1 more week
Hedge fund losses are *most likely* to be magnified by a: A.) margin call. B.) lockup period. C.) redemption notice period.
a is correct
An economist states that the probability of having the gross domestic product (GDP) of a country higher than 3% is 0.20. What are the odds against a GDP higher than 3%? A.) 5 to 1 B.) 6 to 1 C.) 4 to 1
1-0.2/0.2 = 4
The confidence interval for 90% confidence is equal to ___________ The confidence interval for 95% confidence is equal to ___________ The confidence interval for 99% confidence is equal to
1.645 1.96 2.575
A group of fund analysts have to select the first, second, and third best fund manager of the year for 2012 based on their subjective judgment. If 10 fund managers are candidates for the three awards, the number of ways in which each analyst can make his ranking is closest to: A.) 30. B.) 720. C.) 120.
10!/10!-3! 10!/7! = 720
An investor deposits £2,000 into an account that pays 6% per annum compounded continuously. The value of the account at the end of four years is closest to: A.) £2,854. B.) £2,525. C.) £2,542.
2000 * e^(0.06 x 4) = 2542
1 January --> 180,000 shares outstanding 1 June --> 60,000 shares issued 1 August --> 2-for-1 stock split 31 December --> 480,000 shares outstanding To calculate earnings per share for 2012, the company's weighted average number of shares outstanding is closest to: A.) 315,000. B.) 215,000. C.) 430,000.
5/12 * 180000 7/12 * (180,000+60,000) *2 430000
A South African company issues bonds denominated in pound sterling that are sold to investors in the United Kingdom. These bonds can be best described as: *issued by foreign country in a domestic currency* A.) Foreign Bond B.) Euro Bond C) Domestic bond
A
According to US GAAP, the payment of cash dividends during the year will most likely affect the cash flow from which type of activity? A.) Financing B.) Investing C.) Operating
A
Inventory values under GAAP are recorded at lower of cost or: A.) Market B.) Net Realizable Value C.) Estimated selling price
A
Other comprehensive income is least likely to include gains or losses on: A.) the sale or disposal of discontinued operations. B.) derivative contracts accounted for as hedges. C.) the translation of foreign currency-denominated subsidiary financial statements.
A
The role of the International Organization of Securities Commissions (IOSCO) is best described as: A.) promoting cross-border cooperation and uniformity in securities regulation. B.) enforcing financial reporting requirements for entities participating in capital markets. C.) promoting the use of International Financial Reporting Standards (IFRS) and the convergence of national accounting standards.
A
Trade receivables are most commonly reported at: A.) net realizable value. B.) net present value. C.) face value.
A
Under US GAAP, interest paid is most likely included in which of the following cash flow activities? A.) Operating only B.) Financing only C.) Either operating or financing
A
Using a common-size income statement to compare a company to its peers, an analyst can determine the company's: A.) relative performance. B.) size. C.) revenue recognition policies.
A
When the population variance is *unknown* use The sample is large (n ≥ 30). The sample is small (n < 30) but the distribution of the population is normal or approximately normal. A.) T Test B.) Z test
A
Which of the following hedge fund strategies emphasizes a top-down approach? A.) Macro B.) Equity hedge C.) Event-driven
A
Which of the following is least likely to be a general feature underlying the preparation of financial statements within the International Financial Reporting Standards (IFRS) Conceptual Framework? A.) Matching B.) Accrual basis C.) Materiality
A
Which of the following is most likely an indicator of liquidity in the Primary market for bonds? A.) Bid-to-cover ratio B.) Bid-offer spread C.) Settlement period
A
Which of the following is most likely considered an example of matrix pricing when determining the cost of debt? A.) Debt-rating approach only. B.) Yield-to-maturity approach only. C.) Both the yield-to-maturity and the debt-rating approaches.
A
Which of the following is most likely to be available when conducting hedge fund due diligence? A.) The benchmark used by the fund B) information on systems risk management C.) Details of investment strategies and processes
A
consumer-related companies whose business tends to exhibit less economic sensitivity than other companies; for example, manufacturers of food, beverage, tobacco, and personal care products. A.) Consumer staples B.) Consumer Discretionary
A
in the binomial model, the difference between the up and down factors best represents the: A.) volatility of the underlying. B.) moneyness of an option. C.) pseudo probability.
A
Under US GAAP, internally created identifiable intangible assets most likely: A.) are expensed and not reported on the balance sheet. B.) have their amortization method and useful life reviewed at least annually. C.) can be revalued only when there is an active market for the specific intangible asset.
A this is also true for IFRS
2008 --> 250,738 2009 --> 279,347 2010 --> 316,480 2011 --> 355,589 2012 --> 392,008 The company's compound annual growth rate in revenue is closest to: A.) 11.8%. B.) 14.1%. C.) 9.4%.
A 392,008/250,738 ^ 1/4 2008-2009 2009-2010 2010-2011 2011-2012
Under US GAAP, property, plant, and equipment is reported on the balance sheet based on: A.) a cost model only. B.) a revaluation model only. C.) either a cost model or a revaluation model.
A PPE is carried at amortized cost Amortized cost ( Historical cost - Accumulated depreciation)
Which of the following dates in the dividend chronology can fall on a weekend? The A.) payment date. B.) record date. C.) ex-date.
A Payment date --> day company actually pays the dividend Record date --> ex date --> first date the stock trades without the divided
A manager is compensated with a management fee based on committed capital plus an incentive fee based on fund performance. This scenario best describes the fee structure of a: A.) private equity fund. B.) hedge fund. C.) mutual fund.
A is correct
Accounts payable are: A.) amounts a company owes its vendors for purchase of goods and services. B.) financial liabilities owed by a company through a formal loan agreement. C.) reported in a different section of the balance sheet from notes payable due in one year.
A is correct
Under the converged FASB and IASB revenue recognition accounting standards, companies are required to disclose: A.) remaining performance obligations and transaction price allocated to those obligations. B.) general descriptions of any contract-related assets and liabilities. C.) aggregated information about customer contracts.
A is correct
Which income or expense item is prohibited under both IFRS and US GAAP? A.) Extraordinary items B.) Discontinued operations C.) Unusual or infrequent items
A is correct
Which of the following equations is a consequence of the Fisher effect? A.) Nominal interest rate = Real interest rate + Expected rate of inflation. B.) Real interest rate = Nominal interest rate + Expected rate of inflation. C.) Nominal interest rate = Real interest rate + Market risk premium.
A is correct
Which of the following suggestions is best aligned with CFA Institute advocacy for financial reporting that reflects *economic reality* ? A.) Cash flow statements prepared using the direct format for cash flow from operations (CFO) B.) Conservatism in revenue recognition policies C.) Detailed cost information for long-lived assets
A is correct
When the futures price of a commodity exceeds the spot price, the commodity market is most likely in: *low connivence yield* A.) contango. B.) backwardation. C.) carry.
A is correct Commodity futures curve is upward sloping
Which of the following is traded ONLY on a regulated exchange? A.) Futures options B) Stock options C.) Warrents
A is correct B is traded OTC C cab be traded on a regulated exchange or initiated as private transactions
An area of difference regarding revenue recognition between IFRS and US GAAP within the converged IASB and FASB accounting standards is the: A.) threshold for probable collectability under a contract. B.) determination of the transaction price. C.) recognition of revenue based on the consideration which the entity expects.
A is correct IFRS --> "probable" means more likely then not GAAP "probable" means is likely to occur
A private equity firm sells a portfolio company to a buyer that is active in the same industry as the portfolio company. This transaction is best described as a(n): A.) trade sale. B.) secondary sale. C.) initial public offering.
A is correct B is incorrect because a secondary sale is a sale to another private equity firm.
Which of the following would be included in GDP A.) A commercial real estate broker that receives commission from bringing together a buyer and seller on a property he didn't construct B.) A Flea Market dealer makes household goods for resale but doesn't report the income on his taxes C.) A pot dealer that imports 1,500 pounds of merchandise and sells it without being arrested
A is correct GDP is the final value of all goods and services produced in a nation's economy. GDP includes the broker's commission for bringing together the buyer and seller. Choice "b" is incorrect. This is an example of the underground economy. The flea market dealer offers goods at a retail marketplace which are both legal and add value to the economy. However, illegally failing to report his legal activities excludes their value from the GDP measure. Choice "c" is incorrect. The marijuana dealer provides an importing and retailing service. However, GDP does not include the marijuana dealer's illegal goods and services."
Industry consolidation and high barriers to entry most likely characterize which life-cycle stage? A.) Mature B.) Growth C.) Embryonic D.) Shakeout
A is correct Shakeout ---> companies increasingly focus on reducing their cost structure (restructuring) and building brand loyalty. characterized by slowing growth, intense competition, and declining profitability.
Conceptually, a forward rate agreement most likely allows a company that wants to invest money in the future to lock in a rate by making a: A.) variable payment and receiving a fixed payment. B.) fixed payment and receiving a different fixed payment. C.) fixed payment and receiving a variable payment.
A is correct. Forward rate agreements are forward contracts that conceptually allow lenders to lock in a fixed payment on a future investment by receiving a known payment and making an unknown payment that offsets the unknown future interest payment
A hedge fund that implements trades based on a top-down analysis of expected movements in economic variables most likely uses a(n): A.) macro strategy. B.) relative value strategy. C.) event-driven strategy.
A is correct. Macro strategies emphasize a top-down approach, and trades are made based on expected movements of economic variables.
Arbitrage activity will most likely be higher in securities markets: A.) with no restrictions on short selling. B.) that are efficient. C.) with high information acquisition costs.
A is correct. Short selling helps in price discovery. Arbitrageurs benefit from pricing discrepancies (inefficiencies); therefore, arbitrage activity will be higher in markets with no restrictions on short selling.
When a company issues common stock as part of the conversion of a convertible bond, the cash flow statement will most likely: A.) omit the transaction but disclose it in a separate note or supplementary statement. B.) omit the transaction without disclosure. C.) include the transaction because it materially affects the company's financial position.
A is correct. Significant non-cash transactions, such as the exchange of non-monetary assets or issuance of stock as part of a stock dividend or conversion are not incorporated in the cash flow statement. They are required to be disclosed, however, in either a separate note or a supplementary schedule to the cash flow statement.
Concentrated portfolio strategies are attractive because of their: A.) potential to generate alpha. B.) ability to track market indices. C.) low risk
A is correct. Concentrated portfolio strategies focus on only a few securities, strategies, or managers. This focus reduces diversification but may enable investors to achieve alpha.
A change in which of the following best describes a macroeconomic influence on industry growth? A.) The cost of debt B.) Personal spending habits C.) Population size
A is correct. External factors affecting an industry's growth include macroeconomic, technological, demographic, governmental, and social influences. A change in interest rates, or the cost of debt, is an example of a macroeconomic influence on industry growth, profitability, and risk.
Which of the following most accurately describes the basis for construction of nearly all bond market indexes? A.) Dealer prices B.) Model prices C.) Market prices
A is correct. Firms (dealers) are assigned to specific securities and are responsible for creating liquid markets for those securities by purchasing and selling them from their inventory. In addition, many securities do not trade frequently and, as a result, are relatively illiquid. As a result, index providers must contact dealers to obtain current prices on constituent securities to update the index, or they must estimate the prices of constituent securities using the prices of traded fixed-income securities with similar characteristics.
An argument for investing in commodities is that they: A.) may provide a hedge against inflation. B.) are correlated negatively with stocks and bonds. C.) have low volatility.
A is correct. Given that commodity prices are positively correlated with inflation, commodity investing may provide higher returns when inflation is rising. In this way, commodity investing can provide inflation protection.
For portfolio managers of active funds, market indexes are least useful as: A.) model portfolios. B.) proxies to measure risk-adjusted performance. C.) benchmarks.
A is correct. Market indexes are used as model portfolios for index funds and exchange-traded funds, but they are not useful as model portfolios for active funds.
Non-operating items reported on the income statement: A.) include interest expense and interest revenue for non-financial service firms. B.) are shown as either financing or investing items on the cash flow statement. C. ) are required to be reported as separate entries.
A is correct. Non-financial service companies disclose interest received, dividends, or profits from the sale of securities held as investments as non-operating items. Interest expense is also disclosed as a non-operating item.
Which of the following statements regarding the money creation process in fractional reserve banking is correct? A.) The reserve requirement is negatively related to the quantity of money created. B.) The reserve requirement is positively related to the availability of credit. C.) The money multiplier is unaffected by the reserve requirement.
A is correct. The amount of money that the banking system creates through fractional reserve banking is a function of the money multiplier, which is expressed as 1 divided by the reserve requirement. Therefore, the smaller the reserve requirement, the greater the money multiplier effect on money creation.
Over time, a forward contract most likely has variable: A.) value and constant price. B.) price and constant value. C.) value and variable price.
A is correct. The price of a forward contract remains constant throughout its life. It is set as part of the contract specifications. The value varies with changes in the price of the underlying.
Which of the following is not a characteristic of a coherent financial reporting framework? A.) Timeliness. B.) Consistency. C.) Transparency.
A is correct. Timeliness is not a characteristic of a coherent financial reporting framework. Consistency, transparency, and comprehensiveness are characteristics of a coherent financial reporting framework.
Consider a mutual fund that invests primarily in fixed-income securities that have been determined to be appropriate given the fund's investment goal. Which of the following is *least likely* to be a part of this fund? A.) Warrants. B.) Commercial paper. C.) Repurchase agreements.
A is correct. Warrants are least likely to be part of the fund. Warrant holders have the right to buy the issuer's common stock. Thus, warrants are typically classified as equity and are least likely to be a part of a fixed-income mutual fund. Commercial paper and repurchase agreements are short-term fixed-income securities.
Deferred tax liabilities result when: A.) taxable income in a period is less than reported financial statement income before taxes. B.) Items of expense are included in financial statement income in earlier periods than those for which taxable income is reported. C.) straight-line depreciation methods are used for tax purposes and accelerated methods are employed for financial statement purposes.
A is correct. Deferred tax liabilities result when, for a given period, taxable income and the associated income tax payable are less than the reported financial statement income before taxes and the associated income tax expense.
A security market index that reports returns based on the reinvestment of income and the change in price of its constituent securities is best described as which type of index? A.) Total return B.) Float-adjusted C.) Price return
A is correct. A total return index reflects not only the constituent securities' prices but also the reinvestment of all income since inception.
A closed-end fund is trading at a premium to its net asset value. This scenario most likely reflects: A.) a belief that the portfolio securities are undervalued. B.) concerns about the quality of management. C.) excess demand for redemption of the shares.
A is correct. Closed-end funds may trade at a premium (discount) to net asset value when investors believe that the portfolio securities are undervalued (overvalued).
The advantages to an investor owning convertible preference shares of a company most likely include: A.) less price volatility than the underlying common shares. B.) an opportunity to receive additional dividends if the company's profits exceed a pre-specified level. C.) preference dividends that are fixed contractual obligations of the company.
A is correct. Convertible preference shares tend to exhibit less price volatility than the underlying common shares because the dividend payments are known and more stable.
The voting rights of an unsponsored depository receipt (DR) belong to the: A.) depository bank. B.) direct owners of the foreign common shares. C.) foreign company whose shares are held by the depository.
A is correct. In the case of unsponsored DRs, the depository bank, not the investors in the DR, retains the voting rights.
Which of the following is most likely one of the main functions of the financial system? A.) Determining an equilibrium interest rate B.) Ensuring that markets are informationally efficient C.) Ensuring that all investment projects receive sufficient funding
A is correct. One of the main functions of the financial system is to determine the equilibrium interest rate, which is the only interest rate that would exist if all securities were equally risky, had equal terms, and were equally liquid.
An asset-based valuation model would be most applicable: A.) for valuing a small and privately held firm. B.) when the economic environment is hyperinflationary. C.) for valuing a firm that has significant property, plant, and equipment.
A is correct. Owners of small, privately held businesses are familiar with valuations arrived at by valuing the assets of the company and then subtracting any relevant liabilities.
A university endowment fund is mandated to hold some of its value in alternative investments. Which of the following would most likely be included in the fund's alternative investments portfolio? A.) Real estate securities B.) Exchange-traded funds C.) Convertible preferred shares
A is correct. Real estate securities qualify as alternative investments.
The cumulative amount of earnings recognized on a company's income statements that have not been distributed as dividends to the company's owners is best described as: A.) retained earnings. B.) accumulated other comprehensive income. C.) dividends payable.
A is correct. Retained earnings, a component of equity, is defined as the cumulative amount of earnings recognized on the company's income statements that have not been distributed as dividends to the company's owners.
Which of the following isn't a Leading indicator A.) manufacturing and trade sales B.) S&P index C.) avg time for initial claims for unemployment insurance D.) Average weekly hours , manufacturing
A.) manufacturing and trade sale are a confident indicator
A bond issued internationally, outside the jurisdiction of the country in whose currency the bond is denominated, is best described as a: *bond issued in currency other then market in which is was issued* A.) Foreign Bond B.) Euro Bond C) Domestic bond
B
A derivative can best be described as a financial instrument that: A.) duplicates the underlying asset's performance. B.) transforms the underlying asset's performance. C.) passes through the underlying asset's returns.
B
A tree diagram is most likely used when dealing with investment problems that involve outcomes that are: A.) independent at each node. B.) mutually exclusive. C.) unconditional at each node.
B
According to the industry life-cycle model, an industry in the shakeout stage is best characterized as experiencing: A.) little or no growth and industry consolidation. B.) slowing growth and intense competition. C.) relatively high barriers to entry and periodic price wars.
B
An income statement in a single-step format presents a subtotal for: A.) amortization of intangibles. B.) operating income. C.) gross margin.
B
For a company issuing securities in the United States to meet its obligations under the Sarbanes-Oxley Act, which of the following is management required to attest to? A.) The suitability of management and director compensation agreements B.) The adequacy of internal control over financial reporting C.) The accuracy of estimates and assumptions used in preparing the financial statements
B
For a company without a clearly identifiable operating cycle, current liabilities are expected to be settled within: A.) six months. B.) one year. C.) two years.
B
Inventory values under IFRS are recorded at the lower of cost or: A.) market. B.) net realizable value. C.) estimated selling price.
B
The most appropriate treatment for intangible assets with indefinite useful lives is to: A.) expense. B.) capitalize with no amortization. C.) capitalize and amortize.
B
The underlying in a forward rate agreement is most likely a(n): A.) growth rate of an equity index. B.) interest rate. C.) exchange rate.
B
Which of the following best describes the link between the cash flow statement and the balance sheet? A.) The statement's investing activities section reconciles the changes in current assets on the balance sheet. B.) The cash flow statement reconciles the beginning and ending balances of cash reported on the balance sheet. C.) The cash flow statement reconciles changes in all accounts on the balance sheet.
B
Which of the following is most likely an indicator of liquidity in the secondary market for bonds? A.) Bid-to-cover ratio B.) Bid-offer spread C.) Settlement period
B
Which of the following items is an example of deferred income? A.) Normal operating expenses that have been paid in advance B.) A payment received for contracted goods and services prior to their delivery C.) An expense recognized on a company's income statement but not paid for as of the balance sheet date
B
Which of the following portfolio performance measures are the most appropriate for an investor who holds a fully diversified portfolio? A.) Sharpe ratio and Treynor ratio. B.) Treynor ratio and Jensen's alpha. C.) M-Squared and Sharpe ratio.
B
Which of the following statements about exchange-traded funds is most correct? A.) Exchange-traded funds are not backed by any assets. B.) The investment companies that create exchange-traded funds are financial intermediaries. C.) The transaction costs of trading shares of exchange-traded funds are substantially greater than the combined costs of trading the underlying assets of the fund.
B
_______________ is widely used for investment performance measurement to measure *excess return per unit of risk*. A.) Variation B.) Sharpe ratio C.) Coefficient of variation D.) St.Dev
B
companies that derive a majority of revenue from the sale of consumer-related products or services for which demand tends to exhibit a relatively high degree of economic sensitivity. Examples of business activities that frequently fall into this category are automotive, apparel, hotel, and restaurant businesses A.) Consumer staples B.) Consumer Discretionary
B
in a securitization, the *Issuer* of the pool of securitized assets is the: A.) trustee. B.) special purpose entity. C.) depositor.
B
when the population is normally distributed and the *known* population variance use A.) T Test B.) Z test
B
In the context of venture capital financing, seed-stage financing most likely supports: A.) initial commercial production and sales. B.) product development and/or marketing efforts. C.) transformation of an idea into a business plan.
B C is angel investing stage
The _____________________ effect is when weights will shift away from securities that have increased in relative value whenever the portfolio is rebalanced. A.) Momentum effect B.) Contrarian effect C.) Value tilt
B this is present in fundamentally weighted indexes
investors of an open-end fund sell the shares ________________ whereas investors of a closed-end fund sell the shares A.) To others in the secondary market. B.) back to the fund
B A
The annual cost of trade credit assuming a 365-day year for terms 3/10 net 30 is closest to: A.) 43.3%. B.) 44.9%. C.) 32.0%.
B cost of trade credit (1+ ( Discount/1+Discount)^365/#days beyond discount period) -1 1+(.03/1-.03)^365/30 -1
which is a one tailed test A or B A.) Ho = 0 Ha cant = 0 B.) Ho <= 0 Ha > 0
B A is a two tailed test
A company sells a product with a three-year warranty included in the price. According to IFRS, which of the following is the most appropriate accounting treatment for the warranty? A.) Fully recognizing the revenue at the time of the sale but waiting until the actual warranty costs are incurred to recognize the expense. B.) Fully recognizing the revenue and estimated warranty expense at the time of the sale and updating the expense as indicated by experience over the life of the warranty. C.) Deferring all of the revenue and recognizing it over the life of the warranty period.
B --> due to eh matching principle
Examples of the beneficial features of using an ethical decision-making framework *least likely* includes analyzing: A.) the best course of action when alternatives are available. B.) the decision maker's perspective of contemplated actions. C.) a broader picture from a long-term point of view.
B is correct
The objective of general purpose financial reporting is best described as: A.) providing information about financial performance to a wide range of users. B.) facilitating resource allocation decisions by current and potential investors and creditors. C.) reporting an entity's economic resources and claims, and changes therein, to shareholders.
B is correct
The role of financial statement analysis is best described as: A.) providing information useful for making investment decisions. B.) evaluating a company for the purpose of making economic decisions. C.) using financial reports prepared by analysts to make economic decisions.
B is correct
Which of the following is a leading indicator? A.) Average duration of unemployment B.) Building permits for new private housing units C.) Average bank prime lending rate D.) Commercial and institutional loans outstanding E.) Employees on non agricultural payrolls
B is correct A--> is a Lagging indicator C--> is a lagging indicator D --> is a lagging indicator E. --> is a concident indicator
If an investor uses derivatives to make a long investment in commodities, the return earned on margin is best described as: A.) convenience yield. B.) collateral yield. C.) price return.
B is correct Collateral yield is the return on cash used as margin on derivatives used to gain commodity exposure.
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%.
B is correct Using the cash flow (CF) function of a financial calculator: CF0 = −85, CF1 = 2, CF2 = 2.25, CF3 = 102.75; and solving for IRR: IRR = 8.15%.
When spot prices are higher than the futures price, the commidity market is most likely in: *High connivence yield* A.) contango. B.) backwardation. C.) carry.
B is correct market is said to be in backwardation.
An index provider launches a new index that will include value stocks in a specific country. This index will most likely be a: A.) large-capitalization index. B.) style index. C.) fundamentally weighted index.
B is correct. Style indexes represent a group of securities classified according to market capitalization, value, and growth or a combination of these characteristics.
If the quantity demanded of pears falls by 4% when the price of apples decreases by 3%, then apples and pears are best described as: A.) complements. B.) substitutes. C.) inferior goods.
B is correct. The cross-price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in the price of a substitute or complement. If the cross-price elasticity of demand is positive, the goods are substitutes. In this case, the 4 percent decline in quantity of pears is divided by the 3 percent decline in the price of apples, which is a positive number: −4/−3 = +1.33
A portfolio of securities representing a given security market, market segment, or asset class is best described as a: A.) benchmark. B.) security market index. C.) total return index.
B is correct. A security market index represents a given security market, market segment, or asset class and is normally constructed as portfolios of marketable securities.
You have placed a sell market-on-open order—a market order that would automatically be submitted at the market's open tomorrow and would fill at the market price. Your instruction, to sell the shares at the market open, is a(n): A.) execution instruction. B.) validity instruction. C.) clearing instruction.
B is correct. An instruction regarding when to fill an order is considered a validity instruction.
Under US GAAP, a company's comprehensive income is reported as: A.) net income less common stock dividends. B.) the change in equity during a period from transactions and other events and circumstances from non-owner sources. C.) revenue less expense items that are excluded from the net income calculation.
B is correct. Comprehensive income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, which means comprehensive income is the sum of all transactions and other events and circumstances from non-owners.
An investor is seeking an investment that can take long and short positions, may use multi-strategies, and historically exhibits low correlation with a traditional investment portfolio. The investor's goals will be best satisfied with an investment in: A.) real estate. B.) a hedge fund. C.) a private equity fund.
B is correct. Hedge funds may use a variety of strategies (event-driven, relative value, macro and equity hedge), generally have a low correlation with traditional investments, and may take long and short positions.
Compared with historical simulation, Monte Carlo simulation is most appropriate when: A.) probability distributions are unavailable. B.) "what if" analysis is required. C.) analytical methods are required.
B is correct. Monte Carlo simulation lends itself to "what if" analysis and requires the user to provide a probability distribution or distributions. It can be a complement to analytical methods.
A technical analyst observes a head and shoulders pattern in a stock she has been following. She notes the following information: Head price --> $83.50 Shoulder price --> $72.00 Neckline price --> $65.75 Current price -> $64.00 Based on this information, her estimate of the price target is closest to: A.) $59.50. B.) $48.00. C.) $44.50.
B is correct. Price target = Neckline − (Head − Neckline). In this example, Price target = $65.75 − ($83.50 − $65.75) = $65.75 − $17.75 = $48.00.
All else remaining equal, a decline in the average duration of unemployment most likely indicates that an economic: A.) upturn is beginning. B.) upturn has already occurred. C.) downturn is forthcoming.
B is correct. The average duration of unemployment is a lagging economic indicator because businesses wait until a downturn looks genuine before laying off employees and until recoveries look secure before rehiring. If there is a decline in the average duration of unemployment, then it means that companies have been hiring, which indicates that an economic upturn has already occurred.
A long-term bond investor with an investment horizon of 8 years invests in option-free, fixed-rate bonds with a Macaulay duration of 10.5. The investor most likely currently has a: A.) positive duration gap and is currently exposed to the risk of lower interest rates. B.) positive duration gap and is currently exposed to the risk of higher interest rates. C.) negative duration gap and is currently exposed to the risk of higher interest rates.
B is correct. The duration gap is the bond's Macaulay duration minus the investment horizon, which is positive in this case. A positive duration gap implies that the investor is currently exposed to the risk of higher interest rates.
Which of the following elements of financial statements is most closely related to measurement of performance? A.) Assets. B.) Expenses. C.) Liabilities.
B is correct. The elements of financial statements related to the measure of performance are income and expenses.
When graphically depicting the life-cycle model for an industry as a curve, the variables on the axes are: A.) price and time. B.) demand and time. C.) demand and stage of the life cycle.
B is correct. The industry life-cycle model shows how demand evolves through time as an industry passes from the embryonic stage through the stage of decline.
Based on good corporate governance practices, independent board members most likely: A.) are pre-approved by management before being nominated. B.) have a "lead" director when the board chair is not independent. C.) hold large equity positions but have never worked at the company.
B is correct. Under good corporate governance practices, independent board members should have a "lead" director when the board chair is not independent.
In valuing underlying hedge fund positions, the most conservative approach is most likely one that uses: A.) the average of the bid and ask prices. B.) bid prices for longs and ask prices for shorts. C.) the most recent market prices.
B is correct. A conservative and theoretically accurate approach is to use bid prices for longs and ask prices for shorts because these are the prices at which the positions could be closed.
The type of voting in board elections that is most beneficial to shareholders with a small number of shares is bestdescribed as: A.) statutory voting. B.) cumulative voting. C.) voting by proxy.
B is correct. Cumulative voting allows shareholders to direct their total voting rights to specific candidates, as opposed to having to allocate their voting rights evenly among all candidates. Thus, applying all of the votes to one candidate provides the opportunity for a higher level of representation on the board than would be allowed under statutory voting.
Which of the following is lowest in quality on the spectrum of GAAP conforming financial reports? A.) Aggressive accounting choices B.) Earnings management C.) Conservative accounting choices
B is correct. Earnings management represents deliberate actions to influence reported earnings and their interpretation. The distinction between earnings management and biased choices is subtle and, primarily, a matter of intent. A and C are incorrect B/C because aggressive and conservative accounting is a biased choice. Biased accounting choices are higher in quality than earnings management on the spectrum of GAAP conforming financial reports.
The convergence of global accounting standards has advanced to a degree that the Securities and Exchange Commission in the United States now mandates that foreign private issuers who use IFRS may report under: A.) US GAAP or under IFRS with a reconciliation to US GAAP. B.) US GAAP or under IFRS. C.) US GAAP with voluntary supplemental reporting under IFRS.
B is correct. Historically, the Securities and Exchange Commission required reconciliation for foreign private issuers that did not prepare financial statements in accordance with US GAAP. However, the reconciliation requirement was eliminated as of 2008 for companies that prepared their financial statements under IFRS.
If securities markets are semi-strong-form efficient, the most appropriate role of a portfolio manager is to:] A.) invest by analyzing publicly available information to consistently generate abnormal returns. B.) manage portfolios with appropriate diversification and asset allocation, taking into consideration investor preferences. C.) exploit appropriate trading rules and serial correlations for achieving excess returns.
B is correct. If markets are semi-strong-form efficient (which also encompasses weak-form efficiency), the role of a portfolio manager is not necessarily to beat the market, but rather to establish and manage a portfolio consistent with the portfolio's objectives, with appropriate diversification and asset allocation, while taking into consideration the risk preferences and tax situation of the investor.
Which of the following products provides protection from inflation? A.) Consols B.) Linkers C.) Floaters
B is correct. Linkers, also known as inflation-linked bonds, adjust coupon payments, principal payments, or both to protect investors from inflation risk.
The non-controlling or minority interests found in the equity section of the balance sheet are best described as the equity interests: A.) held by the corporation in other entities that it does not control, but has significant influence. B.) of minority shareholders in subsidiaries that have been consolidated. C.) of minority shareholders of the corporation who have significant influence, but not control.
B is correct. Non-controlling interests found in the equity section represent the equity interests of minority shareholders in non-wholly-owned subsidiaries that have been consolidated. The equity interests of minority shareholders in the subsidiary companies that have been consolidated by the parent (controlling) company but that are not wholly owned by the parent company.
The financial systems that are operationally efficient are most likely characterized by: A.) security prices that reflect fundamental values. B.) liquid markets with low commissions and order price impacts. C.) the use of resources where they are most valuable.
B is correct. Operationally efficient markets are liquid markets in which the costs of arranging trades, commissions, bid-ask spreads, and order price impacts are low.
A private equity fund desiring to realize an immediate and complete cash exit from a portfolio company is most likely to pursue a(n): A.) IPO. B.) trade sale. C.) recapitalization.
B is correct. Private equity funds can realize an immediate cash exit in a trade sale. Using this strategy, the portfolio company is typically sold to a strategic buyer.
Which of the following investments most likely provides an investor with indirect equity exposure to real estate? A.) Real estate limited partnerships B.) Real estate investment trusts C.) Commercial mortgage-backed securities
B is correct. Real estate investment trusts (REITs) provide investors with indirect equity real estate exposure. Real estate investment partnerships are a form of direct real estate equity investment. Commercial mortgage-backed securities (CMBS) provide investors with indirect debt investment opportunities in real estate.
The type of equity voting right that grants one vote for each share of equity owned is referred to as: A.) proxy voting. B.) statutory voting. C.) cumulative voting.
B is correct. Statutory voting is the type of equity voting right that grants one vote per share owned.
In a hypothetical economy, consumption is 70% of pre-tax income, and the average tax rate is 25% of total income. If planned government expenditures are expected to increase by $1.25 billion, the increase in total income and spending, in billions, is closest to: A.) $2.6. B.) $4.2. C.) $1.3.
B is correct. The fiscal multiplier is 1/(1−c * (1−T)) c = marginal propensity to consume = consumption/disposable income T = the tax rate Assuming pre-tax income of $100 Disposable income: $100 × (1 − 0.25) = $75 Marginal propensity to consume: $70/$75 = 0.933 The fiscal multiplier: 1/[1 − 0.933(1 − 0.25)] = 3.33 With government expenditure of $1.25 billion, total incomes and spending will rise by $1.25 billion × 3.33 = $4.2 billion
Which of the following statements with respect to Giffen and Veblen goods is least accurate? A.) Giffen goods are "inferior," whereas Veblen goods are "high-status" goods. B.) The highly negative income effect overpowers the substitution effect for both types of goods. C.) Both types of goods demonstrate the possibility of a positively sloping demand curve.
B is correct. The overwhelming nature of the highly negative income effect over the substitution effect is applicable to Giffen goods only. Veblen goods are highly valued, high-priced "status" goods; consumers may tend to buy more of a Veblen good if its price rises. A is incorrect because it is true that Giffen goods are "inferior" whereas Veblen goods are "high-status" goods. C is incorrect because it is true that both Giffen goods and Veblen goods demonstrate the possibility of a positively sloping demand curve.
an informed trader buys a company's stock. His close friends, who lack information or expertise, imitate his action and buy the stock. Which of the following statements concerning this behavioral bias is most accurate? It: A.) is identical to representativeness. B.) improves market efficiency. C.) is inconsistent with rational behavior.
B is correct. This behavioral bias is an example of an information cascade wherein the transmission of information is from those participants who act first and whose decisions influence the decisions of others. The behavior of informed traders acting first and uninformed traders imitating the informed traders is consistent with rationality.
Net income --> $100 million Tax rate --> 25 percent Weighted avg. # of common shares outstanding -->25 million Convertible preferred shares* --> 10 million Preferred Net income --> $100 million Tax rate --> 25 percent Weighted avg. # of common shares outstanding -->25 million Convertible preferred shares* --> 10 million Preferred dividend per share -> $1.00 * Each share is convertible into 0.5 shares of common stock. ------------------------------------------------------------------ Q. The net difference between Mega's reported basic EPS and its diluted EPS is closest to: A.) $0.74. B.) $0.27. C.) $0.37.dividend per share -> $1.00 * Each share is convertible into 0.5 shares of common stock. ------------------------------------------------------------------ Q. The net difference between Mega's reported basic EPS and its diluted EPS is closest to: A.) $0.74. B.) $0.27. C.) $0.37.
Basic EPS = NI- Preferred Dividends/ WiAvg. common shares outstanding diluted EPS = NI/ Wi. Avg. Common Shares outstanding + New common shares that would've been issued at conversion Basic = Net difference = (BASIC EPS)$3.60 - (DILUTED EPS) $3.33 = B is correct
Beginning interest payable --> 90.4 Cash paid for interest --> 103.3 Ending interest payable --> 84.5 Interest expense (in millions) for the year is closest to: A.) £97.4. B.) £109.2. C.) £71.6.
Beg - I/P + Interest Exp - cash paid = ending I/P A is correct
"Other current assets" typically include: A.) trade receivables. B.) customer prepayments. C.) items deemed too small(not material enough) to be individually listed on the balance sheet.
C
. A company has recorded an expense for interest costs that have not yet been paid as of the balance sheet date. On the balance sheet, they are best reported as: A.) deferred expenses. B.) accounts payable. C.) accrued expenses.
C
An example of an expense classification by function is: A.) tax expense. B.) interest expense. C.) cost of goods sold.
C
Expenses on the income statement may be grouped by: A.) nature, but not by function. B.) function, but not by nature. C.) either function or nature.
C
In the short run, a firm operating in a perfectly competitive market will most likely avoid shutdown if it is able to earn sufficient revenue to cover which of the following costs? A.) Fixed B.) Marginal C.) Variable
C
Is a group of investment banks working together to sell securities A.) Qouted margin B.) Matrix pricing C.) Syndicate D.) Securitization
C
Raising the reserve requirement is most likely an example of which type of monetary policy? A.) Neutral. B.) Expansionary. C.) Contractionary.
C
Trade receivables are: A.) typically reported at gross value. B.) owed by customers for products and services to be delivered. C.) based on the company's estimate of amounts that ultimately will be collectible.
C
Under IFRS, property, plant, and equipment is reported on the balance sheet based on: A.) a cost model only. B.) a revaluation model only. C.) either a cost model or a revaluation model.
C
Which of the following hedge fund strategies emphasizes a Bottom-Up approach? A.) Macro B.) Equity hedge C.) Event-driven
C
Which of the following is the most appropriate reason for using a free cash flow to equity (FCFE) model to value equity of a company? A.) FCFE models provide more accurate valuations than the dividend discount model. B.) A firm's borrowing activities could influence dividend decisions, but they would not affect FCFE. C.) FCFE is a measure of the firm's dividend paying capacity.
C
__________ is issued locally in a local currency A.) Foreign Bond B.) Euro Bond C) Domestic bond
C
___________________ is used to measure the *risk (variability) per unit of expected return*. A.) Variation B.) Sharpe ratio C.) Coefficient of variation D.) St.Dev
C
certain information about matters that will be put to a vote at shareholders' meetings. A.) Management Discussion and Analysis B.) Interm Repports C.) Proxy statements
C
in a securitization, the *seller* of the pool of securitized assets is the: A.) trustee. B.) special purpose entity. C.) depositor.
C
One hedge fund strategy that involves simultaneously holding short and long positions in common stock is most likely: A.) volatility. B.) distressed/restructuring. C.) quantitative directional.
C B is incorrect because distressed/restructuring is an event-driven strategy that focuses primarily on fixed-income securities, although it may buy preferred stock and short common stock of a company.
A company has recorded an expense for interest costs that have not yet been paid as of the balance sheet date. On the balance sheet, they are best reported as: A.) deferred expenses. B.) accounts payable. C.) accrued expenses.
C Example of a deferred expense is - Interest paid in advance for following months Deferred expense --> a cost that has *already been incurred but not yet consumed*
A commodity market is in contango when futures prices are: A.) lower than the spot price B.) the same as the spot price. C.) higher than the spot price.
C is correct
Balance sheet items presented on a current value basis are measured at the: A.) start of the reporting period. B.) midpoint of the reporting period. C.) end of the reporting period.
C is correct
Capital provided for companies moving toward operation but before commercial manufacturing and sales have occurred best describes which stage in venture capital investing? A.) Later stage B.) Seed stage C.) Early stage
C is correct
The market approach to valuing portfolio companies in private equity firms is most likely based on: A.) present value. B.) the value of assets minus the value of liabilities. C.) multiples.
C is correct
A firm with convertible securities initially calculates that its diluted EPS is greater than its basic EPS. The firm will: A.) not be required to report diluted EPS. B.) report basic EPS that is not equal to reported diluted EPS. C.) report basic EPS that is equal to reported diluted EPS.
C is correct A higher diluted EPS indicates that the company's convertible securities are anti-dilutive
Unrealized gains and losses on securities categorized as available-for-sale: A.) do not affect shareholders' equity. B.) affect the profit and loss statement as unrealized holding gains or losses. C.) affect shareholders' equity through other comprehensive income.
C is correct they bypass the income statement and go directly to the Shareholder equity portion of the BS through OCI
A sector rotation strategy involves investing in a sector by: A.) making regular investments in it. B.) investing in a pre-selected group of sectors on a rotating basis. C.) timing investment to take advantage of business-cycle conditions.
C is correct. A sector rotation strategy is conducted by investors wishing to time investment in industries through an analysis of fundamentals and/or business-cycle conditions.
An asset-based valuation model is most applicable for a company with significant: A.) intangible assets. B.) property, plant, and equipment. C.) proportions of current assets and current liabilities and few intangible assets.
C is correct. Asset-based valuations work well for companies that do not have a high proportion of intangible or "off the books" assets and that do have a high proportion of current assets and current liabilities.
Which of the following life-cycle phases is typically characterized by high prices? A.) Mature. B.) Growth. C.) Embryonic.
C is correct. The embryonic stage is characterized by slow growth and high prices.
Which date in the chronology of a dividend payment is most likely determined by a security exchange? A.) Holder-of-record date B.) Declaration date C.) Ex-dividend date
C is correct. The ex-dividend date is normally determined by the security exchange on which the shares are listed. The corporation determines the holder-of-record date and declaration date.
Holding all other factors constant, which of the following situations will most likely lead to an increase in a company's return on equity? A.) The market price of the company's shares increases. B.) Net income increases at a slower rate than shareholders' equity. C.) The company issues debt to repurchase outstanding shares of equity.
C is correct. A company's ROE will increase if it issues debt to repurchase outstanding shares of equity.
Which of the following least likely forms the basic structure for enforcement of the CFA Institute Professional Conduct Program? A.) Bylaws B.) Rules of Procedure C.) Board of Governors
C is correct. Although the Board of Governors maintains oversight and responsibility for the Professional Conduct Program, the CFA Institute Bylaws and Rules of Procedure form the basic structure for enforcement of the Code and Standards.
Net income --> 90.0 Non-cash charges --> 15.2 Interest expense ---> 28.0 Capital expenditures --> 34.3 Working capital expenditures --> 13.0 --------------------------------------------------------- If the firm's tax rate is 40%, the free cash flow to the firm (FCFF) is closest to: A.) 57.9. B.) 87.7. C.) 74.7.
C is correct. FCFF = NI + NCC + Int(1 − t) − FCInv − WCInv
Participating preference shares entitle shareholders to: A.) participate in the decision-making process of the company. B.) convert their shares into a specified number of common shares. C.) receive an additional dividend if the company's profits exceed a pre-determined level.
C is correct. Participating preference shares entitle shareholders to receive an additional dividend if the company's profits exceed a pre-determined level.
In an effort to influence the economy, a central bank conducted open market activities by selling government bonds. This action implies that the central bank is most likely attempting to: A.) expand the economy through a lower policy interest rate. B.) contract the economy through a lower policy interest rate. C.) contract the economy by reducing bank reserves.
C is correct. Selling government bonds results in a reduction of bank reserves and reduces their ability to lend, causing a decline in money growth through the multiplier mechanism and hence leads to a contraction in the economy.
The valuation technique under which assets are recorded at the amount that would be received in an orderly disposal is: A.) current cost. B.) present value. C.) realizable value.
C is correct. The amount that would be received in an orderly disposal is realizable value.
If the yield to maturity on an annual-pay bond is 7.75%, the bond-equivalent yield is closest to: A.) 8.05%. B.) 7.90%. C.) 7.61%.
C is correct. The bond-equivalent yield = 2 × (1.0775^0.5 − 1) = 0.07605 or 7.61%.
Under US GAAP, for reporting periods after 15 December 2015, unusual or infrequent items are shown on the income statement separately: A.) below continuing operations. B.) below discontinued operations. C.) as part of continuing operations.
C is correct. Under US GAAP, material items that are unusual or infrequent and that are both as of reporting periods beginning after 15 December 2015 are shown as part of a company's continuing operations but are presented separately.
Compared with unregulated markets, regulated markets are best characterized by: A.) higher transaction costs. B.) lower trading volumes. C.) reduced arbitrage opportunities.
C is correct. Because regulated markets are more informationally efficient, there are fewer arbitrage opportunities.
In an efficient market, it is more likely that fundamental value will be reflected in the: A.) underlying spot market before the derivative market. B.) derivatives market and the underlying spot market at the same time. C.) derivatives market before the underlying spot market.
C is correct. In an efficient market, the derivatives market is more likely to reflect fundamental value, even if only for a short period, before the underlying spot market because derivatives contracts require less capital, have lower transaction costs, and are easier to sell short.
A trader buys 500 shares of a stock on margin at $36 a share using an initial leverage ratio of 1.66. The maintenance margin requirement for the position is 30%. The stock price at which the margin call will occur is closestto: A.) $25.20. B.) $30.86. C.) $20.57.
C is correct. Initial equity (%) in the margin transaction = 1/Leverage ratio = 1/1.66 = 0.60. Initial equity per share at the time of purchase = $36 × 0.60 = $21.60 Price (P) at which margin call occurs: Equity per share/Price per share = Maintenance margin (%) ($21.60+P−$36)/ ($21.60+P−$36) = 0.30 0.7P = $14.40 P = 20.5
A trader seeking to sell a very large block of stock for her client will most likely execute the trade in a(n): A.) quote-driven market. B.) order-driven market. C.) brokered market.
C is correct. Instruments that are infrequently traded and expensive to carry as inventory (e.g., very large blocks of stock, real estate properties, fine art masterpieces, and liquor licenses) are executed in brokered markets. Organizing order-driven markets for such instruments is not sensible because too few traders would submit orders to them. OTC - qoute driven Exchange - Order driven
In comparison to the makeup of fixed-income indexes, the constituent securities of equity indexes are bestdescribed as: A.) harder to price. B.) drawn from a larger universe. C.) more liquid.
C is correct. The constituents of equity indexes are more liquid than those of fixed-income indexes. The number of fixed-income securities is many times larger than the number of equity securities.
Which of the following statements is most accurate regarding cash flow statements? A.) Under IFRS, the indirect method of preparation is encouraged. B.) Under IFRS, interest paid can be reported either as an operating or as an investing cash flow. C.) Under US GAAP, bank overdrafts should be classified as a financing cash flow.
C is correct. Under US GAAP, bank overdrafts are not considered part of cash and cash equivalents and are classified as financing cash flows. A is incorrect because both direct method and indirect method are allowed under IFRS and US GAAP, and the direct method is encouraged under both. B is incorrect because under IFRS, interest paid could be reported either as an operating or financing cash flow.
Credit spreads are most likely to narrow during ________ and widen during __________ A.) economic contractions. B.) a period of flight to quality. C.) economic expansions.
C....A
Net income --> 2,520 Depreciation --> 1,178 Change in accounts receivable --> (62) Change in accounts payable --> 295 Change in inventory --> (792) --------------------------------------- Operating cash flow --> 3,139 Revenue --> 26,430 Cost of goods sold --> 12,831 Operating expenses --> 9,802 Income tax expense --> 1,277 ----------------------------------- Net income --> 2,520 If the company uses the direct method to prepare its cash flow statement, the cash paid to suppliers (in $ millions) will be closest to: A.) 12,334. B.) 13,328. C.) 12,536.
COGS + (Increase in inv) -------------------- Purchases - (Increase in A/P) = cash paid to suppliers B is correct --> 12747 when you see --> (X) on a Cash flow statement it means outflow(Increase) not negative
if the company cant reasonably measure the outcome of a L/T contract under gaap use ________ method
Completed contract IFRS doesn't allow completed contract method
Which of the following doesn't occur in the primary market? Continuous trading -- Lead Underwriters -- Book Building
Continuous trading
what is the formula for correlation?
Covariance(A,B) / St.dev(A) * St.dev(B)
Which of the following *is not* a lagging indicator? A.) Change in CPI B.) Average prime lending rate C.) Inventory / sales ratio D.) Real personal income E.) Average duration of employment
D real personal income is a Coincident indicator
Fixed income markets are predominately ____________ markets
Dealer
Commodity index returns reflect the change in the A.) Future prices B.) Forward Prices C.) convenience yield D.) Roll Yield E.) A and D
E
A bond is selling for 98.2. It is estimated that the price will fall to 96.6 if yields rise 30 bps and that the price will rise to 100.1 if yields fall 30 bps. Based on these estimates, the effective duration of the bond is closest to: A.) 1.78. B.) 5.94. C.) 11.88.
Eff DUR = (PV-) - (PV+) / 2 * Change in curve * PV0 = 100.1-96.6/2 x 98.2 x 0.003 = 5.94
______________ goods are inferior ______________ goods are high status
Griffen Veblen
Net income --> 90.0 Non-cash charges --> 15.2 Interest expense --> 28.0 Capital expenditures --> 34.3 Working capital expenditures --> 13.0 If the firm's tax rate is 40%, the free cash flow to the firm (FCFF) is closest to: A.) 57.9. B.) 87.7. C.) 74.7.
NI + NCC + Int. Exp. (1-T) - Cap Ex - Working Cap = FCFF C is correct
Stock price per share --> $60.75 Comprehensive income (millions) --> $193.0 Other comprehensive income (millions) --> $87.6 Common shares outstanding (millions) --> 46.5 On a net income basis, the company's P/E is closest to: A.) 10.1. B.) 14.6. C.) 26.8.
NI = Comprehensive income - OCI EPS = NI/shares outstanding = 2.27 Stock price/ EPS = 26.75
Stock price per share$60.75 Comprehensive income (millions)$193.0 Other comprehensive income (millions)$87.6 Common shares outstanding (millions)46.5 On a net income basis, the company's P/E is closest to: A.) 10.1. B.) 14.6. C.) 26.8.
NI = Comprehensive income - OCI NI = 105.4 105.4/46.5 = 2.27 ( EPS) Stock Price/ EPS 60.75/2.27 = 26.67
Revenue = $26,430 A/R {2010 = 1072} {2011 = 1134} what is the cash collected from customers?
REV - (increase) in A/R = 26,430 - 62 = *26,368*
_____________________ states that the optimal portfolio minimizes the probability that the return of the portfolio falls below some minimum acceptable "threshold" level.
Roys safety first ratio *Mazimize ratio*
US GAAP is __________ based and IFRS is ___________ based
Rules -- Principles