Free Sample Questions
1. Professor Harlow has 10 students in his Advanced Statistics class, and is in the process of reviewing the students’ mid-term test scores. The resulting test score are as follows: 98%, 95%, 90%, 90%, 88%, 86%, 83%, 80%, 76%, 65%. What is the range of the student’s score (rounded to the nearest percentage point)?
A. 33%
B. 85%
C. 90%
Ans: A
Exp: Range = highest value – lowest value = 98 -65 = 33
2. A ___________ is the tabulation of variables observed in a given sample. The sample’s highest and lowest values are used as a baseline, and the results in broken down into appropriate intervals or categories.
A. Histogram
B. Frequency distribution
C. Frequency polygon
Ans: B
Exp: Frequency distribution breaks values into appropriate intervals with a high and low value baseline
3. A statistician is evaluating a company’s customer satisfaction survey results and has organized the data as follows:
Satisfaction Rating Occurrences
5 |
5 |
4 |
11 |
3 |
4 |
2 |
1 |
1 |
2 |
What is the absolute frequency of responses with a satisfaction rating of 4?
A. 23
B. 47.8
C. 11
Ans: C
Exp: Absolute frequency is the number of occurrences of a specific value in a sample
4. An investor has been tracking the movement of one of her stocks for the past three weeks. The market close price of the stock is as follows:
Stock price per share Occurrences
$13 – $13.99 |
1 |
$12 -$12.99 |
3 |
$11 -$11.99 |
10 |
$10 – 10.99 |
1 |
What is the relative frequency of the stock with a closing price of $12 - $12.99?
A. 3
B. .2
C. 15
Ans: B
Exp: Relative frequency = Absolute frequency / Total number of occurrences in the sample
5. Marion is an avid birdwatcher who carefully catalogs all of her avian sightings. As part of a research project designed to estimate the number of local mating pairs in different species , she is compiling her data to present to the local Wildlife Rescue Center. Her findings are cataloged below:
Species # of Sightings
Wren |
15 |
Woodpecker |
3 |
Egret |
8 |
Bluejay |
3 |
Cardinal |
1 |
What is the absolute frequency of wren sightings? What is the relative frequency of bluejay sightings?
A. .5, .1
B. 15, 3
C. 15, .1
Ans: C
Exp: Absolute frequency is the number of occurrences of a specific value in a sample. Relative frequency = Absolute frequency / Total number of occurrences in the sample
6. A local political party office is preparing a marketing campaign for the coming election year. In order to help them determine how to best design their ads to target the key voting demographic, they want to analyze the voting public. Based on exit polls that asked vote age at the last election, the office has compiled the following results:
Voter Age (in yrs) # of Voters
18-24 |
4 |
25-31 |
15 |
32-38 |
28 |
39- 45 |
25 |
46- 52 |
19 |
53-59 |
7 |
60+ |
2 |
What is the cumulative absolute frequency of the 39-45 year old voter age interval?
A. 72
B. 25
C. 4
Ans: A
Exp: Cumulative absolute frequency is the sum of the absolute frequencies for all intervals up to and including the one being evaluated
7. The population mean of a given sample is the expected value of a random variable. It can be calculated by ________.
A. Taking the average of all the items in the sample
B. Adding up all the values in a sample, then dividing by the number of each value
C. Determining the value most frequently appearing in the sample
Ans: B
Exp: Population mean = Sum of all values in the sample / Number of each value
1.
Beatrice Arnold, a
CFA Institute Designated officer, is conducting an inquiry
related to professional conduct. Which of the following
incidents are least likely to have prompted such an
inquiry?
A.
A written complaint
received by the Professional Conduct staff about a member or
candidate’s professional behavior.
B.
Self-disclosure by
the member or candidate on their annual Professional Conduct
Statement of involvement in civil litigation, criminal
investigation, or a written complaint.
C.
The routine
background check of a CFA member or candidate revealed criminal
investigation.
ANS: C
EXP:
The routine background check is a effective way to investigate a
criminal. And its
prompt such an inquiry.
2.
After thoroughly
investigating the member, Beatrice Arnold decides that the best
course of action is to impose disciplinary sanctions on the
member. Which sequence best describes a possible outcome of this
event?
A.
Member accepts
sanction > Attends hearing before panel of CFA Institute members
> Member is condemned by peers
B.
Member rejects
sanction > Attends hearing before panel of CFA Institute members
> Panel decides, upon review, that no disciplinary actions are
necessary
C.
Member rejects
sanction > Designated officer issues a cautionary letter
ANS: B
EXP:
The valuable sequence is:-
Member rejects sanction > Attends hearing before panel of CFA
Institute members > Panel decides. And that will be more
effective.
3.
There are six
components of the Code of Ethics that CFA Institute members and
candidates are to follow. Which of the following is not
one of these components?
A.
Place the integrity
of the investment profession and the interests of clients above
their own personal interests.
B.
Promote the integrity
of, and uphold the rules governing, capital markets
C.
Practice, and
encourage fellow members and candidates to practice, effective
time management
ANS: C
EXP:
Practice, and encourage fellow members and candidates to
practice, effective time management
4.
Which of the
following Standards of Professional Conduct includes the ethical
responsibility to not knowingly make any misrepresentations
regarding investment analysis, recommendations, actions, or
other professional activities?
A.
Professionalism
B.
Duties to Clients
C.
Duties to Employers
ANS: A
EXP:
Professionalism is Standards of Professional Conduct.
5.
If a member of the
CFA Institute were to engage in a practice that distorted prices
and artificially inflated trading volume with the intent to
mislead market participants, which of the following Standards of
Professional Conduct would be violated?
A.
Conflicts of Interest
B.
Professionalism
C.
Duties to Clients
ANS: D
EXP:
Integrity of Capital Markets would be violated if a member of
the CFA Institute were to engage in a practice that distorted
prices.
6.
Who should the
ethical CFA Institute member work hardest to benefit, according
to the Standards of Professional Conduct?
A.
The member and
his/her family
B.
The client
C.
The employer
ANS: B
EXP: A
client should work hardest to benefit, according to the
Standards of Professional Conduct.
7.
Which of the
following should not be considered when determining the
suitability of an investment for a particular client?
A.
The client’s entire
investment portfolio
B.
The client’s
financial situation
C.
The potential
financial gain of the employer
ANS: C
EXP:
The
potential financial gain of the employer should not be
considered when determining the suitability of an investment for
a particular client.
8.
Harold Dole is a CFA
Institute member acting in an advisory role to a prospective
client. Under which circumstances should he disclose information
about the client?
A.
The information
disclosed could potentially harm another client
B.
The information
concerns illegal activities on the part of the client
C.
The information is
believed to be untrue and is therefore not confidential
ANS: B
EXP: For
illegal activities on the part of the client , should be
disclosed information.
9.
Regarding additional
compensation arrangements, when is it appropriate to accept
gifts, benefits, compensation, or consideration that competes
with a member’s employer?
A.
When written consent
is obtained from all parties involved
B.
When it is in the
best interest of the member to do so
ANS: A
EXP:
When
written consent is obtained from all parties involved, it is
appropriate to accept gifts, benefits, compensation, or
consideration.
10.
Members of the CFA Institute should make reasonable efforts to
detect and prevent violations of applicable laws, rules,
regulations, and the Code and Standards by whom, according to
the Standards of Professional Conduct?
A.
Anyone under their
supervision
B.
Themselves
C.
Themselves and anyone
under their supervision or authority
ANS: C
EXP:
Members of the CFA Institute should make reasonable efforts to
detect and prevent violations of applicable laws, rules,
regulations, and the Code and Standards by Themselves and anyone
under their supervision or authority.
11.
Bill Hodge’s firm advertises its performance by showing a 10
year composite of its client’s accounts. Hodge discovered that
this composite excludes some less than favorable accounts in
order to inflate the appearance of the firm’s performance. If
Hodge is asked to distribute this information in order to get
new clients, what should he do?
A.
Refuse to distribute
inaccurate information, as it is a violation of the CFA
Institute’s Code and Standards.
B.
Distribute the
inaccurate information, because as long as he did not compile
the information, it is not a violation of the Code and
Standards.
C.
Distribute the
inaccurate information, but submit a letter of complaint to the
employer.
ANS: A
EXP: He should
refuse to distribute inaccurate information, as it is a
violation of the CFA Institute’s Code and Standards.
12.
Karen James is a US
citizen, works for an investment advisor based in the US, and
works in a country where investment managers are prohibited from
participating in IPOs for their own accounts. What should she do
regarding IPOs for her own account?
A.
Participate in IPOs
for her own account, as she is a US citizen and must follow the
strictest US laws.
B.
Refrain from
participating in IPOS for her own account, as she is required to
follow the laws where her firm is based, the Code and Standards,
as well as the laws in the country where she is doing business.
C.
Participate in IPOs
for her own account, as her firm is based in the US and she is
obligated to follow the laws of the country where her firm is
based, not where she does business.
ANS: B
EXP: She should
Refrain from participating in IPOS for her own account, as she
is required to follow the laws where her firm is based, the Code
and Standards, as well as the laws in the country where she is
doing business.
13.
Michelle Green is an investment analyst. In researching a
company that she follows, she has interviewed the company
management. Is this an appropriate source?
A.
No. She should be
conducting research among their suppliers and customers instead.
B.
No. Information from
the company management is bound to be biased.
C.
Yes. As long as this
potentially biased information is balanced with information from
other sources, including the company’s customers, suppliers, and
competitors.
ANS: C
EXP: The
appropriate source is As long as this potentially biased
information is balanced with information from other sources,
including the company’s customers, suppliers, and competitors.
14.
Greg Marshall, an analyst, is preparing some issuer-paid
research. In order to avoid potential conflict and maintain
ethical standards, what would his preferred method of payment
be?
A.
Flat fee, regardless
of conclusions or recommendations.
B.
Variable fee,
depending on the conclusions of the research.
C.
Variable fee,
depending on the depth of the research to be decided by the
issuer.
ANS: A
EXP: His
preferred method of payment are flat fee, regardless of
conclusions or recommendations.
15.
Ron Prater and Mike Richards, two analysts who work for
different employers, have been invited by a company they are
both researching to tour some of their factories across the
nation. The company has chartered group flights from site to
site and arranged for accommodations with a chain of hotels that
are near each site for a total of four nights. Ron Prater takes
advantage of this offer, while Mike Richards insists on paying
for his airfare and hotel, in-keeping with his own firm’s
policies. Who is right?
A.
Mike is more ethical
in this situation, as he is not taking anything that might
compromise his independence or objectivity.
B.
They are both
behaving ethically, as they are following their firm’s separate
guidelines. As long as they are both careful to remain objective
and cautious about the possible perceived compromise of
integrity, there is no problem with the actions of either Ron or
Mike.
C.
Ron is more ethical,
as he is not putting his own comfort ahead of the benefit of his
firm.
ANS: B
EXP:
Right answer is that they are both behaving ethically, as they
are following their firm’s separate guidelines. As long as they
are both careful to remain objective and cautious about the
possible perceived compromise of integrity, there is no problem
with the actions of either Ron or Mike.
16.
Gary Taylor is an equity analyst with Bronson Brokerage. He has
concluded that the stock of Mark’s Markets is overpriced. Given
the good relationship between the investment-banking division of
Bronson Brokerage and Mark’s Markets, what should he include in
his research report?
A.
He should include any
and all information relevant, regardless of the positive or
negative implications for his firm and for Mark’s Markets.
Objectivity is of the utmost importance.
B.
He should include all
of the favorable information, but very little of the
unfavorable. While objectivity is important, Gary must also
think about the benefit to his firm.
C.
He should spin the
negative information to sound more positive, but still include
it. Objectivity is important, but as long as he is not directly
dishonest, he is still behaving ethically.
ANS: A
EXP:
He
should include any and all information relevant, regardless of
the positive or negative implications for his firm and for
Mark’s Markets. Objectivity is of the utmost importance.
17.
Harold Kilmer’s boss instructed him to assume coverage of a
stock and maintain a buy rating. If Harold were to do so, would
this be ethical?
A.
Only if the stock
maintained a buy rating objectively. Harold’s opinion must
remain objective and independent.
B.
If Harold’s boss
offers him a raise in order to bias his information, this is
acceptable.
C.
Because Harold’s boss
instructed him to be dishonest in order to maintain the buy
rating, Harold can not ethically assume coverage of the stock.
ANS: A
EXP: Ethical is
if the stock maintained a
buy rating objectively. Harold’s opinion must remain objective
and independent.
18.
Melanie Jones, a money manager, received a gift of significant
value from a client as a reward for her performance in the prior
period. Melanie does keep the gift, but notifies her employer.
Is this an ethical violation?
A.
No. As long as
Melanie notifies her employer, she can receive gifts for any
reason.
B.
No. As long as
Melanie notifies her employer and the gifts are for the prior
period and not contingent on future performance or client
benefit, this is not an ethical violation.
C.
Yes. Melanie should
not be receiving gifts of significant value from clients.
ANS: B
EXP:
No
thats not ethical violation ,As long as Melanie notifies her
employer and the gifts are for the prior period and not
contingent on future performance or client benefit, this is not
an ethical violation.
19.
Grant Parker, a money manager, was promised a gift of
significant value from a client contingent on the performance of
the coming period. Would Grant be committing an ethical
violation if he were to accept?
A.
Yes. Grant should not
accept gifts from a client, regardless of value or performance.
B.
No. As long as Grant
does not tell his employers of the gift and compromise their
integrity, this is not an ethical violation.
C.
No. If Grant secures
the permission of his employer and does not act to the detriment
of his other clients in pursuit of the gift, this is not an
ethical violation.
ANS: C
EXP:
No.
If Grant secures the permission of his employer and does not act
to the detriment of his other clients in pursuit of the gift,
this is not an ethical violation.
20.
An analyst enters into a contract to write a research report on
a company, paid for by the company itself. Which method of
payment would be ethical?
A.
N one. An analyst can
not ethically take money from a company in exchange for a
research report on the same company.
B.
A flat-fee plus a
bonus for each new investor the report attracts to the security.
It would be unethical for the company to fail to compensate the
analyst for the profit based on the report.
C.
A flat fee only. It
would be unethical to take compensation such that full
compensation depends on the outcome of the report.
ANS: C
EXP:
Ethical method of payment is
A flat fee only. It would be unethical to take
compensation such that full compensation depends on the outcome
of the report.
A. (8 + 4) / (12 + 2) = 12/ 14 = 85.7%
B. (8 – 2) / (12 - 2) = 6 / 10 = 60%
C. (8 – 4) / (12 - 2) = 4 / 10 = 40%
ANS: C
EXP: (8 – 4) / (12 - 2) = 4 / 10 = 40% .Thus Lucy calculates the
probability that X will be between 4 and 8.
335. Lucy notes that X is uniformly distributed between 2 and
12. How does she calculate the probability that X will be
between 6 and 7?
A. (7 + 6) / (12 + 2) = 13/ 14 = 92.8%
B. (7 – 2) / (12 - 2) = 5 / 10 = 50%
C. (7 – 6) / (12 - 2) = 1 / 10 = 10%
ANS: C
EXP: (7 – 6) / (12 - 2) = 1 / 10 = 10% .Thus Lucy calculates the
probability that X will be between 6 and 7.
337. Margaret notes that X is uniformly distributed between 1
and 11. How does she calculate the probability that X will be
between 2 and 10?
A. (10 + 2) / (11 + 1) = 12/ 12 = 100%
B. (10 – 2) / (11 - 1) = 8 / 10 = 80%
C. (10 – 1) / (11 - 2) = 9 / 9 = 100%
ANS: B
EXP: (10 – 2) / (11 - 1) = 8 / 10 = 80% .Thus Margaret
calculates the probability that X will be between 2 and 10.
431. What result indicates a perfect negative correlation
between the variables Ri and Rj?
A. Corr(Ri, Rj) = 0
B. Corr(Ri, Rj) = -1.0
C. Corr(Ri, Rj) = 0.5
ANS: B
EXP: Corr(Ri, Rj) = -1.0 indicates a perfect negative
correlation between the variables Ri and Rj.
432. What does a perfect positive correlation between the
variables Ri and Rj indicate?
A. A movement in one random variable results in a proportional
positive movement in the other relative to its mean.
B. A movement in one random variable results in an exact
opposite proportional movement in the other relative to its
mean.
C. Prediction of Ri cannot be made on the basis of Rj using
linear methods.
ANS: A
EXP: A perfect positive correlation between the variables Ri and
Rj indicates a movement in one random variable results in a
proportional positive movement in the other relative to its
mean.
76. Josh’s drives to work every morning along a busy highway. He
has a big meeting with his boss first thing in the morning and
doesn’t want to be late. If there is a 25% chance that Josh will
sleep through his alarm clock, a 40% chance that Josh will get
stuck in traffic during his drive, and a 10% chance that both
events will occur, what is the probability that Josh will be
late?
A. 75%
B. 65%
C. 55%
Ans: C
Exp: Use the addition rule that one or more of the events will
occur. P(A) = P(A) +P(B)-P(AB)
77. Suzanne is researching a cure for a tropical disease and has
been struggling to keep her samples uncontaminated. There is a
10% chance that she will forgot to wash her test tube and
cross-contaminate the sample, a 18% chance that bacteria will
leech into her work, and a 33% chance that her assistant will
trip and shatter the sample on the floor. What is the
probability that Suzanne’s work will not become contaminated?
A. 61%
B. 39%
C. 55%
Ans: B
Exp: Use the addition rule that one or more of the events will
occur, then subject this from the total probability. P(NOT A) =
1 – [P(A) +P(B)-P(AB)]
78. Isabella’s birthday is coming up and she really wants a
kitten for her present. She knows that she has a 50% chance of
convincing her dad to buy her a pet, and a 35% chance of
convincing her mom to let her buy a pet. What are the chances
that she can get them both to agree to a kitten?
A. 85%
B. 17.5%
C. 15%
Ans: B
Exp: Use the joint probability rule that both events will occur.
P(A/B) = P(AB) / P(B)
79. The unconditional probability of an event can be calculated
using the formula P(A) = P(A/S) x P(S) + P(A/SC) x P(SC). This
equation calculates the likelihood that 3 or more situations are
___________.
A. Random
B. Dependent
C. Conditional
D. Exclusive
Ans: D
Exp: Unconditional probability calculates the possibility of
deals with 3 or more exclusive events
80. An expected value is the sum of all possible values for a
random variable x by occurrence probability. The formula used to
compute the expected value is ___________.
A. E(X) = ∑ xj P(x=xj)
B. E(X) = ∑ x P(x=xj)
C. E(X) = ∑ x/j P(x=xj)
Ans: A
Exp: Expected value is computed using the formula E(X) = ∑ xj
P(x=xj)
81. Albert is conducting a survey that evaluates individuals’
favorite weekend hobbies. Some of the participants stated enjoy
going camping in the mountains. Reading was also a popular
choice. Albert wants to evaluate the relationship between liking
camping and reading. To do this, he needs to calculate
____________.
A. The exclusivity of the two events
B. The dependence of the two events
C. The covariance of the two events
Ans: C
Exp: Covariance measure the relationship between 2 or more
events
82. Covariance is a measure of how much two variables chance in
relation to each other. The stronger the relationship between
the variable, the greater their covariance. To measure
covariance, you would use which of the following equations?
A. Cov(x,y) = E((x-µ)(y-v))
B. Cov(x,y) = E((x+µ)(y-v))
C. Cov(x,y) = E((x-µ)(y+v))
Ans: A
Exp: The formula for covariance is Cov(x,y) = E((x-µ)(y-v))
83. A permutation is all of the possible orders or combinations
of a series of objects. Which of the following variables are
necessary to compute a permutation problem?
A. Number of elements available for selection
B. Number of elements to be selected and order of the elements
C. Number of elements available for selection and the order of
the elements
D. Number of the elements available for selection and the number
of elements to be selected
Ans: D
Exp: Permutation use the formula P(n,r) = n! / [r!(n-r)!] where
n = number of elements and r = elements available to be selected