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 V(A) Diligence and Reasonable Basis requires that recommendations be supported by:
Answer: Appropriate research and investigation
Members must have a reasonable and adequate basis, backed by research, for any recommendation or action.
The internal rate of return (IRR) of a project is the discount rate at which:
Answer: Net present value equals zero
IRR is defined as the rate making the project's NPV equal to zero.
A call option is in-the-money when the underlying asset's price is:
Answer: Above the exercise price
A call has intrinsic value when the spot price exceeds the strike price.
The coefficient of variation is useful for comparing investments because it measures:
Answer: Risk per unit of return
The coefficient of variation is standard deviation divided by mean return, standardizing risk relative to return.
Under U.S. GAAP, research costs are generally:
Answer: Expensed as incurred
Research costs are expensed immediately under U.S. GAAP, with limited development capitalization exceptions.
A market in which prices fully reflect all publicly available information is described as:
Answer: Semi-strong form efficient
Semi-strong form efficiency means public information cannot be used to earn abnormal returns.
An increase in a country's real interest rates, all else equal, tends to:
Answer: Attract foreign capital and strengthen the currency
Higher real rates draw capital inflows seeking yield, increasing demand for and value of the currency.