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  1. Home
  2. CFA
  3. CFA Institute CFA Level I Chartered Financial Analyst
  4. CFA.CFA-Level-I.v2023-09-13.q263
  5. Question 1

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Question 1/263

If the price elasticity of demand is unit then a fall in price:

Correct Answer: B
This means the percentage change in quantity demanded equals the percentage change in price so price changes will not alter the revenue.

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Other Question (263q)
Q1. If the price elasticity of demand is unit then a fall in price:...
Q2. Economic analysis suggests that patent laws, which can often be used to limit the entry of...
Q3. A retail client of yours is interested in knowing how low an annual return a major stock i...
Q4. Last year, Company X sold $590,000 on account. The company estimated that 3 percent of sal...
Q5. Two basic assumptions of technical analysis are that security prices adjust:...
Q6. Which of the following is a measure of a firm's liquidity?...
Q7. Which of the following statement(s) is/are true? I). If no errors are made in the daily re...
Q8. The value of the stock: I). Increases as the dividend growth rate increases II). Increases...
Q9. Sampling error, which can be attributed to the fact that only a sample of values is observ...
Q10. Web Company has a cash conversion cycle of 90 days. Its inventory turnover reduces from 6 ...
Q11. If the issuing company is considered to be of high risk and it may be years before the iss...
Q12. Refer to the graph below. Assuming that the monopoly maximizes profit it will earn profits...
Q13. Assume the nominal exchange rate (CA$/US$) increases by 10%, the inflation rate in Canada ...
Q14. Indifference curves for one consumer never intersect. This comes from:...
Q15. A company has 50,000 stock options outstanding at year-end each convertible into a share o...
Q16. Which of the following are reasons why budget deficits may lead to increase in the nominal...
Q17. Which ones of the following items are examples of intangible assets: I). Franchises. II). ...
Q18. Calculate an 80% confidence interval for a population mean. You have a sample of 21, a sam...
Q19. If a purely competitive firm seeks to maximize profit, the firm should...
Q20. You plan to buy a common stock and hold it for one year. You expect to receive both $1.50 ...
Q21. Suppose that P(A) = 0.9, P(B) = 0.8, and P(B|A) = 0.6. Find P(A|B)....
Q22. A company's quick ratio:
Q23. A corporate bond quote of "zr 04" following the name of the issuer in The Wall Street Jour...
Q24. Which element is "defined" in a defined benefit pension plan?...
Q25. Which of the following statements is true?
Q26. Studies on mutual fund performance indicate
Q27. A firm had an asset with a carrying value of $600,000. The estimated future discounted cas...
Q28. Covariance of returns is positive
Q29. Suppose that all of the fast-food restaurants in the entire world are purchased by one fir...
Q30. Bond 1 is a 6%, 5-year bond, and Bond 2 is a 6%, 10-year bond. Both bonds yield 5%. What i...
Q31. Followers of technical analysis believe ALL of the following EXCEPT...
Q32. Imagine a fictional derivative that can, when combined with certain other financial instru...
Q33. Which organization provides funds for a wide range of projects in developing countries wor...
Q34. Why would a firm use accelerated depreciation for tax purposes and straight-line for finan...
Q35. A portfolio earned the following rates of return over a period of twelve months. (Exhibit)...
Q36. A nation's comparative advantage in the production of an item is determined by:...
Q37. A loss on the sale of property, plant, and equipment should be __________ in computing cas...
Q38. Which statement(s) is/are true? I). If one hundred units of merchandise were purchased at ...
Q39. The unrealized gains and losses on available-for-sale securities are:...
Q40. Which of the following statements is (are) true with respect to the impact the choice betw...
Q41. For a two-stock portfolio, what would be the preferred correlation coefficient between the...
Q42. According to Porter, the chief competitive starategies a firm can pursue are: I). low cost...
Q43. Which of the following statements is true?
Q44. When bonds are issued at a premium, the long-term liability reported on the balance sheet ...
Q45. The arbitrage free valuation approach uses the __________ on a __________ to discount each...
Q46. A portfolio has two securities with 35% and 65% allocations by market value. The first sec...
Q47. According to the matching principle
Q48. Assume two months have elapsed since the last coupon payment date. The cum-coupon price fo...
Q49. Given the following information: Yield on 10-year government bond in Argentina: 9.5%. * Yi...
Q50. At the beginning of the year, Chock Company had $50,000 in assets and $20,000 in liabiliti...
Q51. For the long investor, when the commodity market is in contango,...
Q52. A recent annual report included the following information: Note 5: Assets placed in servic...
Q53. The purchase of equipment is an example of
Q54. If a company issues debt and then uses the proceeds to repurchase some of its outstanding ...
Q55. Variable X is distributed normally and has a mean of 10. If the probability that an observ...
Q56. A portfolio with 10 stocks has a weighted average return of 5.5% and a variance of 25. Wha...
Q57. Marginal revenue equals the change in total revenue associated with:...
Q58. Which of the following statements is (are) true with respect to bond valuation? I). Spot r...
Q59. Which of the following is a problem that an effective corporate governance system would mi...
Q60. The passage of time usually
Q61. The country with a comparative advantage in the production of good X is the one that:...
Q62. Tests of the EMH suggest that: I). if technical trading rules can predict profit opportuni...
Q63. Toulon has an expected inflation rate of 5.35% and its neighbor Brozania has an expected i...
Q64. Annualized returns: I). allow for comparison among different assets and over different tim...
Q65. A study found out that, on average, 10% of a pharmaceutical company's drugs that are place...
Q66. In the case of a quota, the difference between the import supply price and the domestic pr...
Q67. Which of the following statements least accurately describes the interpretation of an F-st...
Q68. Two parties enter into a three-year interest rate swap, which involves the exchange of LIB...
Q69. Main Street contains 8 traffic lights. The lights work independently of each other and the...
Q70. The probability that the price of a stock increases is 0.30. The price of the stock will e...
Q71. An investment of $275 grows to $400 in 3 years. The holding period return is:...
Q72. When the Federal Reserve raises the federal funds rate, the long-term real interest rate _...
Q73. Your great aunt has promised to give you a $150,000 inheritance upon her death. If you had...
Q74. ABC Corporation just paid a dividend of $1.25 per share. These dividends are expected to g...
Q75. Which of the following statements about liability is false?...
Q76. Which type of preferred shares is the least risky?...
Q77. You are a corporate treasurer who needs to raise money. You expect interest rates to rise ...
Q78. Tomas Arnaud is considering an investment property that can be purchased for E(EUR)700,000...
Q79. Which of the following is false?
Q80. A 10 year, 8% coupon bond has a price of 97.21 of 100 par. If its effective duration is 4....
Q81. Which of the following statements is not correct?...
Q82. A firm does not want to increase it financial leverage. It may resort to all of the follow...
Q83. An analyst has gathered the following information about Barnstabur, Inc. for the year 2001...
Q84. One feature common to both the trading and available for sale classifications is:...
Q85. Which of the following is not part of the eight main sections of GIPS?...
Q86. Accelerated depreciation method is appealing for all of the following reasons EXCEPT...
Q87. Select the correct statement(s). I). Market-neutral fund is a hedge fund classification. I...
Q88. Which statement is false?
Q89. Your firm's EPS last year was $1.00. You expect sales to increase by 15 percent during the...
Q90. Suppose that the exchange rates (after taking out the fees for making the exchange) in Lon...
Q91. Which of the following industries is/are most likely to be regarded as growth?...
Q92. A portfolio consists of 2 bonds: Bond | Maturity | Coupon | Duration | Proportion in Portf...
Q93. What type of charts does NOT provide four prices per data point entry?...
Q94. Determine net sales for 20x2 if the average days' sales uncollected equals 73 days and Acc...
Q95. There are 2,000 eligible voters in a precinct. Despite protests from knowledgeable persons...
Q96. You have $500 that you would like to invest. You have 2 choices: Savings Account A which e...
Q97. You are comparing two companies by looking at financial ratios they publish in their annua...
Q98. Czech Ltd. shipped goods to a customer on December 30, 1998. Since Czech used the shipping...
Q99. When the level of market interest rates is anticipated to fall (select the best answer):...
Q100. A stock dividend would most likely result in a ______ debt / equity ratio and a ______ cur...
Q101. Using the rates of z1= 3.00%,1f1= 3.60%,1f2= 3.92%,1f3= 5.15%, compute the forward discoun...
Q102. Which of the following calculations can be successfully performed without knowing the requ...
Q103. In calculating diluted earnings per share, which of the following should not be considered...
Q104. The nation of Economica has increased their M1 money supply by 10% over the last year by p...
Q105. If a firm's asset turnover were to increase by 10% and the tax rate were to increase from ...
Q106. An automatic machine inserts mixed vegetables into a plastic bag. Past experience revealed...
Q107. Money is valuable since:
Q108. A share of stock is expected to pay a dividend of $1.00 one year from now, with growth at ...
Q109. According to advocates of the quantity theory of money, a government that attempts to main...
Q110. A major disadvantage of relying solely on the comparative sales approach of valuing real e...
Q111. The law of demand is simply a reflection of
Q112. Assume the managers want to maximize bonuses, which are based on current net income. Manag...
Q113. An analyst gathered the following information about a company: 01/01/01 - 50,000 shares is...
Q114. When an economy dips into a recession, automatic stabilizers will tend to alter government...
Q115. Regarding the disclosure requirements for intangible assets, which piece of information is...
Q116. Increases and decreases in the level of sales are due to business risk. The business risk ...
Q117. Which of the following relationships is/are true in an oligopolistic market with collusion...
Q118. A lessee has leased a corporate building for 7 years and has classified it as a capital le...
Q119. Which of the following measures of dispersion are based on deviations from the mean? I). M...
Q120. Consider the following conditions of ending inventory and the stated results: Ending Cost ...
Q121. Nonrecurring items are:
Q122. Which of the following is a misconception about beta?...
Q123. Which of the following is/are source(s) of economic inefficiency that arise under monopoly...
Q124. Which of the following most accurately measures interest rate sensitivity for bonds with e...
Q125. A survey of 144 retail stores revealed that a particular brand and model of a VCR retails ...
Q126. An analyst gathered the following information about a company: 01/01/01 - 20,000 shares is...
Q127. A student's grade in a course is determined by her score on two exams. The probability tha...
Q128. On June 28, 2001, a business sold for $1,500 a plant asset that cost $5,000. The asset had...
Q129. Which of the following statements is false?
Q130. A portfolio consists of 45% of wealth invested in the market portfolio and the remaining i...
Q131. An increase in the price of a complement for product A would:...
Q132. Suppose that JPK, Inc. paid dividends of $80,000 to its preferred shareholders and $40,000...
Q133. John Berg, CFA, is the senior vice president in charge of the investment banking division ...
Q134. The fixed charge coverage ratio will always be equal to or _______ than times interest ear...
Q135. An investor is currently considering the choice between a corporate and a municipal bond. ...
Q136. A portfolio manager who does not have access to superior analysts should focus on:...
Q137. What is the minimum number of years required for $1,000 invested at 7 % per annum to excee...
Q138. This is an example of (Exhibit)
Q139. On May 25th, 2004, Dove Landing Corporation bought 2,500 shares of Hunt Corporation's comm...
Q140. If a given score is at the 30th percentile for reference group A and the 60th percentile f...
Q141. To measure relative risk an analyst should use:...
Q142. Which of the following statements is (are) inconsistent with the Markowitz theory of portf...
Q143. Increasing the frequencies in the tails of a distribution will:...
Q144. After passing CFA level 1 exam, Frank wrote a memorandum to all his clients stating that h...
Q145. In the short run, the unemployment rate ____________ the natural unemployment rate....
Q146. If a researcher testing the null hypothesis H : 53 u 57 vs. H : u 53 or u > 57, found t...
Q147. Which statement is false regarding the ideal exchange rate regime?...
Q148. Which of the following is reported as financing cash flow? I). Proceeds provided from loan...
Q149. The essential characteristics of an asset are: I). The enterprise can obtain the benefit a...
Q150. The beta is the slope of ______.
Q151. To estimate the average weight of the red-crowned woodpecker to within 2 grams at a 95% co...
Q152. You have a nest egg of $750. In order for your money to grow to $1,343.10, it must be inve...
Q153. A security characteristic line graphs:
Q154. The Z-spread is different from the nominal spread because...
Q155. The demand curve of a monopolist is
Q156. A consumer group wants to prove that the average hospital costs are more than $931 per day...
Q157. A normal distribution has a mean of 25% and a standard deviation of 33%. What is the 95% c...
Q158. Jeremy Gotes is an analyst at a large Brokerage House. Jeremy receives a call from company...
Q159. Which of the following statements is (are) true with respect to the relation between a sta...
Q160. Mr. Boland has discovered from looking at charts of past stock prices that if he buys just...
Q161. Price discrimination is the practice of:
Q162. On January 1, 2000 the Trading Co. had 487,500 shares of common stock outstanding. During ...
Q163. The crowding-out model implies that budget deficit will...
Q164. Consider a two-year currency swap, with semi-annual settlements. It is fixed dollar rate f...
Q165. A loss on impairment should be recognized when:...
Q166. Which of the following Standards of Professional Conduct includes the ethical responsibili...
Q167. In an environment where the level of required return is decreasing for all bonds:...
Q168. Swiss Franc is quoted in the New York as CHF:$ = 0.4312 - 0.4317. What is the ask price fo...
Q169. Which of the following will give rise to a deferred tax liability?...
Q170. Which approach predicts that if an economy operates at full employment and faces a trade d...
Q171. Which type of ADR can be used if a foreign company wants to raise capital in the US throug...
Q172. An airline initially has a single price of $200 for all consumers. At this price, it sells...
Q173. A job paid $8,700 in 1970, when the CPI was 29. In 2011, the CPI was 164. How much would y...
Q174. An insurer should be categorized in ______ sector....
Q175. With respect to the portfolio management process, the security analysis is done in the...
Q176. For a firm with a simple capital structure, all of the following are necessary to measure ...
Q177. Which measure of dispersion does not disregard the algebraic signs (plus and minus) of eac...
Q178. In the presence of a risk-free security, the efficient frontier...
Q179. The strong form of the efficient market hypothesis states that: I). security prices reflec...
Q180. Which of the statements is true?
Q181. The _____ is the period of time between the receipt of inventory and the payment for it....
Q182. Which of the following is not an example of an affirmative (positive) covenant?...
Q183. A 30-day T-Bill is selling at a money market yield of 2.95%. What is its equivalent bank d...
Q184. Economic profit is
Q185. When a firm initially presents its historical performance record, it I). is required to pr...
Q186. The seasonal output of a new experimental strain of pepper plants was carefully weighed. T...
Q187. Anderb, a portfolio manager for XYZ Investment Management Company--a registered investment...
Q188. When a company listed in the Russell 2000 index simply becomes too big to be included in t...
Q189. If a company estimates that its expected return on pension plan assets will increase to 9....
Q190. An analyst has gathered the following information about a company: Net profit margin of 15...
Q191. A 5-unit apartment building is being considered as an investment. The average monthly rent...
Q192. The opposite of inflation is:
Q193. The following data pertains to the Sapphire Company: Net income equals $15,000 * 5,000 sha...
Q194. You are given the following information regarding a random variable: (Exhibit) P(1 x <=...
Q195. A distribution of 6 scores has a median of 21. If the highest score increases 3 points, th...
Q196. Which of the following statements regarding a lessor's direct-financing lease is generally...
Q197. Which of the following statements is not false?...
Q198. An increase in real output will cause which of the following?...
Q199. Which one of the following is an example of "other revenues and gains" in a multiple incom...
Q200. Bond 3 is a 4%, 5-year bond that yields 5%. What is the relative percentage of total futur...
Q201. Data that describe characteristics of entities (such as persons, places, companies) at a g...
Q202. BWT, Inc. shows the following data in its financial statements at the end of the year. Ass...
Q203. Which of the following measurements can be found for a portfolio by simply taking the weig...
Q204. A sample mean possesses all of the following properties EXCEPT...
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Q206. If the Laspeyres index is 120, the Paasche index is 115, then the Fisher index is:...
Q207. The market price of wheat is $2. The government imposes a legal minimum price (price floor...
Q208. You have set up a test of a suitably phrased null hypothesis. After analyzing the statisti...
Q209. A venture capital investment is expected to yield of payoff of $100 million in five years ...
Q210. In a large metropolitan area, past records revealed that 30 percent of all the high school...
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Q212. "Material" in the phrase "material non-public information" refers to information that:...
Q213. A lease contains a guaranteed residual value (guaranteed by the lessee). How would this am...
Q214. During a presentation to prospective clients, Sumanta Mitra makes the following two statem...
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Q220. Taxable temporary differences result in a deferred tax ______ when the tax base of an asse...
Q221. Which of the following does NOT favor a capital lease?...
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Q224. Ashley Corporation constructed an office building for its own use. During 2000, the averag...
Q225. What is the value after three years of $1,000 invested at a 6% annual rate, if interest is...
Q226. If credit terms of "1/10, net 35" are offered, the approximate cost (using 365 days) of no...
Q227. Which of the following assumptions does the Gordon growth dividend discount model require?...
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Q230. As an analyst, you are concerned about whether Arcadian Manufacturing Co. can generate a s...
Q231. Consider the following statements relating to sample size and confidence intervals: I). Th...
Q232. You are considering a portfolio only of long positions not involving leverage and have the...
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