CFA Institute CFA Institute Certifications CFA-LEVEL-1 Questions & Answers

• Question 741:

  According to the framework for real estate analysis, one determinant of value is supply. Which of following is not a subset of "supply"?

  A. Inventorying competitors

  B. Market structure

  C. Sources of competition

  D. All of these answers

  E. None of these answers

  Correct Answer: E

  All of these answers are demand determinants of value.

• Question 742:

  What would the offering price be if the NAV of a fund with a 7.5% load is $10.25?

  A. 10.25

  B. 10.90

  C. 10.45

  D. 11.31

  E. 11.08

  Correct Answer: E

  The offering (ask) price = NAV / (1.0 - percent load) $10.25 / (1 - .075) = 11.08

• Question 743:

  Which is not a true statement concerning the empirical evidence of mutual fund performance?

  A. less than 32 percent of the funds outperform the DJIA

  B. risk measures increase as fund objectives become more aggressive

  C. none of these answers are true

  D. more aggressive funds outperformed more conservative funds

  E. good performance is associated with low expense ratios

  F. successful market forecasting was not accomplished overall by fund managers

  G. all of these answers are true

  Correct Answer: G

  All of these are true as a result of research.

• Question 744:

  Which one of the following is not one of the four major determinants of real estate value?

  A. the property

  B. demand

  C. supply

  D. the property transfer process

  E. none of these answers

  Correct Answer: E

  Demand, supply, the property and the property transfer process all are determinants of real estate value.

• Question 745:

  The portfolio of securities of an investment company is typically managed by

  A. the company's board of directors.

  B. the company's analysts.

  C. the company's CEO.

  D. a legally separate investment management company.

  Correct Answer: D

  The portfolio and most other administrative duties of the investment company are typically managed by a separate investment management company. In fact, that investment management company usually starts the investment company and picks its board of directors, who then hire the investment management company to manage the new investment company's portfolio.

• Question 746:

  What is a characteristic of an open-end investment company?

  A. NAV is based on current market prices

  B. its stock trades on the regular secondary market

  C. its market price is determined by supply and demand

  D. the NAV is computed twice daily

  E. it continues to repurchase and sell shares

  Correct Answer: E

  Open-end investment companies (mutual funds) sell additional shares of the fund at the NAV, with or without sales charge, or redeem shares at the NAV, with or without redemption fees.

• Question 747:

  Which statement is correct concerning the correlation of venture capital?

  A. It has a high correlation with the other assets in a portfolio.

  B. There is a positive correlation with treasury bills.

  C. It is negatively correlated to the large-cap stock market.

  D. There is a small correlation with corporate and treasury bonds.

  E. It is highly correlated with the small-cap stock market.

  Correct Answer: E

  The high correlation with small-cap stocks primarily results from the implications of exit strategies, which are fundamentally connected to the value of the market.

• Question 748:

  Name the fee charged by a fund when the fund is bought and is typically in the 3 percent range of the NAV?

  A. low-load

  B. management fees

  C. deferred sales load

  D. no-load

  E. commissions

  F. 12b-1 plan

  Correct Answer: D

  Between the full-load and no-load funds charges, low-load funds are used for bond or equity funds offered by management companies that also offer no-load funds.

• Question 749:

  A/An ________ sells shares at their NAV.

  A. initial offer fund

  B. par-value fund

  C. no-load fund

  D. closed-end fund

  Correct Answer: C

  A no-load fund imposes no sales charges so it sells shares at their NAV, however some charge a small redemption fee of about half-percent.

• Question 750:

  Aggressive (growth) funds have tended to

  A. outperform conservative funds.

  B. have portfolio compositions very similar to conservative funds.

  C. have returns about equal to those of conservative funds.

  D. underperform conservative funds.

  Correct Answer: A

  A study by McDonald found a positive relationship between stated objectives (growth vs. income, for example) and measures of risk. The higher risk was also found to have been positively related to higher return. The objectives of a fund were thus found to have influenced its performance.