Free Online CFA Level 1 Mock Exam 7


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7. A mutual fund invests primarily in fixed income securities. Which of the following is least likely to be part of this fund?

A. Warrants.

B. Treasury bills.

C. Repurchase agreements.

Correct Answer: A

Answer Explanation:

Warrants are least likely to be part of a fund because they are usually categorized as stocks and least likely to be part of a fixed-income mutual fund. Commercial paper and Treasury bills are short-term fixed-income securities.

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8. Depending on the market, fixed income indices are most unlikely to fall into the following categories:

A. global.

B. currency zone.

C. investment grade.

Correct Answer: C

Answer Explanation:

Depending on the market, fixed income indices are categorized into global, regional and country or currency areas. Based on credit quality, fixed-income indices are categorized as investment grade, high-yield grade and non-investment grade.

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9. The exponential weighting method that requires a divisor adjustment after a stock split is?

A. price weighting.

B. equal weighting.

C. float adjusted market-capitalization weighting.

Correct Answer: A

Answer Explanation:

The index weighting method that requires a divisor adjustment after a stock split is the price weighting method. The equal weight method and the float-adjusted market capitalization weighting method do not require a divisor adjustment after a stock split.

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