Free Online CFA Level 1 Mock Exam 8


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Looking for a free CFA Level 1 mock exam online? You’ve come to the right place! We offer a complimentary online CFA Level 1 mock exam designed to help you familiarize yourself with the exam format, assess your knowledge, and prepare thoroughly for the real thing. Whether you’re in the midst of studying or seeking a self-assessment, our free mock exam provides valuable practice. Start now to experience the real exam atmosphere and gauge your performance under exam conditions.

Fixed Income

1. Many issuers periodically roll over their commercial paper. To minimize the risk of rollover, they usually need to:

A. have sufficient T-bills as collateral.

B. apply for a bilateral loan.

C. maintain backup lines of credit with banks.

Correct Answer: C

Answer Explanation:

Under the standby line of credit, the bank provides funding for commercial paper as it matures.

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2. Party A sells a 90-day Treasury bill to Party B for USD 99.85 and promises to buy it back the next day for USD 99.87. From Party B’s point of view, this transaction could be called:

A. repo agreement.

B. reverse repo agreement.

C. forward rate agreement.

Correct Answer: B

Answer Explanation:

Party A borrows and Party B lends. From Party B’s perspective, this is a reverse repurchase. Looking at a repurchase agreement from the perspective of the lender of the cash, the transaction is known as a reverse repurchase agreement or reverse repo.

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3. The price of a Singapore dollar-denominated bond issued by a U.S. company in Singapore is most likely to be:

A. change as Singapore’s interest rates change.

B. change as U.S interest rates change.

C. be unaffected by changes in U.S. and Singaporean interest rates.

Correct Answer: A

Answer Explanation:

The currency in which a bond’s cash flows are denominated will affect which country’s interest rates will affect the price of the bond. The price of a Singapore dollar-denominated bond issued by a U.S. company will be affected by the interest rates in Singapore.

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