I am thinking to register for L1- June 2014. I have below query:
If i want to give the exam in India can I ask my sister to pay in GBP? What all things are required while registering/paying? Can we defer the slot booking and venue booking?
Please suggest urgently
CFA Level 1 Practice Question 52
A credit analyst estimates that the probability of default within 1 year for bonds with less than 1.5X interest coverage ratio is 35%. The analyst is tracking 45 such companies. The standard deviation of default for the analyst's tracking portfolio is closest to
a) 22.75
b) 10.24
c) 3.12
This follows Bernouli's distribution where variance will be given by n*P*(1-P); 45*35*65 = 10.24; Standard deviation = sqrt(10.24) = 3.12
CFA Level 1 Practice Question 53
A technical analyst watching movements of two large cap indices in India, Nifty and Sensex believed that later is more volatile than the earlier. To test this he collected data for last 25 trading sessions.
Nifty: Average: 0.9%, Standard Deviation: 7.2%
Sensex: Average: 0.85%, Standard Deviation: 4.9%
F value with Df1=24 and Df2=24 at 5% significance is 1.98
F value with ds1=24 and Df2=24 at 2.5% significance is 2.27
The analyst's believe that the volatility of the Sensex is lesser is
a) Right at 5% significance as Ratio of SD > Critical F Value
b) Right at 2.5% significance as ratio of SD > Critical F Value
c) Not right at 5% significance as ratio of SD
I am depositing the CFA fees through HDFC (master) credit card. The bank is saying I have to pay 3% transaction fee + 12.5% service tax. Has anyone knows how I can save that amount.... Does any other kind of credit card charge less.... Pl. HELP !!!!
CFA Level 1 Practice Question 53
A technical analyst watching movements of two large cap indices in India, Nifty and Sensex believed that later is more volatile than the earlier. To test this he collected data for last 25 trading sessions.
Nifty: Average: 0.9%, Standard Deviation: 7.2%
Sensex: Average: 0.85%, Standard Deviation: 4.9%
F value with Df1=24 and Df2=24 at 5% significance is 1.98
F value with ds1=24 and Df2=24 at 2.5% significance is 2.27
The analyst's believe that the volatility of the Sensex is lesser is
a) Right at 5% significance as Ratio of SD > Critical F Value
b) Right at 2.5% significance as ratio of SD > Critical F Value
c) Not right at 5% significance as ratio of SD
Answer: C. 7.2%^2 / 4.9%^2 = 2.15. The critical value at 5% is 1.98; since 1.98
CFA Level 1 Practice Question 54
An analyst read in a news item that Chincinnati fund reported a Sharpe ratio of 0.167 for the last year and a treynor ratio of 0.033 for the same period. He calculated the market volatility for the period as 16%. The coefficient of correlation of the fund with the market is closest to
a) 0.90
b) 0.81
c) 0.13
CFA Level 1 Practice Question 55
Below are excerpts from real Ltd's Financial statements (all values are in mn). The company's 'Free cash flow to firm' is closest to
EBITDA : 2200
EBIT : 1925
EBT: 1800
Net Profit: 1500
Net Debt Raised: 500
Increase in Current Liabilities: 100
Increase in Current Assets: 120
Dividend paid : 200
Capital Expenditure: 600
a) Rs. 1259 mn
b) Rs. 1299 mn
c) Rs.1280 mn
CFA Level 1 Practice Question 55
Below are excerpts from real Ltd's Financial statements (all values are in mn). The company's 'Free cash flow to firm' is closest to
EBITDA : 2200
EBIT : 1925
EBT: 1800
Net Profit: 1500
Net Debt Raised: 500
Increase in Current Liabilities: 100
Increase in Current Assets: 120
Dividend paid : 200
Capital Expenditure: 600
a) Rs. 1259 mn
b) Rs. 1299 mn
c) Rs.1280 mn
Answer A: FCFF = [EBIT x (1-tax rate)] + Dep - FCInv €“ WCInv;
Tax rate = (EBT-NP) / EBT = 16.67%; 1925 * (1-16.67%)+275-600+100-120= Rs. 1259
CFA Level 1 Practice Question 56
Below are the details of a bond. For 100 bps change in yield the convexity adjustment that needs to be done for the bond is closest to
Coupon %: 5%
Coupon Payment per year: 1
FV USD: 100
Maturity Years: 5
Yield: 4.50%
a) 0.12
b) 12.10
c) 24.20
CFA Level 1 Practice Question 57
Maya Limited reported an Inventory Turnover Ratio of 0.4X. The company uses FIFO inventory valuation method in the present inflationary environment. If the company had used LIFO inventory valuation instead their Inventory turnover would have been
a) Higher
b) Lower
c) Same
CFA Level 1 Practice Question 57
Maya Limited reported an Inventory Turnover Ratio of 0.4X. The company uses FIFO inventory valuation method in the present inflationary environment. If the company had used LIFO inventory valuation instead their Inventory turnover would have been
a) Higher
b) Lower
c) Same
Ans A: LIFO inventory turnover ratio would have been higher.
Inventory Turnover = COGS/ average inventory
In an inflationary environment under FIFO the older items which are cheaper will become part of COGS and costlier items will become part of Inventory.
If we convert FIFO in to LIFO then COGS will increase and the inventory will decrease.
Let us take numbers: COGS 40, Average inventory 100. Last year LIFO reserve is 25 and current year LIFO reserve is 30.
Inventory turnover under FIFO = 40/100 = 0.4X
Now, under LIFO
LIFO COGS = FIFO COGS + Change in LIFO Reserve; LIFO COGS = 45
LIFO inventory = FIFO inventory - LIFO Reserve; LIFO inventory = 100-30 = 70
LIFO Inventory turnover = 45/70 = 0.64X
CFA Level 1 Practice Question 58
Subjective follows LIFO inventory system for its reporting purpose in the current inflationary environment. All else remaining the same if the company has used FIFO inventory system the cash on books would have been
a) Higher
b) Lower
c) Same
CFA Level 1 Practice Question 58
Subjective follows LIFO inventory system for its reporting purpose in the current inflationary environment. All else remaining the same if the company has used FIFO inventory system the cash on books would have been
a) Higher
b) Lower
c) Same
Ans B: Lower. When it comes to cash flow the only difference between LIFO and FIFO is the tax paid. LIFO company reports higher cost and hence ends up paying lower tax. This leads to higher cash at the end of the year.
CFA Level 1 Practice Question 59
In May 2009 Air Chennai the airline operator opened the online advance booking for flights in November 2009. All the tickets got sold in May 2009 and the company collected Rs.125 crs in May 2009. The passengers traveled in November 2009 however Air Chennai paid the flight lease charges only in March 2010. Air Chennai should report the revenue with respect to this advance booking in
a) May 2009
b) November 2009
c) March 2010
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CFA Level 1 Practice Question 60
Laurence Ltd has leased an asset and currently reporting the lease as an operating lease and reported an interest coverage ratio of 4.0x. An analyst feels that the lease is essentially capital in nature and hence adjusted the financials accordingly for his analysis. Post the adjustment the Interest coverage ratio under capital lease would be ------------- compared to the Interest coverage ratio under operating lease
a) Same
b) Higher
c) Lower
CFA Level 1 Practice Question 60
Laurence Ltd has leased an asset and currently reporting the lease as an operating lease and reported an interest coverage ratio of 4.0x. An analyst feels that the lease is essentially capital in nature and hence adjusted the financials accordingly for his analysis. Post the adjustment the Interest coverage ratio under capital lease would be ------------- compared to the Interest coverage ratio under operating lease
a) Same
b) Higher
c) Lower
Ans C: Two adjustments will be made.
The operating lease rental will be removed €“ Increase Gross profit
i) The amount equal to principle will be amortized €“ There will be a net increase in EBIT because cost of goods sold decreased but amortization increase but by an amount that is lesser than decrease in COGS
ii) Interest payment increases. Because part of the lease payment is interest
To conclude EBIT would be higher and interest also would be higher. This difference will be equal on a Dollar basis. Given that the ratio currently is more than 1x, the above adjustments will lead to decrease of interest coverage ratio. If the current ratio is less than 1X, the answer does not hold good.
CFA Level 1 Practice Question 61
Laxman Ltd reported a return on equity of 27%. Net profit margin of 6% and Asset turn over ratio of 1.4X. If the company had Equity of 550 crs what would be the company's Average total assets
a. Rs. 1767 crs
b. Rs.183.3 crs
c. Rs.2475 crs
Hi All,
I have registered for CFA level 1 june 2014. Can anyone share the soft copy of notes?
Thanks