1. Felix Lindberg, CFA, is an individual investment adviser specializing in commodity investments. A little while back, Lindberg packaged and sold to his clients a portfolio of commodity futures. Lindberg’s family owns the largest cotton crops in the country, and 15% of the portfolio sold to his clients include cotton future contracts . What should Lindberg have done, following the CFA Institute Code of Ethics and Standards of Professional Conduct?

2. Sarah Nisim, CFA, runs a financial advisory business, specializing in retirement planning and investments. During a client’s meeting, Nisim is asked to advise the firm’s pension fund trustees on obtainable investments in the Swedish products market. After that, Nisim begins to familiarize with Swedish investment products. The ensuing meeting took place in the following week, in which she recommended Swedish investment products based on her investigation. Shortly after the meeting, the trustees incorporated Swedish products into their investment allocation. Were Nisim’s basis for the recommendation according to the CFA Code of Ethics?

3. Olof Kajbjer, a CFA candidate, in a meeting with his former employer, agreed in writing not to solicit old clients for a period of 3 years after his dismissal. Immediately after the meeting, Kajbjer consulted Ilya Osipov, his lawyer, about the agreement. Since Osipov warned him that his former employer doubtfully could enforce that agreement, KajBjer contacted all of his former clients to tell them about his new firm. Following the Standards of Practice Handbook, what more accurately define Kajbjer’s conduct?

4. Nikola Kovač, a CFA charter holder, during a meeting is asked to review his firm’s soft dollar practices. While doing the review, she noticed the firm had failed to disclose the practices to their clients in writing. Even though she knew that was required by law, Kovač does not report the firm’s violation to the authorities, she reports it to her supervisor instead. Has Kovač violated any of the CFA Institute Standards of Professional Conduct?

5. Louis Walker, CFA, works as an independent researcher. While analyzing Glencore, he overheard employees spreading a rumor that the CEO of Glencore had final stage cancer. Considering this information has not yet been widely disseminated, what is the most appropriate action for Walker according to the CFA Institute Code of Ethics and Standards of Professional Conduct?

6. Ana Dumbravă, CFA, provides investment advice to high-net-worth investors. Recently, Dumbravă completed an analysis of Alka Motors. She recommended the company for investors that were seeking growth and income. Throughout the process of her analysis, Dumbravă reviewed Alka’s management team, dividends, financial data and dividend policy, comparing it with Alka’s competitors. However, she doesn’t tell anyone that, three years ago, she’s worked at Alka managing the commodities derivatives trading unit. When she left Alka, Dumbravă received stock that she still owns. Shortly after she recommended Alka shares for her clients, the company announces its semestral earnings are 45% less than the past few years, making their shares drop by 65%. Which Dumbravă’s actions has violated the CFA Institute Code of Ethics and Standards of Professional Conduct?

7. Liam Moore, CFA, is an independent financial advisor. He had not had contact with his client in over three years. Recently, Moore scheduled a meeting with Adam Scott, his client, in which Scott declared his desire to increase his risk exposure. After the meeting, Moore buys in a number of high-risk assets, including commodities and derivatives, and added to Scott’s portfolio. Has Moore violated any CFA Institute Standards of Professional Conduct?

8. Richard Ramirez, CFA, is a financial advisor who practices in multiple jurisdictions. Ramirez is not required by law, in country A, to hold a financial advisors license but is to uphold a fiduciary duty to his clients. In country B, he is not required to uphold a fiduciary duty to his clients but is to hold a financial advisors license. However, in country C, Ramirez is required not only to hold a financial advisors license but also an asset management license in addition to upholding a fiduciary duty to his clients. What country makes Ramirez adhere CFA Code and Standards over local laws?

9. If a firm alleges compliance with the GIPS Standards, the firm is least likely required to:

10. Caroline Frost, a CFA charter holder runs a small investment management firm. Her firm agreed to buy services from a research firm. Smaller firms use the research reports provided by the research firm to as in-house research. Once the reports are concluded, they are widely disseminated to clients with specific references as to their source and author. Has Frost violated the Standard related to misrepresentation, following the Standards of Practice Handbook?

11. An analyst has established the following probabilities regarding next year’s economic scenario. The analyst estimates the likelihoods the company will cut the dividend given each economic stage as reported below. The company announced a cut on dividends. Using Bayes’ formula, the posterior probability that the economy entered into a recession is closest to:

12. When calculated for the same data and provided there is variability in the observations, the harmonic mean will most likely be:

13. The Central Limit Theorem is best described as stating that the sampling distribution of the sample mean will be approximately normal for large-size samples:

14. If the distribution of a population is positively skewed, it most likely:

15. If the distribution of the population from which the samples are drawn is negatively skewed, and given that the sample size is large, the sampling distribution of the sample means is most likely:

16. The number of ways we can choose r objects from a total of n objects, when the order in which the r objects are listed does matter is given by the permutation formula: How many permutations are possible when choosing 4 objects from a total of 10 objects?

17. A discrete uniform distribution consists of the following twelve values. On a single draw from the distribution, the probability of drawing a value between -1.0 and 1.5 from the distribution is closest to:

18. If the correlation between A and B is 0.6, and standard deviation of A and B are 10% and 15% respectively, then the covariance of A and B will be:

19. An analyst wants to test the following hypotheses for the expected return of a stock: Ho: E(R) >= 0; Ha: E(R) < 0 . Using a sample of 100 past returns, the analyst determined the mean and standard deviation to be 0.5% and 2% respectively. If the analyst used a critical value of 2.2 using the appropriate t-distribution, the analyst would:

20. An analyst calculates the correlation of variables in a sample to be 0.15. She wants to test the following hypotheses for the correlation of a given population: Ho: ρ >= 0; Ha: ρ < 0, where ρ is the correlation. The analyst collected a sample of 20 elements and determined a critical value of 2.2 using the appropriate t-distribution. In this case the analyst should:

21. Compared to the z-distribution, the t-distribution most likely:

22. In Hypothesis Testing, the step that comes after collecting the data is:

23. The difference between the binomial distribution and the normal distribution is that:

24. For planning purposes, an individual wants to be able to spend $100,000 per year, at the end of each year, for an anticipated 24 years in retirement. To fund this retirement account, he will make annual deposits of $6,591.25 at the end of each year. What is the minimum number of equal deposits he will need to make to fund his desired retirement? Use 5% interest compounded annually for all calculations.

25. If the quantity demanded of Good A falls by 5% when the price of Good B decreases by 3%, then A and B are best described as:

26. A product exhibits price elasticity of demand equal to 0.5, and elasticity of supply such a product are most likely borne:

27. As the quantity of labor increases, what is the effect on the marginal revenue product (MRP) of labor?

28. The cross elasticity of demand for a substitute product would most likely be:

29. If the labor force participation declines while the number of people employed remains unchanged, the unemployment rate will most likely:

30. According to the Heckscher-Ohlin Theorem, for a country to gain from trade it must:

31. The primary goal for most central banks could be characterized as:

32. Externalities due to a production of a good are most likely to impact:

33. Which of the following will most likely lead to demand-pull inflation?

34. Which of the following is most likely to be a tool available to a government for implementing fiscal policy?

35. Four countries operate within a customs union. One country proposes moving to a common market structure. What additional level of economic integration between the countries would most likely arise if this change took place? They would:

36. The current spot rate for the USD/EUR is 0.7500. The forward rate for the EUR/Australian dollar (AUD) is 1.4300, which represents a 400 forward-point premium to the spot rate. The USD/AUD contract spot rate is closest to:

37. At the start of a month, a retailer purchased $8,000 in cash for different types of products. It sold some of these products costing $3,500 for $4,500 during the month. The most likely effect of these transactions on the retailer’s accounting equation at the end of the month is that assets will:

38. Which of the following statements best describes a ledger? A ledger is a document that:

39. If an analyst is preparing common-size financial statements, the most appropriate way of expressing the interest expense is as a percentage of:

40. An analyst gathers the following information about three fixed asset sales that a company made at the end of the year. All else equal, the company’s cash flow from operations will most likely be:

41. In the previous question, if no purchases of fixed assets were made during the period, the cash flow from investing activities most likely will be?

42. In the previous question, if no purchases of fixed assets were made during the period, the cash flow from investing activities most likely will be?

43. Which of the following will most likely result in an increase in a company’s sustainable growth rate? ROE x b

44. During 2019, the following events occurred at a GAAP compliant company. Based on those events the amortization expense that the company should report at the end of that fiscal year is closest to:

45. During 2019, Company A sold a piece of land with a cost of $8 million to Company B for $12 million. Company B made a $3 million down payment with the remaining balance to be paid over the next 5 years. At the end of the year company B credit ratings were downgraded to junk. Company A would most likely report a profit in 2019 of:

46. A company’s balance sheet shows the following. The company’s current ratio, and quick ratio are closest to:

47. At the beginning of the year, two American companies issued debt with the same market rate, maturity date, and total face value. One company issued coupon-bearing bonds at par and the other company issued zero-coupon bonds. All other factors being equal for that year, compared with the company that issued par bonds, the company that issued zero-coupon debt will most likely report:

48. Which of the following is the simplest way for a company to increase its reported operating cash flow?

49. Assume U.S. GAAP applies unless otherwise noted. Company A purchased a fixed asset and expensed the full amount. Company B purchased a similar asset but decided to depreciate it using the double declining balance method of depreciation. Compare with Company A, Company B will report:

50. Which of the following is the simplest way for a company to increase its reported net income?

51. Which of the following will record the asset depreciation under the following lease contracts?

52. Which of the following is most likely a benefit of the direct method for reporting cash flow from operating activities? Compared with the indirect method, the direct method provides:

53. A firm that uses operating leases will have the following performance ratios when comparing with a firm that uses a financing lease type:

54. • During the year a firm incurred and capitalized some asset refurbishing costs. These costs were fully deductible immediately for tax purposes, but the company is depreciating them over 5 years according to accounting principles. At the end of the year, the manufacturer balance sheet will report a:

55. The valuation allowance for deferred taxes is most likely:

56. A company issued 2,000,000 of bonds with a 20-year maturity at 96. Seven years later, the company called the bonds at 103 when the unamortized discount was $39,000. The company would most likely report an accounting loss of:

57. An analyst is forecasting EPS for a company. She prepares the following common sized data from its recent annual report and estimates sales for 2019. The capital structure of the company has not changed, and the company has no short-term interest-bearing debt outstanding. The projected net income (in $ millions) for 2019 is closest to:

58. The unrealized gains and losses arising from translation of financial statements are reported under U.S. GAAP and International Financial Reporting Standards (IFRS) in the:

59. An analyst is analyzing two companies in the same industry and believes that they have similar strategies regarding the use of fixed assets, PP&E. He also thinks that the fixed assets of the two companies are roughly of the same age and have the same expected useful lives remaining. Company A uses the LIFO method of inventory valuation, and Company B uses the FIFO method. The following additional information is available from the companies’ financial statements. In the analyst’s opinion, which of the following conclusions is most appropriate? Compared with Company A, Company B:

60. An analyst has made three observations in his worksheets about a company that he is reviewing. Which of the observations most likely reduces the quality of earnings of the company? The company:

61. Assume that the expected inflation premium is 5%. If the real risk-free rate of return is 3% and the risk premium incorporates default risk, liquidity risk, and any maturity premium, then an observed (nominal) interest rate of 12% implies that the risk premium is closest to:

62. A company’s optimal capital budget most likely occurs at the intersection of the:

63. When considering two mutually exclusive capital budgeting projects with conflicting rankings (one has the higher positive NPV, the other has a higher IRR), the most appropriate conclusion is to choose the project with the:

64. Which of the following is most likely a sign of a good corporate governance structure?

65. Two mutually exclusive projects have conventional cash flows, but one project has a larger NPV while the other project has a higher IRR. Which of the following most likely explains this conflict?

66. An analyst gathers the following information about the cost and availability of raising various amounts of new debt and equity capital for a company, (all numbers in millions). The company’s target capital structure is 0.66. If the company borrows $6 million in new financing, the change in the company’s WACC compared to raising $3 million is closest to:

67. Using the firm’s income statement presented, its degree of operating AND financial leverage are closest to:

68. Business risk most likely incorporates:

69. The “per unit contribution margin” for a product is $12. Assuming fixed costs of $12,000, interest costs of $3,000, and taxes of $2,000, the operating breakeven point and the total break even (in units) are closest to:

70. If the degree of financial leverage (DFL) is 1.00, the operating breakeven point compared to the breakeven point, is most likely:

71. Which of the following is least likely to concern an investor evaluating a corporation’s shareowner rights provisions?

72. A company’s optimal capital budget is best described as the amount of new capital required to undertake all projects with an internal rate of return greater than the:

73. The index weighting which include only shares of available to trade securities instead of the total number of shares is called:

74. According to the industry life-cycle model, an industry in the shakeout stage is best characterized as experiencing:

75. An equity fund manager is considering a market index as benchmark for his portfolio and he has the following preferences. The best index to be used as a benchmark is a:

76. Abby Morgan, CFA is a portfolio manager for a pension fund. She notices that the value one of portfolios she manages tends to generate more returns on Mondays and less on Fridays. This anomaly is commonly referred to as the:

77. Which of the following is the most accurate characterization of momentum anomalies? Momentum anomalies:

78. The annual report of a company as at the end of its first year of its operation contains the following data. Additional Information: Ending inventories using LIFO are valued at $1,500,000. If it used FIFO, ending inventory would be $1,900,000. The company is on the 30% tax rate. The FIFO adjusted price-to-book value of the company is closest to:

79. Maple Inc has stop paying dividends due to a restructuration. It will start paying dividends again as shown below. The estimate of the company’s value per share closest to:

80. A trader seeking to sell a very large block of stock for her client will most likely execute the trade in a(n):

81. A fund manager compiles the following data on two companies. Based on the information provided, the most accurate conclusion is that Company A’s stock is more attractive relative to that of Company B’s because of its:

82. An investor wants to determine the intrinsic value of the common stock for a company with the following characteristics. Further, the investor focuses on the firm’s capacity to pay dividends rather than expected dividends. Considering the above, the investor will least likely use which of the following valuation models?

83. According to the DuPont identity, which of the following is not a component of ROE?

84. Which trade strategy would be preferable in an inefficient semi strong market?

85. Which trade strategy would be preferable in an efficient semi strong market?

86. When purchasing a futures contract, the margin maintenance requirement refers to the:

87. Which of the following has the greatest risk of default:

88. Which of these statements is most likely correct for an option?

89. Based on put-call parity, a synthetic call is most likely equivalent to a:

90. A trader writes a put option on a stock when the stock is trading at $45. The put has an exercise price of $40 and the put seller receives $2.25 in premium. The price of the stock is $36 at expiration. The profit or loss for the put seller at expiration is: