CFA一级模考

CFA一级模考题

1 . The portfolio approach to investing is best described as evaluating each investment based on

its:

A) potential to generate excess return for the investor.

B) fundamentals such as the financial performance of the issuer.

C) contribution to the portfolio’s overall risk and return.

C was correct!

The portfolio approach to investing refers to evaluating individual investments based on their contribution to the overall risk and return of the investor’s portfolio.

2 . Which of the following statements best describes an investment that is not on the efficient

frontier?

A) There is a portfolio that has a lower return for the same risk.

B) There is a portfolio that has a lower risk for the same return.

C) The portfolio has a very high return.

B was correct!

The efficient frontier outlines the set of portfolios that gives investors the highest return for a given level of risk or the lowest risk for a given level of return. Therefore, if a portfolio is not on the efficient frontier, there must be a portfolio that has lower risk for the same return. Equivalently, there must be a portfolio that produces a higher return for the same risk.

3 . In equilibrium, investors should only expect to be compensated for bearing systematic risk

because:

A) nonsystematic risk can be eliminated by diversification.

B) individual securities in equilibrium only have systematic risk.

C) systematic risk is specific to the securities the investor selects.

A was correct!

In equilibrium, investors should not expect to earn additional return for bearing nonsystematic risk because this risk can be eliminated by diversification. Individual securities have both systematic and nonsystematic risk. Systematic risk is market risk; nonsystematic risk is specific to individual securities.

4 . An individual investor specifies to her investment advisor that her portfolio must produce a

minimum amount of cash each period. This investment constraint is best classified as:

A) liquidity.

B) legal and regulatory.

C) unique circumstances.

A was correct!

Liquidity constraints arise from an investor’s need for spendable cash.

5 .In the top-down approach to asset allocation, industry analysis should be conducted before

company analysis because:

A) most valuation models recommend the use of industry-wide average required returns,

rather than individual returns.

B) an industry's prospects within the global business environment are a major determinant

of how well individual firms in the industry perform.

C) the goal of the top-down approach is to identify those companies in non-cyclical

industries with the lowest P/E ratios.

B was correct!

In general, an industry’s prospects within the global business environment determine how well or poorly individual firms in the industry do. Thus, industry analysis should precede company analysis. The goal is to find the best companies in the most promising industries;

even the best company in a weak industry is not likely to perform well.