AIFA AIFA Quantitative Methods & Financial Modeling

Question 1

A US investor deposits $50,000 into an account earning 6% annual interest compounded monthly. What is the approximate future value after 5 years?

Accepted Answer

$67,443

Answer

$66,911

Answer

$67,898

Answer

$65,000

Question 2

In a discounted cash flow (DCF) model, which rate is used to convert future cash flows to present value?

Accepted Answer

Weighted average cost of capital (WACC)

Answer

Internal rate of return

Answer

Dividend yield

Answer

Return on equity

Question 3

Which statistical measure describes how much individual data points in a dataset deviate from the mean on average?

Accepted Answer

Standard deviation

Answer

Median

Answer

Variance

Answer

Skewness

Question 4

A bond with a face value of $1,000 pays a 5% annual coupon and matures in 10 years. If the required yield is 6%, the bond is trading at a:

Accepted Answer

Discount to par

Answer

Premium to par

Answer

Par value

Answer

Cannot be determined

Question 5

What does a correlation coefficient of -1.0 between two assets indicate for portfolio construction?

Accepted Answer

The assets move in exactly opposite directions, offering maximum diversification

Answer

The assets are perfectly positively correlated

Answer

The assets move completely independently

Answer

The assets carry equal risk

Question 6

Which financial model estimates the value of a company's equity by discounting expected future dividends at the required rate of return?

Accepted Answer

Gordon Growth Model (Dividend Discount Model)

Answer

Capital Asset Pricing Model (CAPM)

Answer

Arbitrage Pricing Theory

Answer

Black-Scholes Model