CFA Flashcards
7 cards from real CFA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 CFA flashcards as text
Standard III(B) Fair Dealing requires that members treat all clients fairly when:
Answer: Disseminating investment recommendations or taking investment action
Fair Dealing applies to the dissemination of recommendations and the execution of investment actions across clients.
The Gordon (constant) growth dividend discount model values a stock as D1 divided by:
Answer: (r - g)
Value equals next year's dividend divided by the required return minus the constant growth rate.
A futures contract differs from a forward contract primarily because futures are:
Answer: Standardized and exchange-traded with daily settlement
Futures are standardized, traded on exchanges, and marked to market daily through a clearinghouse.
Which measure of central tendency is most affected by extreme outliers?
Answer: Arithmetic mean
The arithmetic mean incorporates every value, so outliers pull it strongly.
Operating leverage is highest for a firm with:
Answer: High fixed costs relative to variable costs
A large proportion of fixed costs magnifies the effect of sales changes on operating income.
The Sharpe ratio evaluates portfolio performance by dividing excess return by:
Answer: Standard deviation of returns
The Sharpe ratio uses total risk (standard deviation) in its denominator.
When the U.S. dollar appreciates against the euro, U.S. exports to the Eurozone tend to become:
Answer: More expensive and less competitive
A stronger dollar raises the foreign-currency price of U.S. goods, reducing export competitiveness.