CFA Level 1 Free Practice Test

1. You are provided with the following information on a non-callable, non-convertible preferred stock:

Face value: GBP65.00
Annual dividend: GBP6.35
Maturity: Perpetual
Embedded options: None
Required rate of return: 8.75%

The intrinsic value of this stock is closest to:

2. Management fees in private equity are ________ those in hedge funds in that _________.

3. Which of the following statements relating to obstacles to efficient allocation of resources is/are most likely incorrect?

I: Price ceilings set below the equilibrium price lead to shortages, bribery, poor quality and black marketeering.
II: Subsidies decrease equilibrium quantities and lead to dead weight losses from overproduction.
III: Production quotas decrease equilibrium quantities and lead to dead weight losses from underproduction.

4. The exchange rate between two currencies has decreased to 101.34. The price currency has appreciated by 7.5 percent against the base currency. The initial exchange between the two currencies was closest to:

5. Given the following data, determine the cash flow from operations:

Sales = USD2,100m
Increase in inventory = USD200m
Depreciation = USD125m
Increase in accounts receivable = USD75m
Decrease in accounts payable = USD70m
After tax profit margin = 35%
Gain on sale of machinery = USD30m