QUANTITATIVE ANALYSIS QUIZZER

Another important part of the CFA Exam is the Quantitative Analysis. So get your pencils and calculators and rack that brain of yours!

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1. The future value of $100 invested at 6% for 4 years is:

A. $126.25
B. $79.00
C. $124.79
D. $116.32

2. The present value of $200 to be received 10 years from today, assuming an opportunity cost of 10%, is:

A. $50.79
C. $518.00
B. $200.43
D. $77.11

3. A $100 savings bond with a maturity of 25 years can be purchased for $29.50. Assuming annual compounding, what is the rate of return on the bond?

A. 5%
B. 6%
C. 7%
D. 8%

4. What is the value in five years of $100 invested today at an interest rate of 8 percent per year compounded quarterly?

A. $144.50
B. $144.00
C. $147.75
D. $148.59

5. Tom is saving $1,000 a quarter for the next 4 years. Assuming an annual interest rate of 12% compounded quarterly, how much money will he have at the end of the fourth year?

A. $3,506
B. $19,117
C. $20,157
D. $16,000

6. Jay is 30 years old and will retire at age 65. Jay is saving $1,000 a year and believes he will have a constant interest rate of 7% compounded annually on his investments. How much will Jay have accumulated by age 65?

A. $138,237
B. $97,537
C. $66,674
D. $144,469

7. Zumwalt Inc.’s class B stock is expected to pay $6 in annual dividends forever. If the required return on an equivalent investment is 12%, then a share of Zumwalt stock today is worth:

A. $25
B. $100
C. $50
D. None of the above

8. David wishes to accumulate $1 million by the end of 20 years by making equal annual end-of-year deposits over the next 20 years. If David can earn 10% on his investments, how much must he deposit at the end of each year?

A. $16,556
B. $62,745
C. $117,453
D. $17,460

9. A firm is evaluating a proposal that has an initial investment of $500,000 and cash flows of $125,000 for 6 years. The firm’s cost of capital is 12%. What is the internal rate of return of this investment?

A. 13%
B. 11%
C. 20%
D. 9%

10. Below are some raw data displayed in increasing order from top to bottom.

63.5
96.9
112.3
134.1
66.4
98.3
116.2
138.5
75.6
100.5
116.9
139.8
77.5
100.7
118.3
140.7
84.4
102.0
122.0
143.0
87.6
105.5
122.2
143.9
In constructing a frequency distribution using five classes of equal range, if the first class is “60 up to 80”, the class frequency of the third class is:

A. 4
B. 5
C. 8
D. 9

11. The annual rate of return for JSI’s common stock has been:

20X0 Return 14%
20X1 Return 19%
20X2 Return -10%
20X3 Return 14%

What is the arithmetic mean of the rate of return for JSI’s common stock over the four years?

A. 8.62%
B. 9.25%
C. 14.25%
D. None of the above

12. A portfolio generated the following returns over the last three years:

Year 1 Return 10
Year 2 Return -2
Year 3 Return 5

What is the geometric average return for the three-year period?

A. 4.3%
B. 4.2%
C. 1.3%
D. 5.6%

13. A portfolio of non-dividend-paying stocks earned a geometric mean return of 5.0 percent between January 1, 19X2, and December 31, 19X8. The arithmetic mean return for the same period was 6.0 percent. If the market value of the portfolio at the beginning of 19X2 was$100,000, the market value of the portfolio at the end of 19X8 was closest to:

A. $135,000
B. $140,710
C. $142,000
D. $150,363

14. Which investment has the least risk relative to its mean return?

A. Standard deviation = $500 expected return = $5,000
B. Standard deviation = $700 expected return = $500
C. Standard deviation = $900 expected return = $800
D. Standard deviation = $400 expected return = $350

15. The skyscrapers in a city have heights of 40, 35, 46, 57, 84, 45, and 50 stories.
The percentage of buildings with heights within 1.5 standard deviations of the
mean will be at least:

A. 51%
B. 95%
C. 56%
D. 66%

16. Medical Equipment Suppliers, Inc., must choose between two asset purchases. The annual rate of return and related probabilities given below summarize the firm’s analysis:

Asset A Rate of Return 10% Probability 30%
Asset A Rate of Return 15% Probability 40%
Asset A Rate of Return 20% Probability 30%

Asset B Rate of Return 5% Probability 40%
Asset B Rate of Return 15% Probability 20%
Asset B Rate of Return 25% Probability 40%

Using the information provided above, compute the coefficient of variation of
Asset A and Asset B.

A. Asset A: .11 Asset B: .23
B. Asset A: .18 Asset B: .21
C. Asset A: .23 Asset B: .35
D. Asset A: .26 Asset B: .60

17. A portfolio has exhibited the following characteristics over a 3-year period:

Year 1 Return 5% Variance 43
Year 2 Return 10%
Year 3 Return -3%

The average return on risk-free bonds over the same period was 3.5%. Calculate the Sharpe Ratio for this portfolio.

A. .120
B. .001
C. .011
D. .076

18. There is a 40% chance of an expansion, a 20% chance of a stagnant economy, and a 40% chance of a recession. Stocks behave under these scenarios as follows:

Economy Expansion, Stock Performance Good, Probability 70%
Economy Expansion, Stock Performance Fair, Probability 30%
Economy Expansion, Stock Performance Poor, Probability 0%

Economy Stagnant, Stock Performance Good, Probability 40%
Economy Stagnant, Stock Performance Fair, Probability 30%
Economy Stagnant, Stock Performance Poor, Probability 30%

Economy Recession, Stock Performance Good, Probability 0%
Economy Recession, Stock Performance Fair, Probability 40%
Economy Recession, Stock Performance Poor, Probability 60%

What is the probability of stagnant economy and fair stock market?

A. 30%
B. 10%
C. 34%
D. 6%

19. Based on historical data analysis, an equity analyst provides the following probability of future prices for a particular stock:


Probability 0.10, Price $18
Probability 0.10, Price $16
Probability 0.35, Price $15
Probability 0.30, Price $14
Probability 0.15, Price $12

The stock’s expected value is:

A. $14.00
B. $14.50
C. $14.65
D. $15.00

20. An analyst makes the following calculations about the returns for Stock X and Stock Y:

COVxy = 0.0050
ox = 0.20
0y = 0.06

The correlation coefficient between the returns for Stock X and Stock Y is between:

A. 0.00 and 0.25
B. 0.25 and 0.50
C. 0.51 and 0.75
D. 0.76 and 1.00

21. If there are 9 stocks in a portfolio how many ways can the stocks be labeled if 5 are called outperform, 2 perform, and 2 underperform. How many unique ways can 9 stock in a portfolio be labeled if 5 must be called outperform, 2 perform, and 2 underperform?

A. 1,512
B. 756
C. 3,024
D. 1,008

22. Sandi Santa, CFA, a portfolio manager for North Pole Trust, believes that a well-diversified portfolio can be constructed with 30 stocks. How many 30-stock portfolios can be constructed from the S&P 500 index (assuming there are 500 stocks in the index)?

A. 500!/(500-30)!
B. 500!/30!(500-30)!
C. (30)(500)
D. (30!)(500!)

23. Given the following information regarding the possible returns on a capital project, determine the probability that the project will have a return of 5% or greater.

% Return -5, Probability 15%
% Return 0, Probability 20%
% Return 5, Probability 40%
% Return 10, Probability 15%
% Return 15, Probability 10%

A. 90%
B. 65%
C. 40%
D. 20%

24. If the probability of a stock index generating a return greater than 15% in any given year is 6.68%, what is the standard deviation of the returns assuming the mean return is 5%?

A. 6.08
B. 6.66
C. 10.00
D. 44.36

25. Based on a normal distribution with a mean of 500 and standard deviation of 150, what is the z value for an observation at 200?

A. -2.00
B. -1.75
C. 1.75
D. 2.00