5 questions will be shown from 30 free practice questions to prepare you for the CFA level 2 exam. Enjoy!
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1. Based on the data in Exhibit 2, the GDP growth rate in Country A using Hollingsworth’s preferred method of calculation is closest to:
Hollingsworth;s preferred method of calculating the GDP growth rate is the Solow growth accounting equation, and the rate is calculated as follows: ΔY/Y = ΔA/A + α(ΔK/K) + (1 – α)(ΔL/L) where ΔY/Y = Growth in gross domestic product, GDP ΔA/A = Growth in total factor productivity = 1/5% ΔK/K = Growth rate of capital = 3.2% ΔL/L = Growth rate of labor = 0.4% α = Output elasticity of capital = 0.3 1 – α = Output elasticity of labor = 0.7 Thus, ΔY/Y = 1.5 + (0.3 × 3.2) + (0.7 × 0.4) = 1.5 + 0.96 + 0.28 = 2.74. The calculation did not apply (1 – α). ΔY/Y = 1.5 + (0.3 × 3.2) + 0.4 = 1.5 + 0.96 + 0.4 = 2.86 The inflation rate was incorrectly used in place of TFP in the calculation. ΔY/Y = 1.7 + (0.3 × 3.2) + (0.7 × 0.4) = 1.7 + 0.96 + 0.28 = 2.94
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2. Which inputs listed in Exhibit 2 are most likely required in Betta’s development of a reduced form model?
. A reduced form model requires that one of the company’s liabilities trade; it can be a zero-coupon bond or an estimation of zero-coupon bonds from observable risky coupon bond prices that trade. In addition, the company’s default prospects are dependent on macroeconomic state variables. These explanatory variables can include such inputs as the growth rate of GDP and the level of unemployment. The model also requires a risk-free rate. because a reduced form model requires that the state of the economy can be described as a vector of macroeconomic state variables. because a reduced form model requires that some of the company’s debt trades, either a zero-coupon or coupon bond.
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3. Are Marlin’s points regarding structural models of credit risk most likely correct?
. Both points that Marlin makes regarding structural models of credit risk are correct. because the first point is correct. because the second point is correct.
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4. According to the CFA Institute Research Objectivity Standards, does LeCompte’s first statement made during her television appearance most likely provide all the recommended disclosures relating to potential conflicts of interest?
. LeCompte provided all the recommended disclosures relating to potential conflicts of interest with respect to UniFlash. In addition to her small equity position in NanoMem and the firm’s market making role for NanoMem shares, LeCompte should have also disclosed the “benefit received” from NanoMem concerning the trip she took as required by Standard 2, Public Appearances. In addition, if news of the secondary offering of NanoMem had already been made public, she should have also disclosed the fact that Topaz had been appointed the lead underwriter. LeCompte only provided recommended disclosures relating to potential conflicts of interest with respect to UniFlash.
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5. The mark-to-market value for Drawbridge’s forward position is closest to:
1 Drawbridge sold AUD 5 million forward to the settlement date at an all-in forward price of 0.8940 (USD/AUD). 2 To mark the position to market, Drawbridge offsets the forward transaction by buying AUD 5 million three months forward to the settlement date. 3 For the offsetting forward contract, because the AUD is the base currency in the USD/AUD quote, buying AUD forward means paying the offer for both the spot rate and forward points. I. The all-in three-month forward rate is calculated as 0.9066 – 0.00364 = 0.90296 II. This gives a net cash flow on settlement day of 5,000,000 × (0.8940 – 0.90296) = –USD44,800 (This is a cash outflow because Drawbridge sold the AUD for- ward and the AUD appreciated against the USD). 4 To determine the mark-to-market value of the original forward position, calculate the present value of the USD cash outflow using the three-month USD discount rate: –USD44,8000/[1 + 0.0023(90/360)] = –USD44,774. The present value of the cash flow was not calculated (step 4 of calculation). The cash flow was calculated using the bid rate instead of the offer rate. 1 The all-in three-month forward rate = 0.9062 – 0.00368 = 0.90252 2 This gives a net cash flow on settlement day of 5,000,000 × (0.8940 – 0.90252) = – USD42,600, and the present value is calculated as –USD42,600/[1 + 0.0023(90/360)] = –USD42,576.
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腦海中有大膽的想法嗎