2012 level i mock exam difficulty mapping

S. No. Year Topic Subtopic

1 Quant

2 2012 Quant

3 2012 Quant

4 2012 Quant

5 2012 Quant

6 2012 Quant Sampling

7 2012 Quant

2012 Afternoon

Time Value of Money

Measures of central tendency

Discounted Cash Flow Application



8 2012 Quant

9 2012 Quant

10 2012 Quant

11 2012 Quant

12 2012 Quant Estimation

13 2012 Quant


14 Quant

Time Value of Money

Hypothesis testing

Time Value of Money



2009 Morning

15 Quant

16 Quant

17 Quant

18 Quant

2009 Morning

Time value of money

2009 Morning

Time value of money

2009 Morning

Discounted Cash Flows

2009 Morning


19 Quant

20 Quant Probability

21 Quant

22 Quant

23 Quant

24 Quant Estimation

25 Quant

2009 Morning


2009 Morning

2009 Morning

2009 Morning

2009 Morning


2009 Morning

2009 Morning

Time value of money

26 Quant


27 Quant

28 Quant


30 Quant

2009 Morning

2012 Afternoon

Probability Distribution

2012 Afternoon

Time Value of Money

2012 Afternoon

2012 Afternoon

Time Value of Money

31 Quant

32 Quant

33 Quant


35 Quant

36 Quant Charts


2012 Afternoon

Time Value of Money

2012 Afternoon

Technical Analysis

2012 Afternoon

Discounted cash flows

2012 Afternoon

2012 Afternoon

Time Value of Money

2012 Afternoon

37 Quant estimation

38 Quant

39 Quant Sampling

40 Quant

41 Quant

42 Quant

2010 Afternoon

2010 Afternoon

Measures of central Tendency

2010 Afternoon

2010 Afternoon

Hypothesis Testing

2010 Afternoon

Hypothesis Testing

2010 Afternoon


43 Quant

44 Quant

45 Quant

46 Quant probability


47 Quant

48 Quant

49 Quant

2010 Afternoon

Time Value Of Money

2010 Afternoon

Discounted cash Flows

2010 Afternoon


2010 Afternoon

2010 Morning


2010 Morning

Time Value of money

2010 Morning


50 Quant

51 Quant

52 Quant

53 Quant

54 Quant

55 Quant

56 Quant

57 Quant


2010 Morning

2010 Morning


2010 Morning


2010 Morning

Discounted Cash Flows

2010 Morning


2010 Morning

Hypothesis Testing

2010 Morning

2010 Morning


58 Quant

59 Quant

60 Quant Sampling

61 Quant

62 Quant Estimation

63 Quant

64 Quant

65 Quant

2011 Afternoon

Measures Of Central tendency

2011 Afternoon

2011 Afternoon

2011 Afternoon

Time Value Of Money

2011 Afternoon

2011 Afternoon

Technical Analysis

2011 Afternoon

Time Value Of Money

2011 Afternoon


66 Quant Estimation

67 Quant


68 Quant

69 Quant

70 Quant

71 Quant

72 Quant

2011 Afternoon

2011 Afternoon

Time Value Of Money

2011 Morning


2011 Morning


2011 Morning


2011 Morning


2011 Morning



74 Quant

75 Quant

76 Quant

77 Quant

78 Quant

79 Quant

80 Quant

2011 Morning

2011 Morning

Time Value of monney

2011 Morning

Discounted cash Flows

2011 Morning

Hyppothesis Testing

2011 Morning

Hyppothesis Testing

2011 Morning

Hyppothesis Testing

2011 Morning


2011 Morning

2012 Level I Mock Exam: Morning SessionQuestion

If the stated annual interest rate is 20% and the frequency of compounding is monthly, the effective annual rate (EAR) is closest to: A. 20%.B. 21%.C. 22%.

For a positively skewed unimodal distribution, which of the following measures is most accurately described as the largest?A. ModeB. MeanC. Median

A project offers the following incremental after-tax cash flows:Year Cash flow (€)0 –12,5001 2,0002 4,0003 5,0004 2,0005 1,0006 500The IRR of the project is closest to:A. 2.4%.B. 4.4%. C. 5.5%

Over a four-year period, a portfolio has returns of 10%, –2%, 18%, and –12%. The geometric mean return across the period is closest to: A. 2.9%.B. 3.5%.C. 8.1%.

The following sample of 10 items is selected from a population. The population variance is unknown.10 20 –8 2 –9 5 0 –8 3 21 The standard error of the sample mean is closest to:A. 3.4.B. 3.6.C. 10.8.

A subset of a population is best described as a:A. sample.B. statistic.C. conditional distribution.

An analyst collects data relating to five commonly used measures of use of debt (leverage) and interest coverage for a randomly chosen sample of 300 firms. The data comes from those firms’ fiscal year 2011 annual reports. This data is best characterized as:A. time-series data.B. longitudinal data.C. cross-sectional data.


A financial contract offers to pay €1,200 per month for five years with the first payment made today. Assuming an annual discount rate of 6.5%, compounded monthly, the present value of the contract is closest to:A. €61,330.B. €61,663.C. €63,731.

A two-tailed t-test of the null hypothesis that the population mean differs from zero has a p-value of 0.0275. Using a significance level of 5%, the most appropriate conclusion is:A. reject the null hypothesis.B. accept the null hypothesis.C. the chosen significance level is too high.

An investor deposits £2,000 into an account that pays continuously compounded interest of 6% (nominal annual rate). The value of the account at the end of four years is closest to:A. £2,525.B. £2,542.C. £2,854.

A graphic depiction of a continuous distribution that shows the left tail to be longer than the right tail is best described as having:A. lepto-kurtosis.B. positive skewness.C. negative skewness.

When an analyst is unsure of the underlying population distribution, which of the following is least likely to increase the reliability of parameter estimates?A. Increase in the sample sizeB. Use of point estimates rather than confidence intervalsC. Use of the t-distribution rather than the normal distribution to establish confidence intervals

Consider the following 20 items.–41 –18 –17 –9 –8 –6 –5 3 3 3 5 5 7 7 11 12 20 21 21 61 The median value of the items is:A. 3.B. 4.C. 5.

The yield to maturity on otherwise identical option-free bonds issued by the U.S.Treasury and a large industrial corporation is 6 percent and 8 percent,respectively. If annual inflation is expected to remain steady at 2.5 percent overthe life of the bonds, the most likely explanation for the difference in yields is apremium due to:A. maturity.B. inflation.C. default risk.

A 24 year old is using the following information to plan her retirement:Current age---------------------------------------------------------------- 24Expected retirement age ------------------------------------------------68Life expectancy -----------------------------------------------------------93Current annual expenditures------------------------------------------- $30,000Expected inflation rate of current expenditures until retirement 3%Expected return on investment-----------------------------------------8% She assumes her consumption expenditures will increase with the rate of inflation,3 percent, until she retires. Upon retiring she will have end-of-year expendituresequal to her consumption expenditure at age 68. The minimum amount that shemust accumulate by age 68 in order to fund her retirement is closest to:A. $928,000.B. $1,176,000.C. $1,552,000.

A project has the following expected cash flows:Time Cash Flow ($) 0 (125,000) 1 100,000 2 200,000If the risk-free interest rate is 4 percent, expected inflation is 3 percent, the marketrisk premium is 8 percent and the Beta for the project is 1, the investment’s netpresent value (NPV) is closest to:A. $113,000.B. $124,000.C. $139,000.

A 270-day U.S. Treasury bill with a face value of $100,000 sells for $96,500when issued. Assuming an investor holds the bill to maturity, the investor’smoney market yield is closest to:A. 3.63%.B. 4.84%.C. 4.93%.

An analyst gathered the following annual return information about a portfoliosince its inception on 1 January 2003:Year Portfolio return 2003 8.6%2004 11.2%2005 12.9%2006 15.1%2007 –9.4%

The portfolio’s mean absolute deviation for the five-year period is closest to:A. 3.76%.B. 6.83%.C. 7.68%.

An analyst gathered the following information about a common stock portfolio:Arithmetic mean return -------14.3%Geometric mean return -------12.7%Variance of returns ------------380Portfolio beta -------------------1.35If the risk-free rate of return is 4.25 percent, then the coefficient of variation isclosest to:A. 0.52.B. 1.36.C. 1.53.

If an analyst estimates the probability of an event for which there is no historicalrecord, this probability is best described as:A. a priori.B. empirical.C. subjective.

Which of the following statements best describes the relationship betweencorrelation and covariance? The correlation between two random variables istheir covariance standardized by the product of the variables’:A. variances.B. standard deviations.C. coefficients of variation.

Which of the following best describes the discrete uniform distribution? Thediscrete uniform distribution:A. has a finite number of specified outcomes.B. is based on the Bernoulli random variable.C. has an infinite number of unspecified outcomes.

According to the central limit theorem, a sampling distribution of the samplemean will be approximately normal only if the:A. sample size is large.B. underlying distribution is normally distributed.C. variance of the underlying distribution is known.

Which of the following is least likely to be a desirable property of an estimator?A. EfficiencyB. ReliabilityC. Consistency

Rent is $700.00 monthly and is due on the first day of every month. If the statedannual interest rate is 6 percent, the present value of a full year’s rent payments isclosest to:A. $8,133.B. $8,173.C. $8,833.

2012 Level I Mock Exam: Afternoon SessionQuestion

An analyst gathers the following information about the price-earnings (P/E) ratiosfor the common stocks held in a portfolio:Interval P/E range FrequencyI 8.00 – 16.00 20II 16.00 – 24.00 52III 24.00 – 30.00 24IV 30.00 – 38.00 14The relative frequency for Interval II is closest to:A. 47.27%.B. 52.00%.C. 65.45%.

If the distribution of the population from which the samples are drawn is positively skewed, and given that the sample size is large, the sampling distribution of the sample means is most likely:A. approximately normally distributed.B. to have a variance equal to that of the entire population.C. to have a mean smaller than the mean of the entire population.

A project offers the following incremental after-tax cash flows:Year Cash flow (€) 0 –12,500 1 2,000 2 4,000 3 5,000 4 2,000The appropriate discount rate to use in evaluating the project is 8%. The NPV (in €) of the project is closest to:A. –1,780.B. –1,736.C. –922.

If two events, A and B, are independent and the probability of A does not equal the probability of B (i.e., P(A) ≠ P(B)), then the probability of event A given that event B has occurred (i.e., P(A│B)) is best described as:A. P(A).B. P(B).C. P(B│A).

Assume that the real risk-free rate of return is 3% and that the expected inflation premium is 5%. If the risk premium incorporates default risk, liquidity risk, and any maturity premium, an observed (nominal) interest rate of 12% implies that the risk premium is closest to:A. 4%.B. 8%.C. 10%.

2010 Level I Mock Exam: Afternoon SessionQuestion

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:A. higher IRR.B. higher NPV.C. shorter payback.

A low price range in which buying activity is sufficient to stop a price decline is best described as:A. support.B. resistance.C. change in polarity.

An investor purchases one share of stock for $85. Exactly one year later, the company pays a dividend of $2.00 per share. This is followed by two more annual dividends of $2.25 and $2.75 in successive years. Upon receiving the third dividend, the investor sells the share for $100. The money-weighted rate of return on this investment is closest to:A. 7.97%.B. 8.15%.C. 8.63%.

Which of the following most accurately describes how to standardize a random variable X?A. Subtract the mean of X from X, and then divide that result by the standard deviation of X.B. Subtract the mean of X from X, and then divide that result by the standard deviation of the standard normal distribution.C. Divide X by the difference between the standard deviation of X and the standard deviation of the standard normal distribution.

For planning purposes, an individual wants to be able to spend €80,000 per year, at the end of each year, for an anticipated 25 years in retirement. In order to fund this retirement account, he will make annual deposits of €6,608 at the end of each of his working years. What is the minimum number of such deposits he will need to make to fund his desired retirement? Use 6% interest compounded annually for all calculations.A. 29 paymentsB. 40 paymentsC. 51 payments

A technical analyst has detected a price chart pattern with three segments. The left segment shows a decline followed by a reversal to the starting price level. The middle segment shows a more pronounced decline than in the first segment and again a reversal to near the starting price level. The third segment is roughly a mirror image of the first segment. This chart pattern is most accurately described as:A. a triple bottom.B. a head and shoulders.C. an inverse head and shoulders.

An increase in which of the following items is most likely to result in a wider confidence interval for the population mean?A. Sample sizeB. Reliability factorC. Degrees of freedom

An analyst determines that approximately 99 percent of the observations of daily sales for a company are within the interval from $230,000 to $480,000 and that daily sales for the company are normally distributed. The standard deviation of daily sales (in $) for the company is closest to:A. 41,667.B. 62,500.C. 83,333.

A mutual fund manager wants to create a fund based on a high-grade corporate bond index. She first distinguishes between utility bonds and industrial bonds; she then, for each segment, defines maturity intervals of less than 5 years, 5 to 10 years, and greater than 10 years. For each segment and maturity level, she classifies the bonds as callable or non-callable. She then selects bonds from each of the subpopulations she has created. For the manager’s sample, which of the following best describes the sampling approach?A. SystematicB. Simple randomC. Stratified random

An analyst conducts a significance test to determine if the relation between two variables is real or the result of chance. His null hypothesis is that the population correlation coefficient is equal to zero and his alternative hypothesis is that the population correlation coefficient is different from zero. He gathers the following information:Value of the test statistic -------------------------2.8092Critical value at the 0.05 significance level -----1.96Critical value at the 0.01 significance level------2.58The analyst most likely conducted a:A. one-tailed test and can reject his null hypothesis.B. two-tailed test and can reject his null hypothesis.C. two-tailed test and cannot reject his null hypothesis.

The null hypothesis is most appropriately rejected when the p-value is:A. negative.B. close to one.C. close to zero.

Under which measurement scale is data most likely categorized without being ranked?A. OrdinalB. NominalC. Interval


On 7 January 2008, an investor purchases 100 shares of stock for $32.50 a share. On 7 January 2009, the investor purchases 100 more shares of the same stock for $36.70 a share. On 7 January 2010, the investor sells all 200 shares of the stock for $42.00 a share. The internal rate of return for this investment is best described as an example of a:A. geometric mean return.B. time-weighted rate of return.C. money-weighted rate of return.

A 180-day U.S. Treasury bill has a holding period yield (HPY) of 2.375%. The bank discount yield (in %) is closest to :A. 4.640.B. 4.750.C. 4.875.

The sample variance based on the following data points: -6.0 percent, 5.8 percent, 8.4 percent, and 9.7 percent is closest to:A. 0.000360.B. 0.003855.C. 0.005140.

An analyst determines that 60 percent of all U.S. pension funds hold hedge funds. In evaluating this probability, a random sample of 10 U.S. pension funds is taken. Using the binomial probability function, , the probability (in %) that exactly 6 of the 10 firms in the sample hold hedge funds is closest to:A. 25.08.B. 27.99.C. 60.00.

A random variable with a finite number of equally likely outcomes is best described by a:A. binomial distribution.B. discrete uniform distribution.C. continuous uniform distribution.

The bond-equivalent yield for a semi-annual pay bond is most likely:A. equal to the effective annual yield.B. more than the effective annual yield.C. equal to double the semi-annual yield to maturity.

An analyst gathered the following information about a stock index:Mean net income for all companies in the index $2.4 millionStandard deviation of net income for all companies in the index $3.2 millionIf the analyst takes a sample of 36 companies from the index, the standard error of the sample mean (in $) is closest to:A. $88,889.B. $400,000.C. $533,333.

2011: Level I Mock Exam: Afternoon SessionQuestion

For an investment portfolio, the coefficient of variation of the returns on the portfolio is best described as measuring:A. risk per unit of mean return.B. mean return per unit of risk.C. mean excess return per unit of risk.

When using stock return data, a geometric mean return calculation is most likely preferred over a geometric mean calculation because:A. return data can be negative.B. return data can be less than one.C. the geometric mean return is closer in value to the arithmetic mean.

An analyst collects the following set of past stock returns: -2.3%, -5.1%, 7.6%, 8.2%, 9.1%, and 9.8%. Which of the following measures of return is most likely the highest?A. Median returnB. Geometric mean returnC. Arithmetic mean return

A 182-day U.S. Treasury bill has a face value of $100,000 and currently sells for $98,500. Which of the following yields is most likely the lowest?A. Bank discount yieldB. Money market yieldC. Holding period yield

If a probability distribution is very similar to a normal distribution, then the kurtosis is best described as:A. leptokurtic.B. mesokurtic.C. platykurtic.

The 95% confidence interval for the sample mean is -4.56 to 3.27. The null hypothesis is that the sample mean is equal to zero. The alternative hypothesis is that the sample mean is not equal to zero (two-tail test). The null hypothesis most appropriately should be:A. rejected at a 2.5% level of significance.B. rejected at a 5.0% level of significance.C. accepted at a 5.0% level of significance.

Which of the following is most likely to be considered a momentum indicator?A. Put-call ratioB. Breadth of marketC. Mutual fund cash position

Compared to a normal distribution, a lognormal distribution is least likely to be:A. skewed to the left.B. skewed to the right.C. useful in describing the distribution of stock prices.

The following ten observations are a sample drawn from a normal population: 25, 20, 18, -5, 35, 21, -11, 8, 20, and 9. The fourth quintile (80th percentile) of the sample is closest to:A. 8.0.B. 21.0.C. 24.2.

When calculated for the same data and provided there is variability in the observations, the geometric mean will most likely be:A. equal to the arithmetic mean.B. less than the arithmetic mean.C. greater than the arithmetic mean.

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:A. if the population distribution is normal.B. if the population distribution is symmetric.C. for populations described by any probability distribution

If the stated annual interest rate is 9% and the frequency of compounding is daily, the effective annual rate is closest to:A. 9.00%.B. 9.42%C. 9.88%.

All else held constant, the width of a confidence interval is most likely to be smaller if the sample size is:A. larger and the degree of confidence is lower.B. larger and the degree of confidence is higher.C. smaller and the degree of confidence is lower.

The belief that trends and patterns tend to repeat themselves and are, therefore, somewhat predictable best describes:A. technical analysis.B. weak-form efficiency.C. arbitrage pricing theory.

An investor purchases 100 shares of stock at a price of $40 per share. The investor holds the stock for exactly one year and then sells the 100 shares at a price of $41.50 per share. On the date of sale, the investor receives dividends totaling $200. The holding period return on the investment is closest to:A. 3.75%.B. 8.43%.C. 8.75%.

A test statistic is best defined as the difference between the sample statistic and the value of the population parameter under H0 divided by the:A. sample standard deviation.B. standard error of the sample statistic.C. appropriate value from the t-distribution .

2011: Level I Mock Exam: Morning SessionQuestion

In generating an estimate of a population parameter, a larger sample size is most likely to improve the estimator’s:A. efficiency.B. consistency.C. unbiasedness.

Using a discount rate of 5%, compounded monthly, the present value of $5,000 to be received three years from today is closest to:A. $4,250.B. $4,305.C. $4,320.

Assume that a stock’s price over the next two periods is as shown below.Time = 0 Time = 1 Time = 2S0 = 100 Su = 110 Suu = 121 Sd = 92 Sud,du = 101.20 Sdd = 84.64The initial value of the stock is $100. The probability of an up move in any given period is 40% and the probability of a down move in any given period is 60%. Using the binomial model, the probability that the stock’s price will be $101.20 at the end of two periods is closest to: A. 16%.B. 24%.C. 48%.

A sample of 438 observations is randomly selected from a population. The mean of the sample is 382 and the standard deviation is 14. Based on Chebyshev’s inequality, the endpoints of the interval that must contain at least 88.89% of the observations are closest to:A. 340 and 424.B. 354 and 410.C. 396 and 480.

The following ten observations are a sample drawn from a normal population: 25, 20, 18, -5, 35, 21, -11, 8, 20, and 9. The mean of the sample is closest to: A. 14.00.B. 15.56.C. 17.20.

Over the past four years, a portfolio experienced returns of -8%, 4% 17% and -12%. The geometric mean return of the portfolio over the four year period is closest to:A. -0.37%B. 0.25%C. 8.99%

A sample of 25 observations has a mean of 8 and a standard deviation of 15. The standard error of the sample mean is closest to:A. 1.60.B. 3.00.C. 3.06.

The probability of event A is 40%. The probability of event B is 60%. The joint probability of AB is 40%. The probability that A or B occurs or both occur is closest to:A. 40%.B. 60%.C. 84%.

the terms of the loan call for the loan to be repaid over five years using equal monthly payments with an annual nominal interest rate of 8% and monthly compounding. The monthly payment is closest to:A. €608.29.B. €626.14.C. €700.00.

The dollar discount on a U.S. Treasury bill with 91 days until maturity is $2,100. The face value of the bill is $100,000. The bank discount yield of the bill is closest to:A. 8.31%.B. 8.40%.C. 8.58%.

One is most likely to reject the null hypothesis when the p-value of the test statistic:A. is negative.B. exceeds a specified level of significance.C. falls below a specified level of significance.

When an investigator wants to test whether a particular parameter is larger than a specific value, the null and alternative hypothesis are best defined as:A. H0: θ = θ0 versus Ha: θ ≠ θ0B. H0: θ ≤ θ0 versus Ha: θ > θ0C. H0: θ ≥ θ0 versus Ha: θ < θ0

A hypothesis test fails to reject a false null hypothesis. This is best described as a:A. Type I error.B. Type II error.C. test with little power

Which of the following statements is most accurate?A. The first quintile generally exceeds the median.B. The first quintile generally exceeds the first decile.C. The first quintile generally exceeds the first quartile.

Assuming no short selling, diversification benefit is most likely to occur when the correlations among the securities contained in the portfolio are:A. equal to positive one.B. less than positive one.C. greater than positive one.

Num/Concep Difficulty

Numerical Easy

Conceptual Easy

Numerical Moderate

Numerical Moderate

Numerical Moderate

Conceptual Easy

Conceptual Moderate

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Conceptual Moderate

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Moderately difficult


Numerical

Conceptual Moderate

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Conceptual Easy

Conceptual Easy

Numerical Easy


Numerical difficult


Conceptual

Numerical Moderate

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Moderatey Difficult

Conceptual Easy

Conceptual Easy

Numerical Moderate

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Numerical

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Conceptual Easy

Numerical Easy

Conceptual Moderate

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Conceptual Easy

Conceptual Moderate

Numerical Moderate

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Numerical


Conceptual Moderate

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Numerical Easy

Moderatey Difficult

Conceptual

Conceptual Moderate

Conceptual Moderate

Conceptual Moderate

Conceptual Easy

Conceptual Moderate

Conceptual

Conceptual Easy


Moderately Difficult

Numerical Moderate

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Numerical Easy

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Numerical Easy


Numerical

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Numerical Moderate

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Conceptual

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2012 level i mock exam difficulty mapping

Documents

discounted

tax cash flows

effective

quintile generally

bank discount

discrete uniform

central limit

effective