CFA Level 1 Free Practice Test

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5 questions will be shown from a total of 30 free practice questions to prepare you for CFA level 1 exam. Enjoy!

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1. Henry Williamson, CFA, is also a Fellow of the Society of Actuaries (SOA). Henry is required to abide by the SOA’s Code of Conduct as a fellow. Part of that Code of Conduct is as follows: PRECEPT 4. An Actuary who issues an Actuarial Communication shall take appropriate steps to ensure that the Actuarial Communication is clear and appropriate to the circumstances and its intended audience and satisfies applicable standards of practice.

If Henry issues actuarial communications that do not adhere to the actuarial standards of practice, what Standard would Henry most directly violate?

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2. Which of the following statements relating to Z-spread, Option-adjusted spread (OAS) and option cost for callable and putable bonds is/are most likely correct?

I: For callable bonds, Z-spread is greater than OAS and option cost is greater than 0
II: For callable bonds, Z-spread is less than OAS and option cost is greater than 0
III: For putable bonds, Z-spread is less than OAS and option cost is greater than 0

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3. The exchange rate between two currencies has decreased to 101.34. The price currency has appreciated by 7.5 percent against the base currency. The initial exchange between the two currencies was closest to:

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4. You are provided with the following information on a non-callable, non-convertible preferred stock:

Face value: USD50
Annual dividend: USD2.50
Maturity: Perpetual
Embedded options: None
Required rate of return: 6.25%

The intrinsic value of this stock is closest to:

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5. Which of the following forms of trading blocs allow for unrestricted trade of goods and services among its members?

I. Free trade areas
II. Customs unions
III. Common market

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