WorksheetsCFA L1 2022 Question Bank — QA [B] Qns 1-93
Total questions: 60
Worksheet time: 58mins
If Stock X's expected return is 30% and its expected standard deviation is 5%, Stock X's expected coefficient of variation is:
Assume that the following returns are a sample of annual returns for firms in the clothing industry.
Annual Returns on ABC Mutual Fund
Given the following annual returns, what are the geometric and arithmetic mean returns, respectively?
Trina Romel, mutual fund manager, is taking over a poor-performing fund from a colleague. Romel wants to calculate the return on the portfolio. Over the last five years, the fund's annual percentage returns were: 25, 15, 12, -8, and –14. Determine if the geometric return of the fund will be less than or greater than the arithmetic return and calculate the fund's geometric return:
Michael Philizaire decides to calculate the geometric average of the appreciation/deprecation of his home over the last five years. The geometric return is closest to:
In a negatively skewed distribution, what is the order (from lowest value to highest) for the distribution's mode, mean, a
An analyst is asked to calculate standard deviation using monthly returns over the last five years. These data are best described as:
A)cross-sectional data.
B)unstructured data.
C)time series data.
A frequency polygon is best suited to summarizing:
A)underlying trends over time.
B)unstructured textual data.
C)a distribution of numerical data.
A 5% trimmed mean ignores the:
A)highest and lowest 5% of observations.
B)highest and lowest 2.5% of observations.
C)lowest 5% of observations.
Which of the following best describes a frequency distribution? A frequency distribution is a grouping of:
A)measures used to describe a population
B)data into non-overlapping intervals
C)data into groups, the numerical order of which does not matter
In a frequency distribution from 30% to 90% that is divided into six equal-sized intervals, the absolute frequency of the sixth interval is:
A)2
B)3
C)4
Which of the following tools is best suited for visualizing the relative changes over time in the daily closing prices for two stocks?
A)Heat map.
B)Bar chart.
C)Line chart.
Which of the following statements concerning kurtosis is most accurate?
A)A distribution with kurtosis of +2 has fatter tails than a normal distribution.
B)A leptokurtic distribution has excess kurtosis less than zero.
C)A leptokurtic distribution has fatter tails than a normal distribution.
A distribution that has positive excess kurtosis is:
A)more peaked than a normal distribution.
B)less peaked than a normal distribution.
C)more skewed than a normal distribution.
Which of the following tools is most appropriate for visualizing how frequently certain words appear in a set of social media posts?
A)Tree map.
B)Word cloud.
C)Histogram.
Over the last five years, an investment fund's monthly returns were relatively stable apart from last year, where two extremely high returns were recorded. If the arithmetic mean for the fund's monthly returns over the period is 6.7%, a trimmed or winsorized mean return is most likely to be
A)higher than the arithmetic mean.
B)equal to the arithmetic mean.
C)lower than the arithmetic mean.
Which of the following indicates the frequency of an interval in a frequency distribution histogram?
A)Width of the corresponding bar.
B)Horizontal logarithmic scale.
C)Height of the corresponding bar.
Which of the following statements concerning skewness is least accurate? A distribution with:
A)skew equal to 1 is not symmetrical.
B)negative skewness has a large number of outliers on its left side.
C)positive skewness has a long left tail.
If a distribution is positively skewed, then generally:
A)mean > median < mode.
B)mean < median < mode.
C)mean > median > mode.
Categorical or qualitative data types include:
A)ordinal data.
B)discrete data.
C)continuous data.
Given the following annual returns, what are the geometric and arithmetic mean returns, respectively?
A)1.45%; 3.00%.
B)2.75%; 3.00%.
C)2.75%; 5.80%.
What is the coefficient of variation?
168%.
60%.
84%.
For the investments shown in the table below, which of the following statements is most accurate?
A)The median is equal to the mode.
B)The mean is equal to the mode.
C)The mean is equal to the median.
The sample of per square foot sales for 100 U.S. retailers in December 2004 is an example of:
A)cross-sectional data.
B)time-series data.
C)panel data.
Given the following annual returns, what is the mean absolute deviation?
A)0.0%.
B)3.0%.
C)5.6%.
David Martin, CFA, recently joined Arc Financial as a portfolio manager of an emerging markets mutual fund. Does this statement violate the CFA Institute Standard of Professional Conduct related to performance presentation?
A)No.
B)Yes, because the Standards prohibit showing past performance at a prior firm.
C)Yes, because Arc must present at least five years of Martin’s performance history.
A distribution with a mode of 10 and a range of 2 to 25 would most likely be:
A)negatively skewed.
B)positively skewed.
C)normally distributed.
A distribution of returns that has a greater percentage of small deviations from the mean and a greater percentage of large deviations from the mean compared to a normal distribution:
A)has positive excess kurtosis.
B)is positively skewed.
C)has negative excess kurtosis.
Which of the following statements about histograms and frequency polygons is least accurate?
A)A frequency polygon is constructed by plotting the midpoint of each interval on the horizontal axis.
B)A histogram and a frequency polygon both plot the absolute frequency on the vertical axis.
C)A histogram connects points with a straight line.
The owner of a company has recently decided to raise the salary of one employee, who was already making the highest salary in the company, by 40%. Which of the following value(s) is (are) expected to be affected by this raise?
A)mean only.
B)median only.
C)mean and median only.
Which of the following is most likely an example of structured data?
A)Management’s discussion and analysis of a company’s financial condition.
B)Social media posts.
C)Daily closing prices for a stock over the past month.
Given the following set of data: 17, 3, 13 , 3, 5, 9, 8. The value 8 is most accurately described as the:
A)mean.
B)median.
C)mode.
The following data points are observed returns. 4.2%, 6.8%, 7.0%, 10.9%, 11.6%, 14.4%, 17.0%, 19.0%, 22.5%. What return lies at the 70th percentile (70% of returns lie below this return)?
A)17.0%.
B)19.0%.
C)14.4%.
Based on the confusion matrix, how many companies did the model incorrectly predict would not default on their loan payments?
80.
50.
30.
What is the seventh decile of the following data points?
A)141.7.
B)141.0.
C)142.0.
Consider the following set of stock returns: 12%, 23%, 27%, 10%, 7%, 20%,15%. The third quartile is:
A)20.0%.
B)21.5%.
C)23%.
Which of the following statements concerning a distribution with positive skewness and positive excess kurtosis is least accurate?
A)It has fatter tails than a normal distribution.
B)It has a lower percentage of small deviations from the mean than a normal distribution.
C)The mean will be greater than the mode.
Consider the following statements about the geometric and arithmetic means as measures of central tendency. Which statement is least accurate?
A)The geometric mean may be used to estimate the average return over a one-period time horizon because it is the average of one-period returns.
B)The geometric mean calculates the rate of return that would have to be earned each year to match the actual, cumulative investment performance.
C)The difference between the geometric mean and the arithmetic mean increases with an increase in variability between period-to-period observations.
For the last four years, the returns for XYZ Corporation's stock have been 10.4%, 8.1%, 3.2%, and 15.0%. The equivalent compound annual rate is:
A)9.1%.
B)9.2%.
C)8.9%.
An analyst calculates a winsorized mean return of 3.2% for an investment fund. This measure most likely:
An investor has a $12,000 portfolio consisting of $7,000 in stock P with an expected return of 20% and $5,000 in stock Q with an expected return of 10%. What is the investor's expected return on the portfolio?
A sample of returns for four randomly selected assets in a portfolio is shown below: AssetReturn (%) A1.3 B1.4 C2.2 D3.4 What is the sample standard deviation of asset returns?
What is the coefficient of variation for a distribution with a mean of 10 and a variance of 4?
A scatter plot matrix is best suited to visualize:
the joint variability between two variables
trends in more than one variable over time
correlations among multiple variables
In a frequency distribution histogram, the frequency of an interval is given by the:
height of the corresponding bar
height multiplied by the width of the corresponding bar
width of the corresponding bar
Which of the following statements regarding frequency distributions is least accurate?
summarize data into a relatively small number of intervals
organize data into overlapping groups
work with all types of measurement scales
Panel data are most accurately described as:
A) a type of time series data.
B) a type of cross-sectional data.
C) a combination of time series and cross-sectional data.
In the contingency table above, the values shown are:
relative frequencies
joint frequencies
marginal frequencies
A portfolio's monthly returns follow a distribution with a kurtosis measure of 4.2. Relative to a portfolio with normally distributed returns, this portfolio has a:
higher probability of extreme upside returns and lower chance of extreme downside returns
higher probability of extreme upside returns and higher chance of extreme downside returns
lower probability of extreme upside returns and higher chance of extreme downside returns
A bubble line chart is best suited to summarizing data with:
three dimensions
one dimension
two dimensions
The respective arithmetic mean and geometric mean returns of the following series of stock market returns are:
A) 8.75%; 8.34%.
B) 8.90%; 8.62%.
C) 8.75%; 8.62%.
The dividend yield of the S&P 500 index is least likely an example of:
numerical data
nominal data
continuous data
The following annualized monthly return measures have been calculated for an investment based on its performance over the last 72 months. Arithmetic mean 6.8% Geometric mean 6.0% 90% Winsorized mean 5.5% If for one month in the period the return was extremely high, which measure best reflects the central tendency of the investment's returns?
Geometric mean
Winsorized mean
Arithmetic mean
Given the following box-and-whisker plot: The interquartile range is:
A) 0.5% to 5.2%.
B) 3.1% to 5.2%.
C) 0.5% to 3.1%.
If the historical mean return on an investment is 2.0%, the standard deviation is 8.8%, and the risk free rate is 0.5%, what is the coefficient of variation (CV)?
4.40
0.17
0.23
An investor has the following assets: $5,000 in bonds with an expected return of 8%. $10,000 in equities with an expected return of 12%. $5,000 in real estate with an expected return of 10%. What is the portfolio's expected return?
A) 10.00%.
B) 10.50%.
C) 11.00%.
An analyst gathers the following data about the mean monthly returns of three securities: Security X: Mean Monthly Return 0.9, Standard Deviation 0.7; Security Y: Mean Monthly Return 1.2, Standard Deviation 4.7; Security Z: Mean Monthly Return 1.5, Standard Deviation 5.2. Which security has the highest level of relative risk as measured by the coefficient of variation?
Z
Y
X
For the past three years, Acme Corp. has generated the following sample returns on equity (ROE): 4%, 10%, and 1%. What is the sample variance of the ROE over the last three years?
21.0%
4.6%
21.0%
Use the results from the following survey of 500 firms to answer the question. Number of Employees: 300 up to 400 - 40, 400 up to 500 - 62, 500 up to 600 - 78, 600 up to 700 - 101, 700 up to 800 - 131, 800 up to 900 - 88. The cumulative relative frequency of the second interval (400 to 500) is:
10.2%
12.4%
20.4%
