CFA Level 1 － Mock Exam 1 模拟真题－Q86-90 face, normal, style, class

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86、The behavior of investors in which they put more money into a failure that they feel responsible for rather than into a success, is explained by which of the following behavioral biases?

Select exactly 1 answer(s) from the following:

A. Escalation bias

B. Confirmation bias

C. Overconfidence bias

D. Fusion investing bias

 

87、Jim Klein, CFA, gathered the following data about India Garments Company in an effort to determine the growth rate of dividends and the payout ratio implied in the company's stock price:

Stock price	$40
Stock’s required return	12%
Consensus estimate of next year’s dividend	$2.00
Company’s return on equity	10%

 

The company's dividend growth rate according to the Gordon model and the payout ratio, respectively, are closest to:

 

	Dividend growth rate	Payout ratio
A.	5%	50%
B.	5%	58%
C.	7%	30%
D.	7%	42%

 

Select exactly 1 answer(s) from the following:

A. Answer A.

B. Answer B.

C. Answer C.

D. Answer D.

 

88、Which of the following is the attribute that is most closely associated with the liquidity of a securities market?

Select exactly 1 answer(s) from the following:

A. Low transaction costs

B. Timely and accurate information

C. Price continuity and market depth

D. Rapid adjustment of prices to new information

 

89、The most accurate characterization of the nature of abnormal returns relating to an anomaly and a source of unreliability of an anomaly, respectively, are:

 

	Nature of abnormal returns	Source of unreliability of an anomaly
A.	Persistent	Behavioral bias
B.	Persistent	Survivorship bias
C.	Momentary	Behavioral bias
D.	Momentary	Survivorship bias

 

90、Robert Wu, CFA, gathered the following data on Westminster Property Developers Inc:

Earnings per share - most recent year	$2.00
Expected growth rate of dividends	5.10%
Dividend payout ratio	60%
Stock's beta	1.50
Market risk premium	5.60%
Risk-free rate	4.2%
Company's weighted average cost of capital	12%

 

Wu's best estimate for the company's price per share would be closest to:

Select exactly 1 answer(s) from the following:

A. $16.00.

B. $16.82.

C. $17.39.

D. $18.28.

[此贴子已经被作者于2008-11-6 11:14:44编辑过]

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答案和详解如下：

86 Correct answer is A

“Efficient Capital Markets,” Frank K. Reilly and Keith C. Brown
2008 Modular Level I, Vol. 5, pp. 83-84
Study Session 14-54-d
define behavioral finance and describe overconfidence bias, confirmation bias, and escalation bias
Escalation bias refers to the investor behavior of putting more money into a failure that they feel responsible for rather than into a success. This leads to the practice of “averaging down” by viewing the additional purchase as a “bargain” rather than considering the initial purchase as a mistake and selling the stock.

87 Correct answer is C

“Cost of Capital,” Yves Courtois, Gene C. Lai, and Pamela p. Peterson
2008 Modular Level I, Vol. 4, pp. 54-55
“An Introduction to Security Valuation: Part II,” Frank K. Reilly and Keith C. Brown
2008 Modular Level I, Vol. 5, pp. 196-197
Study Sessions 11-45-h, 14-60-e
calculate and interpret the cost of equity capital using the capital asset pricing model approach, the dividend discount model approach, and the bond-yield-plus risk-premium approach;
estimate the implied dividend growth rate, given the components of the required return on equity and incorporating the earnings retention rate and current stock price
V0 = D1 / (k - g); $40 = $2 / (0.12 - g); g = 7%; g = ROE x RR; RR = 7 / 10 = 0.70;
Payout Ratio = 1 - RR = 1 - 0.70 = 0.30 = 30%.

88 Correct answer is C

“Organization and Functioning of Securities Markets,” Frank K. Reilly and Keith C. Brown
2008 Modular Level I, Vol. 5, pp. 7-8
Study Session 13-52-a
describe the characteristics of a well-functioning securities market
Liquidity refers to the ability to buy or sell an asset quickly and at a known price. Price continuity is a component of liquidity which in turn requires market depth. The distracters in A, B, and D are characteristics of a good market, just as liquidity, but not most closely associated with, or as components of, liquidity.

89 Correct answer is B

“Market Efficiency and Anomalies,” Vijay Singal
2008 Modular Level I, Vol. 5, pp. 100-107
Study Session 13-55-d
explain why a mispricing may persist and why valid anomalies may not be profitable
The persistent realization of abnormal returns is referred to as an anomaly and survivorship bias is a source of unreliability of an anomaly.

90 Correct answer is B

“An Introduction to Asset Pricing Models,” Frank K. Reilly and Keith C. Brown
2008 Modular Level I, Vol. 4, pp. 263-265
“An Introduction to Security Valuation: Part II,” Frank K. Reilly and Keith C. Brown
2008 Modular Level I, Vol. 5, pp. 180-181
Study Sessions 12-51-e, 14-60-b
calculate, using the SML, the expected return on a security and evaluate whether the security is overvalued, undervalued, or properly valued;
calculate and interpret the value both of a preferred stock and a common stock using the dividend discount model (DDM)
Most recent dividend = 2.00 (0.6) = 1.20
ks = 4.20 + 5.60(1.50) = 12.60%;
V = 1.20(1.051) / (0.126 - 0.051) = $16.82

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