Exam Details

  • Exam Code
    :CFA-LEVEL-1
  • Exam Name
    :CFA Level I - Chartered Financial Analyst
  • Certification
    :CFA Institute Certifications
  • Vendor
    :CFA Institute
  • Total Questions
    :3960 Q&As
  • Last Updated
    :May 19, 2025

CFA Institute CFA Institute Certifications CFA-LEVEL-1 Questions & Answers

  • Question 1271:

    Consider the following information for a company.

    Common Stock Price $53.25

    Preferred Stock Par Price $100

    Preferred Dividend $10

    Debt Rating BB+

    Owners Equity 25%

    Preferred Stock Flotation Cost 2.5%

    The Preferred Stock is issued at Par

    Calculate the component cost of this newly issued preferred stock.

    A. 10%

    B. 2.5%

    C. 18.78%

    D. 12.5%

    E. 10.26%

  • Question 1272:

    Industries which are cyclical and heavily oriented toward research tend to have high levels of ________. Industries which are subject to high levels of lawsuits tend to high levels of ________.

    A. debt; equity

    B. equity; equity

    C. equity; debt

    D. debt; debt

  • Question 1273:

    The WACC of a firm equals 10.67%. The pre-tax cost of debt equals 8.4%, the firm pays 38% taxes and the firm's equity holders expect a rate of return of 17%. The firm's debt-to-equity ratio equals ________.

    A. 1.41

    B. 0.72

    C. 1.16

    D. 0.86

  • Question 1274:

    Which of the following are methods of estimating a company's Cost of Retained Earnings?

    I. CAPM

    II. CANSLIM

    III. DCF Method

    IV.

    Bond-Yield-plus-Risk-Premium

    V.

    Least Cost Debt vs. Equity

    A.

    I, III, IV, and V

    B.

    I, II, III, IV, and V

    C.

    I, III and IV

    D.

    II only

    E.

    I only

    F.

    I and III

  • Question 1275:

    While evaluating a project using net income figures, you must:

    A. subtract all non-cash net expenses.

    B. none of these answers.

    C. add back all non-cash net expenses.

    D. add back depreciation.

  • Question 1276:

    Which of the following projects is likely to produce multiple Internal Rates of Return. Project A Initial investment outlay: ($1,000,000) t1: $0.00 t2: $0.00 t3: $0.00 t4: $0.00 t5: $0.00 t6: $10,000,000 Project B Initial investment outlay: ($1,000,000) t1: $500,000 t2: $500,000 t3: $500,000 t4: $0.01 Project C Initial investment outlay: ($1,000,000) t1: $800,000 t2: ($100,000) t3: $550,000 Project D Initial investment outlay: ($500,000) t1: $400,000 t2: ($1,000) t3: $230,000 t4: ($50,000)

    A. Project D

    B. Project A, C and D

    C. Project A

    D. Project B

    E. Project C and D

    F. Project C

  • Question 1277:

    Which of the following statements is most correct?

    A. None of these answers.

    B. All else equal, an increase in a company's stock price will increase the marginal cost of retained earnings.

    C. All of these answers.

    D. All else equal, an increase in a company's stock price will increase the marginal cost of issuing new common equity.

    E. If a company's tax rate increases, but the yield to maturity of its noncallable bonds remains the same, the company's marginal cost of debt capital will fall.

  • Question 1278:

    The trade-off theory of capital structure implies that:

    A. firms issue debt up to the level where the total value added by the debt tax shield is offset by expected bankruptcy costs.

    B. firms will use debt up to the level where the flotation cost of new debt equals that of issuing more equity, thus minimizing the costs of raising capital.

    C. managers are uncomfortable with either too much debt or too much equity and hence, tend to choose debt ratios around 0.40 to 0.60.

    D. none of these answers.

  • Question 1279:

    PQR Manufacturing Corporation has $1,500,000 in debt outstanding. The company's before-tax cost of debt is 10 percent. Sales for the year totaled $3,500,000 and variable costs were 60 percent of sales. Net income was equal to $600,000 and the company's tax rate was 40 percent. If PQR's degree of total leverage is equal to 1.40, what is its degree of operating leverage?

    A. 1.15

    B. 1.22

    C. 2.68

    D. 1.12

    E. 1.00

  • Question 1280:

    Which of the following figures is not explicitly incorporated into the earnings per share (EPS) calculation?

    A. Interest Expense

    B. Sales

    C. Fixed Costs

    D. Tax Rate

    E. Weighted Average Cost of Capital

    F. Variable Costs

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