1、Kaplan Schweser Printable Exams - 2011 CFA Level 3 You can print this page by going to file - print in your internet browser. Question 1 - #91715 A firm would like to issue new securities to fund a new project. The firms managers have been paid predominantly with equity-based compensation and now ho
2、ld most of the firms stock. If the firm wants to motivate their managers to work harder, which of the following securities should be issued? Question 2 - #91681 Which of the following best describes the pricing of emerging market equities? If an emerging country announces a liberalization program, e
3、quity prices will: Question 3 - #93073 Portfolio managers tracking international equity indices have a tradeoff between breadth and investability because: Question 4 - #91727 Which of the following best describes the pricing of emerging market equities? If an emerging country announces a liberalizat
4、ion program and the government is more credible then equity prices should: Question 5 - #92459 Which of the following prescriptions would least likely improve board of director effectiveness? A) Shelf registered preferred stock.B) Debt.C) Common stock.A) rise and the cost of capital will increase. B
5、) fall and the cost of capital will decline.C) rise and the cost of capital will decline.A) lower breadth results in higher investability and higher transaction costs.B) higher breadth results in higher investability and lower transaction costs.C) higher breadth results in lower investability and hi
6、gher transaction costs.A) decrease more resulting in lower expected returns. B) increase more resulting in higher expected returns.C) increase more resulting in lower expected returns.Question 6 - #92576 Suppose shareholders wish that the board directors undertook more risk. Which of the following w
7、ould most likely achieve that goal? Question 7 - #91702 A board of directors should have a company secretary, who is responsible for ensuring that the board procedures are followed and that there is compliance with the applicable rules and regulations. With respect to having access to the secretary
8、and/or removing the secretary, the Cadbury Report specifies that: Question 8 - #91568 Which of the following best characterizes the relationship between market liberalization and stock return volatility? After liberalization, there is evidence that return volatility: Question 9 - #92944 Which of the
9、 following refers to the situation where an active investor does not own the majority of the firms shares but persuades other shareholders of her position? Question 10 - #92794 If a manager is confident in her abilities, then: A) The board should have an independent chairman.B) Directors should be s
10、ubject to maximum equity positions.C) Self-evaluations of boards should be performed.A) The directors were paid with stock and their liability insurance was paid for.B) The directors were paid with stock options and their liability insurance was their responsibility.C) The directors were paid with s
11、tock options and their liability insurance was paid for.A)all directors should have access to the advice and services of the company secretary, and removal of the company secretary should be a matter for the board as a whole.B)only the chairman of the board should have access to the advice and servi
12、ces of the company secretary, and removal of the company secretary should be a matter for the board as a whole.C)all directors should have access to the advice and services of the company secretary, and removal of the company secretary should be a matter of the chairman of the board only.A) increase
13、s and in the long run stock volatility should increase.B) does not change but in the long run stock volatility should decline.C) increases but in the long run stock volatility should decline.A) The active investor has contingent control.B) The active investor has real control.C) The active investor
14、has formal control.Question 11 - #92878 ANZ Asia equity index is a new entry into Asian market indices. The index has better coverage especially in the South Asian markets as compared to its more popular rivals. The index has coverage of 90% of all stocks listed in the constituent markets. Which of
15、the following statements best describes the index? Question 12 - #93008 Which of the following statements regarding corporate governance is least accurate? Question 13 - #91661 Which of the following best characterizes the behavior and implications of changes in the dividend yield after liberalizati
16、on? Dividend yields: Question 14 - #93013 Which of the following statements regarding inadequacies in corporate governance is least accurate? Question 15 - #91791 Which of the following is NOT representative of a firm in a stakeholder society? A)implicit incentives such as the manager losing her job
17、 act as a substitute for explicit incentives, such as stock options.B)implicit incentives such as the manager losing her job act as a complement for explicit incentives, such as stock options.C)implicit incentives such as stock options act as a substitute for explicit incentives, such as the manager
18、 losing her job.A) Breadth is high, liquidity is low, and crossing opportunities are low. B) Breadth is high, liquidity is low, and crossing opportunities are high.C) Breadth is high, liquidity is high, and crossing opportunities are low.A) Managers use accounting manipulations to their benefit.B) S
19、hareholders would prefer managers reject hostile takeovers.C) The cross holding of shares in Asia has enabled managers to more effectively thwart takeovers.A) increase and this suggests that the cost of capital temporarily increases.B) decrease and this suggests that the cost of capital permanently
20、declines.C) increase and this suggests that the cost of capital permanently declines.A) Stock prices often drop when investments are announced.B) Shareholders are often ignorant of managerial compensation details.C) If managers were paid using stock-based compensation, the level of executive pay cou
21、ld be reduced.Question 16 - #92486 In which of the following situations is the board of directors most likely to become more effective? Question 17 - #92828 The Cadbury Report for best practice in maintaining an effective board of directors makes a recommendation concerning non-executive directors.
22、It specifies that there should be: Question 18 - #91694 Which of the following statements regarding debt and its effect on corporate health via corporate governance mechanisms is most accurate? Question 19 - #92872 According to the Cadbury Report concerning the best practices in maintaining a board
23、of directors, the pay of executive directors should be: Question 20 - #91719 Which of the following best describes the pricing of emerging market equities? If the emerging market transitions A)Employees are treated fairly and given extra benefits such as child care and extra family time off which ma
24、kes them feel more secure and part of a community. B) Managers of the firm are under greater control by the stakeholders.C)Because the firm is viewed favorably by the community it is extended tax breaks and favorable terms by creditors and suppliers. A)The firm has sustained several quarters of loss
25、es and the firms stock price has been consistently declining.B) The firms earnings have been increasing and the stock price has been consistently increasing.C) The economy is in a recession and the firms stock price has been consistently declining.A) a majority of non-executive directors, and no spe
26、cific number is mentioned.B)a sufficient number so that their views carry weight in the boards decisions, but no specific number is mentioned. C) no more than five, but no fewer than three.A) In some situations it can be beneficial; in others it can be a detriment.B) Debt is unambiguously beneficial
27、.C) Debt is unambiguously detrimental.A) unrelated to the profits of the company.B)subject to the recommendations of a committee that is made up wholly or mainly of non-executive directors.C) merit based only.from segmented to integrated, the countrys equities will be priced according to its: Questi
28、on 21 - #93110 Which of the following statements regarding management compensation is most accurate? Question 22 - #91708 Which of the following statements regarding advantages and disadvantages in a stakeholder society is least accurate? Question 23 - #91533 Jean Daniel is an emerging markets portf
29、olio manager for a large private investment group, Lakefront Financial, based in the U.S. Laura Shrum is a junior analyst at the firm, whose responsibilities include measuring the benefits of incorporating emerging markets into a portfolio based on long-term perspectives. During a weekly firm meetin
30、g on past performance and potential changes in future firm strategy, Daniel and Shrum provide some historical perspective on the performance of emerging market equities, using data from 1980 to 2005. Before discussing the specifics of the data, Daniel states that it is important to understand the pr
31、ocess of economic and financial liberalization because emerging countries are increasingly using liberalization to increase foreign investment in their country which aids in the development and growth of the economy. She states that a countrys financial markets will remain segmented unless it underg
32、oes liberalization first because foreign investors will otherwise refuse to invest in the countrys assets. Shrum states that investors are sometimes biased toward their home markets and are heavily weighted in their home country assets. This occurs, Shrum says, for various reasons including the fact
33、 that investors are often more comfortable with investments they are familiar with. Shrum says that market integration and the home country bias are related because the home country bias will prevent markets from becoming more integrated. Providing a summary of the data, Daniel states that the risks
34、 of investing in emerging markets can be quite high. She states that the best way to measure the risk of large losses in emerging markets is to use the variance-covariance or analytical value-at-risk (VAR) measure. She states that this measures the left-tail risk that most investors are concerned wi
35、th. Shrum adds that when an emerging country undergoes economic and financial liberalization, the historical data for emerging markets will contain structural breaks, which she states will make the data less useful for predictive purposes. Discussing the risk of emerging markets in more detail, Dani
36、el states that contagion is a particular risk in emerging countries. Contagion, she states, is evidenced by the higher correlations in emerging market stock returns during periods of crisis. In regards to the effects of liberalization on stock return risk, Shrum states that when investment A) varian
37、ce risk and its expected returns will be lower.B) covariance risk and its expected returns will be lower.C) covariance risk and its expected returns will be higher.A)Bonuses largely reward a managers short-term efforts whereas stock-based compensation reflects more of the managers long-term efforts.
38、B) Both bonuses and stock-based compensation largely reward a managers short-term efforts.C)Bonuses largely reward a managers long-term efforts whereas stock-based compensation reflects more of the managers short-term efforts.A) Profits are sacrificed in the short term for increased shareholder weal
39、th in the long-run. B)Stockholders and creditors may be hesitant to invest fearing that gains must be shared with other stakeholders. C) Taxes are distributed more equitably under a stakeholder society than a shareholder society. restrictions are lifted after liberalization, foreign investors will b
40、e able to pull their money in and out easier. This she states, will increase speculative capital flows and the variability of stock returns will increase in the short-term after liberalization. In addition to the changes in emerging markets already discussed, Daniel and Shrum state that other change
41、s will occur as well. To test the new employees of Lakefront Financial, they provide the following table of data for hypothetical emerging markets. They then ask the employees to identify the newly liberalized emerging market, based solely on the change in the data for each country before and after
42、the supposed liberalization. Later in the day, Daniel and Shrum discuss the risk of investing in individual stocks in emerging markets. Daniel states that corporate governance can be a particular problem in emerging markets and that the enforcement of shareholder rights has been traditionally weak.
43、She states that during emerging market crises, companies with weak corporate governance tend to suffer losses. Shrum adds that the effectiveness of a corporations governance can be increased by increased analyst coverage, especially when the firm is controlled by family members. Daniel and Shrum hav
44、e made an investment in the emerging country of Walenzia. Fortunately, they have found a bank that will write an over the counter options contract for the Walenzian currency, abbreviated as WP. Lakefront Financials position in Walenzian stocks is valued at WP 10,000,000. The option delta is -0.3 and
45、 the number of WP in one option contract is 31,250. Part 1) Regarding their statements concerning emerging market liberalization and integration? Part 2) Regarding their statements concerning the value-at-risk measure and structural breaks? Part 3) Regarding their statements concerning contagion and
46、 post-liberalization stock return variability in emerging countries? Country Cost of Capital Exports in millions of U.S. dollars Inflation Government debt as a percent of GDP Before After Before After Before After Before After A 24.2% 21.5% $882 $779 9.1% 13.5% 39% 35% B 23.4% 21.2% $595 $888 8.6% 8
47、.0% 33% 25% C 25.8% 28.9% $993 $818 9.2% 7.5% 42% 45% Daniel ShrumA) Correct CorrectB) Correct IncorrectC) Incorrect CorrectDaniel ShrumA) Correct CorrectB) Correct IncorrectC) Incorrect CorrectDaniel ShrumPart 4) Which of the following countries from Daniel and Shrums table is most likely the newly
48、 liberalized emerging market, based solely on the change in the data for each country before and after the supposed liberalization? Part 5) Regarding their statements concerning corporate governance in emerging countries? Part 6) How should Lakefront Financial hedge the currency risk of the Walenzia
49、n stock position? Question 24 - #92626 Which of the following is a valid reason for the need for float adjustment in the construction of international equity benchmarks as compared to US equity benchmarks? Question 25 - #93066 In which of the following situations would an active investor be the least effective monitor of management? The active investor holds a: A) Incorrect IncorrectB) Correct CorrectC) Correct IncorrectA) Country B. B) Country A.C) Country C.Daniel ShrumA) Incorrect IncorrectB) Correct CorrectC) Correct IncorrectA) Buy 1,067 WP put contracts.B) Buy 320 WP ca
