CFA WORKSHOP (AF 124)

EXAMEN PARCIAL
Ciclo 2017-01

Profesor: Carlos Arias Vernal

Duración: 130 minutos
Indicaciones:
1. Solamente está permitido el uso de diccionario, ningún otro material de consulta está
permitido (cuaderno, lecturas, diapositivas, etc.).
2. Se permite el uso de calculadora científica o programable. Se puede tener hasta 2
calculadoras. NO SE PUEDEN INTERCAMBIAR CALCULADORAS
3. No se permite el uso de teléfono celular o cualquier otro aparato electrónico (con
excepción de calculadoras) durante el examen, los cuales deben permanecer apagados y
guardados
4. Todas las preguntas tienen un valor igual (20/30)
5. Elija claramente una de las alternativas de respuesta.
6. No se considerarán puntos en contra

1. Roberto Vargas, CFA, is in charge of the compliance program at his investment firm. According
to the Standards of Practice Handbook, as a supervisor, Vargas is least lik ely required to:

A) respond promptly to all violations.

B) disseminate the contents of the program to all personnel
C) incorporate a professional conduct evaluation as part of an employee’s performance review.

2. Ralph Sallcy. a Leve ll candidate in the CFA Program. is explaining Standard VI(B) Priority of
Transactions. to his supervisor. Sallcy states, "The Standard recommends, but does not require,
that members and candidates should not participate in initial public offerings. The Standard also
recommends that trades for accounts of family members be made after those for other clients. but
before those for the account of the members and candidates responsible for executing the
transactions." Sallcy's explanation of the Standard is:?

A) correct
B) incorrect. because the Standard does not recommend that trades for family members be
made after those for other clients.
C) incorrect. because the Standard requires that members and candidates not participate in
initial public offerings.
3. . Gabrielle Gabbe, CFA has been accused of professional misconduct by one of her
competitors. The allegations concern Gabbe's personal bankruptcy filing ten years ago when she
was a college student and had a large amount of medical bills she could not pay.

By not disclosing the bankruptcy filing to her clients, did Gabbe violate any CFA Institute
Standards of Professional Conduct?

A) No
B) Yes, related to misconduct
C) Yes, related to misrepresentation

4. Bryan Barrett, CFA has an investment advisory servic e providing advice on gold and
other commodities to several large retail banks. Barrett advertises his services in widely
read publications to broaden his business to include retail clients. Because the client base
for the institutions that Barrett serves is large, he is comfortable stating in the ads that
thousands of his clients have benefited from his advice. Does Barrett's advertisement
most lik ely violate any CFA Institute Standards of Professional Conduct

A) No
B) Yes, related to communication with clients
C) Yes, related to misrepresentation

5. While at a bar in the financial district after work, Ellen Miffitt, CFA overhears several employees
of a competitor discuss how they will manipulate down the price of a thinly traded micro cap
stock's price over the next few days. Miffitt's clients have large positions of this stock so when she
arrives at work the next day she immediately sells all of these holdings. Because she has
determined that the micro cap stock was suitable for all of her accounts at its previously higher
price, Miffitt buys back her client's original exposure at the end of the week at the new, lower
price. Which CFA Institute Standards of Professional Conduct did Miffitt violate?

A) Market Manipulation
B) Preservation of Confidentiality
C) Material non Public Information

6. Leng Bo, CFA is a bond portfolio manager for individual investors. Last year, a client whose
portfolio is limited to investment-grade bonds approved Bo's purchase of a below investment
grade bond. Because yields in the high grade fixed income markets declined, Bo subsequently
decides to enhance this client's portfolio by investing in several additional bonds with ratings one
or two notches below investment grade. The investment strategy implemented by Bo most likely
violated which of the following CFA Institute Standards of Professional Conduct

A) Suitability
B) Communications with clients
C) Independence and objectivity
7. Eileen Fisher, CFA has been a supervisory analyst at SL Advisors for the past ten years.
Recently, one of her analysts was found to be in violation of the CFA Institute Standards of
Professional Conduct. Fisher has placed limits on the analyst's activities and is now monitoring all
of his investment activities. Although SL did not have any compliance procedures up to this point,
to avoid future violations, Fischer has put in place procedures exceeding industry standards. Did
Fisher most likely violate any CFA Institute Standards of Professional Conduct?
Which is the probability of having a crash in the stock market?

A) Yes
B) No, because she has taken steps to ensure the violations will not be repeated by the
analyst.
C) No, because she is taking steps to implement compliance procedures that are more than
adequate.

8. Carla Scott, CFA, is a portfolio manager for a company that manages investment accounts for
wealthy individuals. Scott has no beneficial interest in any of the fee-paying accounts she
manages, including her uncle’s account. When shares in initial public offerings (IPOs) become
available, Scott first allocates shares to all her other clients for whom the investment is
appropriate; only if shares are still available does she purchase shares in her uncle’s account, if
the issue is appropriate for him. Scott provides each of her clients with full dis closure of her
allocation procedures and has received each client’s verbal consent to her allocation procedures.
According to the Standards of Practice Handbook, does Scott’s method of allocating
oversubscribed IPOs violate any CFA Institute Standards of Professional Conduct??

A) No
B) Yes, because she has breached her duty to her uncle
C) Yes, because she has not precleared and reported her Uncle´s transactions.

9. An analyst gathers the following information about a common stock investment:

The holding period return on the common stock investment is closest to:

A) 12.5%
B) 20.8%
C) 41.7%

10. A 270-day U.S. Treasury bill with a face value of $100,000 sells for $96,500 when issued.
Assuming an investor holds the bill to maturity, the investor’s money market yield is closest to:

A) 3.63%
B) 4.84%
C) 4.93%
11. Rent is $700.00 monthly and is due on the first day of every month. If the stated annual
interest rate is 6 percent, the present value of a full year’s rent payments is closest to:

A) $8,133
B) $8,173
C) $8,833.

12. An investor purchases $1,000 of stock each month, and over the last three months the prices
paid per share were $8, $9 and $10. What is the average cost per share for the shares acquired?

A) $8.93
B) $8.67
C) $9.03

13. A distribution of returns that has a greater percentage of small deviations from the mean and
a greater percentage of extremely large deviations from the mean compared to a normal
distribution

A) is positively skewed
B) has positive excess kurtosis
C) has negative excess kurtosis

14. Which of the following is most accurate regarding a distribution of returns that has a mean
greater than its median

A) is positively skewed
B) is negatively skewed
C) has excess kurtosis

15. You manage an alternative investment fund and are considering buying all the tickets for a
regional lottery since since the prize is much bigger than usual.

If in order to win the lottery you have to obtain right 5 out of 25 numbers (similar to the case of the
Peruvian Lottery “La Tinka”) and, each ticket costs -$2.25

How much will the fund need to invest in order to buy all the possible tickets?

A) $119,543
B) $ 7,254,352
C) $ 14,345,100

16. For a skewed distribution, what is the minimum percentage of the observations that will lie
between +/- 2.5 standard deviations from the mean based on the Chebyshev´s Inequality?

A) 56%
B) 75%
C) 84%
17. If a price cut (reduction) of a product increases total revenue, demand is best described as:

A) elastic
B) inelastic
C) unit elastic

18. An expansionary fiscal policy is least lik ely to include an increase in:

A) tax rates.
B) government borrowing.
C) government expenditures.

19. A company determines that the quantity demanded of a product increases by 5% when price
is reduced by 10%. The product’s price elasticity of demand is best described as:

A) elastic
B) inelastic
C) perfectly elastic

20. When rent controls limit rents to prices below equilibrium prices, which of the following is most
lik ely to occur? (Rent control means that landlords can not increase the price of the existing
tenant by more than a fixed percentage, but are free to set any price to new tenants)

A) New housing construction expands.

B) Long-time tenants extract significant benefit from landlords.
C) None of the above happens.

21. In regard to the relation between output and costs in the short-run, a decline in the marginal
cost most lik ely occurs at what level of production?

A) Low output
B) High output
C) Profit-maximizing output

22. If a firm’s total average cost of production increases by 15 percent as a result of an 8 percent
increase in production the firm is most likely experiencing:

A) economies of scale
B) diseconomies of scale
C) constant returns to scale.
23. The demand curve for apartment rentals is q=10,000-10p and the supply curve for apartment
rentals is Q= 1,000+ 80p.

If the government sets a price ceiling at $90. How many less apartments will get rented as a
consequence of the ceiling?

A) 1,800
B) 1,300
C) None of the above

24. In short-run equilibrium, if aggregate demand is increasing faster than long-run aggregate
supply:

A) the price level is likely to increase

B) downward pressure on wages should ensue (wages should decrease).
C) supply will increase to meet the additional demand

25. In the short run, an increase in output at low levels of production will most likely cause:

A) an increase in the marginal cost due to the rising total fixed cost.
B) an increase in the marginal cost due to the law of diminishing returns.
C) a decrease in the marginal cost due to economies from greater specialization

26. Which of the following statements is most accurate in regard to the tax division between
buyers and sellers of products with perfectly elastic demand?:

A) Sellers pay the entire tax.

B) Buyers pay the entire tax..
C) Buyers and sellers share the tax burden.

27. Indicate which of the following statements is most likely true, consider a vertical LRAS

A) In the long run, an increase of the aggregate demand will increase the total level of output
in an economy.
B) In the short run, an increase of the aggregate demand will increase the total level of
output in an economy.
C) In the short run an increase of the aggregate demand will not affect the total level of
output in an economy.

28. The cross elasticity of demand for a complementary product would most likely be:

A) Zero
B) Positive.
C) Negative
29. In the short run, a competitive firm should continue to produce as long as the market price is
greater than its:

A) average variable cost

B) marginal cost.
C) average total cost

30. If the government puts in place an expansionary policy consisting of hiring more professors
for public universities. Most likely it will be

A) expanding aggregate demand and not moving aggregate supply

B) expanding aggregate supply and not moving aggregate demand.
C) expanding both aggregate supply and aggregate demand