResponse 3/12 5/28/24, 11:29 AM Rithy is an investment analyst for SBI Royal Cambodia, a major investment 2 points firm in Cambodia. Cambodia is a developing country with a rapidl modernizing economy and a growing capital market, CSX. However, local securities laws are minimal - in form and content - and include no punitive prohibitions against insider trading. Rithy is in possession of material nonpublic information. If Rithy act on the information, is he violating any standard and which one? No, there is no prohibition, Standard I (A) Yes, violating Standard I (B) Yes, violating Standard I (A) Clear selection The standard deviation of return on investment A is 10% and expectes return 2 points is 20% while the standard deviation of return on investment B is 4% and expected return is 15%. If the correlation coefficient between the returns on A and B is -0.50. The covariance of returns on A and B is................ -0.015 -0.002 -0.004 Clear selection https://docs.google.com/forms/d/e/1FAIpQLSddmikS_adSb79a-vPOHHnwXmC6okvD11TZYCXjzALfQyb0-g/formResponse 4/12 5/28/24, 11:29 AM A company’s cost of equity is often used as a proxy for investors’: 2 points Average required rate of return. Minimum required rate of return. Maximum required rate of return Clear selection The Anderson Door Co. earned $30 million before interest and taxes on 2 points revenues of $80 million last year. Capital expenditures were $20 million, and depreciation was $15 million. The additions to working capital were $6 million. The firm's weighted average cost of capital is 12.45%. The value of the firm's equity is closest to (million)...........? $64 $78 $74 Clear selection Chanramy uses e-mail to issue a new recommendation to all his clients. 2 points She then calls her three largest institutional clients to discuss the recommendation in detail. Has Chanramy violated any standart ? No, her action in line with Standart III (B) No, her action consistent with Standard III (A) Yes, violating standard III (B) Clear selection https://docs.google.com/forms/d/e/1FAIpQLSddmikS_adSb79a-vPOHHnwXmC6okvD11TZYCXjzALfQyb0-g/formResponse 5/12 5/28/24, 11:29 AM Which of the following is not a primary goal of raising equity capital? 2 points To finance the purchase of long-lived assets. To finance the company’s revenue-generating activities. To ensure that the company continues as a going concern Clear selection Which of the following is least likely one of Porter's "five forces" framework 2 points ? Intensity of rivalry Macroeconomic influences Bargaining power of suppliers Clear selection Sokuntheary directs a large amount of her commission business to a Hong- 2 points Kong-based brokerage house. In appreciation for all the business, the brokerage house sponsor Sokuntheay and her entire family for a one weeks vacation in Siam Reap at a nearby resort, several meals , an transportation via limousine to Angkor Wat and other historical sight. However, Sokuntheary fails disclose receiving this package to his supervisor. Which CFA standard has Theary violated? Standard V (D) Standard I (B) Standard II (B) Clear selection https://docs.google.com/forms/d/e/1FAIpQLSddmikS_adSb79a-vPOHHnwXmC6okvD11TZYCXjzALfQyb0-g/formResponse 6/12 5/28/24, 11:29 AM Which of the following statements about financial markets and securities 2 points are true? A bond is a long-term security that promises to make periodic payments called dividends to the firm’s residual claimants. A debt instrument is intermediate term if its maturity is less than one year. A debt instrument is long term if its maturity is five years or longer. Clear selection A 200,000 square feet office building rents for $25 per square feet. It 2 points currently has 45 units rented. Operating expenses, including building utilities and maintenance total $875,000 and vacancy and collection loss is 5% of potential gross income. The building taxes and insurance cost $350,000. Interest expenses cost $400,000 and other income from parking is expected to average $75,000 per year. The Net Operating Income (NOI) of the office building is close to ________? $4,598,250 $3,996,250 $3,596,250 Clear selection https://docs.google.com/forms/d/e/1FAIpQLSddmikS_adSb79a-vPOHHnwXmC6okvD11TZYCXjzALfQyb0-g/formResponse 7/12 5/28/24, 11:29 AM Which of the following is not an example of a financial intermediary in 2 points Cambodia? Yuanta Securities Cambodia Prince Bank Plc Metfone Clear selection The expected return of a portfolio is 8.9%, and the risk-free rate is 3.5%. If 2 points the portfolio standard deviation is 12%, What is the Sharpe (reward-to-variability) ratio of the porfolio ? -0.015 -0.002 -0.004 Clear selection A automotive manufacturer is most likely classified in which of the 2 points following industry sectors? A Consumer staples Industrial durables Consumer discretionary Clear selection https://docs.google.com/forms/d/e/1FAIpQLSddmikS_adSb79a-vPOHHnwXmC6okvD11TZYCXjzALfQyb0-g/formResponse 8/12 5/28/24, 11:29 AM Low-risk tolerance and high liquidity requirements best describe the typical 2 points investment needs of a(n) : Defined-benefit pension plan Insurance company Endowment Clear selection In an effort to pump up the price of his holdings in PPAP, Thanin logs on to 2 points several investor chat rooms on the internet to start rumors that the company is about to expand its rail network in anticipation of receiving a large contract for shipping lumber. Has Thanin violated any standard ? No, his action consistent with Standard I (D) No, his action consistent with Standard II (B) Yes, violating Standard II (B) Clear selection Bonds that are sold in a foreign country and are denominated in a currency 2 points other than that of the country in which they are sold are known as : Foreign bonds Eurobonds Corporate bonds Clear selection https://docs.google.com/forms/d/e/1FAIpQLSddmikS_adSb79a-vPOHHnwXmC6okvD11TZYCXjzALfQyb0-g/formResponse 9/12 5/28/24, 11:29 AM A Top-down security analysis begins by : 2 points Analysing a firm's business prospects and quality of managment Identifying the most attractive companies within each industry Examining economic conditions Clear selection Which of the following statements about correlation is least accurate ? 2 points Diversification reduces risk when correlation is less than +1 If the correlation coefficient is 0, a zero variance portfolio can be constructed The lower the correlation coefficient, the greater the potential benefits from diversification Clear selection Both buyout funds and venture capital funds: 2 points Expect that only a small percentage of investments will pay off Play an active role in the management of companies Restructure companies to increase cash flow Clear selection https://docs.google.com/forms/d/e/1FAIpQLSddmikS_adSb79a-vPOHHnwXmC6okvD11TZYCXjzALfQyb0-g/formResponse 10/12 5/28/24, 11:29 AM Which of the following is not a characteristic of common equity? 2 points It represents an ownership interest in the company. Shareholders participate in the decision-making process. The company is obligated to make periodic dividend payments Clear selection A company that is sensitive to the business cycle would most likely: 2 points Not have growth opportunities. Experience below-average fluctuation in demand. Sell products that the customer can purchase at a later date if necessary. Clear selection Which is an example of an activity that may be legal but that CFA Institute 2 points considers unethical ? Making legally required disclosures in marketing materials Trading while in possession of material nonpublic information Disclosure by an employee of his or her own company's dishonest activity Clear selection Back Next Page 2 of 4 Clear form Never submit passwords through Google Forms. This form was created inside of CamEd. Report Abuse Forms https://docs.google.com/forms/d/e/1FAIpQLSddmikS_adSb79a-vPOHHnwXmC6okvD11TZYCXjzALfQyb0-g/formResponse 11/12