CFA Level 1 Question 15
Below are the current assets and current liabilities details of Bram Ltd. The acid test ratio of the company is close to
Cash ; 34
Inventory; 55
Short term investments; 32
Accounts Payables; 42
Accounts Receivables; 38
Short Term Borrowings; 21
a) 2.52
b) 1.83
c) 1.65
Answer C: ( Cash + Short term investments + Accounts Receivables ) / (Account payables + Short term borrowings)
(34+32+38) / (21+42) = 1.65
CFA Level 1 Question 16
Selected items from TAMSAC Ltd are presented below. The company plans to buyback 1.8 mn shares and they are proposing to fund this buyback through borrowing. The new EPS of TAMSAC after the buyback will be close to
Shares Outstanding (mn); 20
Price of the share (USD); 3.74
EBT (USD mn); 8.46
EPS (USD); 0.283
Marginal Borrowing Rate; 5.70%
a) USD 0.297
b) USD 0.440
c) USD 0.311
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CFA Level 1 Question 16
Selected items from TAMSAC Ltd are presented below. The company plans to buyback 1.8 mn shares and they are proposing to fund this buyback through borrowing. The new EPS of TAMSAC after the buyback will be close to
Shares Outstanding (mn); 20
Price of the share (USD); 3.74
EBT (USD mn); 8.46
EPS (USD); 0.283
Marginal Borrowing Rate; 5.70%
a) USD 0.297
b) USD 0.440
c) USD 0.311
Answer A: PAT (EPS * Shares); 5.67
Tax (EBT-PAT); 2.79
Tax rate(tax/EBT); 0.33
Money required to buy 1.8 mn shares (1.8*3.74 mn); 6.732
Interest on Borrowed money (6.7* 5.7%); 0.384
New EBT (old EBIT - incremental interest); 8.07
New PAT (New EBP * (1-Tax rate)); 5.41
New share OS (20-1.8); 18.2
New EPS (New PAT/ New shares OS); 0.297
CFA Level 1 Question 17
Cook an analyst is working on estimating asset beta for BigBet Ltd. He calculated the Beta of the equity from Stock price and relevant index return as 1.32. He also collected the below information from the latest financials of the company (values ate in USD mn). The Asset Beta of BigBet is closest to
Net Worth: 750
Total Debt: 575
EBIT: 416.17
EBT: 373.04
Net Profit: 242.48
a) 1.98
b) 0.97
c) 0.88
CFA Level 1 Question 17
Cook an analyst is working on estimating asset beta for BigBet Ltd. He calculated the Beta of the equity from Stock price and relevant index return as 1.32. He also collected the below information from the latest financials of the company (values ate in USD mn). The Asset Beta of BigBet is closest to
Net Worth: 750
Total Debt: 575
EBIT: 416.17
EBT: 373.04
Net Profit: 242.48
a) 1.98
b) 0.97
c) 0.88
Answer C: Beta(Asset) = Beta (Equity) * [ 1/ {1+ D/E* (1-t)}]
Tax paid = EBT €“ PAT = 130.57; Tax rate = 130.57/373.04 = 35%
D/E = 575/750 =0.77; [ 1/ {1+(0.77*(1-35%))}] * 1.32 = 0.88
CFA Level 1 Practice Question 18
Which of the below corporate action will affect the capital structure of the company
a) Cash Dividend
b) Stock Dividend
c) Stock Split
CFA Level 1 Practice Question 18
Which of the below corporate action will affect the capital structure of the company
a) Cash Dividend
b) Stock Dividend
c) Stock Split
Ans A; Stock dividend and stock split do not involve cash and hence will not affect capital structure. Post stock dividend and stock split the Net worth and Debt in Dollar terms will remain the same and hence the capital structure will not change. In case of cash dividend Net worth will decrease resulting in increase of Debt €“ Equity ratio
CFA Level 1 Practice Question 19
Rave Ltd has 10 million shares outstanding and they are planning to buyback 1 million shares using the cash in books. The shares of the company are presently trading at a Price to Book Value multiple of 1.7X. Post the buyback Rave Ltd's Book Value Per Share (BVPS) will
a) Increase
b) Decrease
c) Not Change
Ans B: For example Let us take Book Value of Rave Ltd's equity is $100 mn. BVPS = 100/10 =10. Current price at P/B of 1.7X = 1.7*10 =$17. IF Rave buy's 1 mn shares are at $17/share, the networth post buy back =$83 mn. Shares outstanding post buyback = 10- 1 = 9mn. BVPS post buy back = 83/9 = $9.22 which is less than BVPS of $10 before buy back
hello,
i am going to appear for l-1 dec exam.i have some doubts...kindly help me out..1> can we make payment through cheque/ dd or only credit card option is available? & what is the payment procedure through either of cheque or credit card?which is the best option?
also will the exam be in online format ? am giving for the first time so i am not aware of it
p.s. kindly don't reply " check on the cfai website"
reply asap coz if its only through credit card it will require some time to avail it
You can pay either through Credit card or debit card. However it not be your own card, you can pay using your friends/parents cards and repay them in cash. The exam will not be in online format it will be conducted in paper format
CFA Level 1 Practice Question 20
Tigeress Ltd has below operating details. The Degree of Total Leverage for the company is close to
Unit Produced – 10,000
Price per unit - $10
Variable cost per unit - $4
Total Fixed cost - $37,500
Total Borrowing – $75,000
Cost of Borrowing – 5.2%
a) Data Insufficient
b) 2.67
c) 3.20
Hi @Nirmal_Analyst I am about to register for December 2013 CFA Level 1 exam.Can i register it with a Debit Card? This is my first time,so gathering help from fellow puys regarding the registration and Test taking process. Any guidance for the first timers here would be of great help. Thank you in advance.
Hi@Nirmal_Analyst
I am about to register for December 2013 CFA Level 1 exam.Can i register it with a Debit Card? This is my first time,so gathering help from fellow puys regarding the registration and Test taking process. Any guidance for the first timers here would be of great help. Thank you in advance.
@tukka_king the acceptable payment modes are available in below link. As long as it is international master, Visa crad etc...it does not matter whether it is a credit or debt card
CFA Level 1 Practice Question 20
Tigeress Ltd has below operating details. The Degree of Total Leverage for the company is close to
Unit Produced – 10,000
Price per unit - $10
Variable cost per unit - $4
Total Fixed cost - $37,500
Total Borrowing – $75,000
Cost of Borrowing – 5.2%
a) Data Insufficient
b) 2.67
c) 3.20
Ans C: DTL = DOL * DFL or
Q * (P-V)/ [ Q (P-V)-F-C] = 10,000 * (10-4)/ [ 10000*10-4)-37500-75000*5%] = 3.2
CFA Level 1 Practice Question 21
Which of the below is NOT an essential characteristic of an effective board structure
a) Majority of the board members should be independent
b) Directors should have complete access to the company's financials
c) Director's should have right to hire external consultants on the advice of Management
ANy1 knowing about any good classes for CFA L1 December attempt near mumbai area ??
CFA Level 1 Practice Question 21
Which of the below is NOT an essential characteristic of an effective board structure
a) Majority of the board members should be independent
b) Directors should have complete access to the company's financials
c) Director's should have right to hire external consultants on the advice of Management
Ans C: Director's should have right to independently hire consultants without Management's intervention.
CFA Level 1 Practice Question 22
Which of the below statement is MOST accurate about stock Beta as defined by CAPM model
a) Beta is a measure of sensitivity of the stock's price to the movement of the market
b) Beta accounts only for diversifiable risk
c) Beta is given by ratio of variance of the stock to variance of the market
CFA Level 1 Practice Question 22
Which of the below statement is MOST accurate about stock Beta as defined by CAPM model
a) Beta is a measure of sensitivity of the stock's price to the movement of the market
b) Beta accounts only for diversifiable risk
c) Beta is given by ratio of variance of the stock to variance of the market
Ans A: Beta is given by the ratio of covariance between stock and market to variance of the market. Beta accounts for only risk that cannot be diversified.
