CFA Level 1 Free Practice Test

1. Meta Corp. sells 15,000 units of its product at a price of USD10 per unit. The company’s fixed costs are USD12,000 and interest expense is USD3,000. The variable cost per unit is USD7.

Meta Corp’s degrees of operating leverage and financial leverage are:

2. The standard deviation of the market portfolio is 0.2. The beta of a company with standard deviation 0.6 and market correlation of 0.4 is closest to:

3. You are provided with the following information on a non-callable, non-convertible preferred stock:

Face value: USD50
Annual dividend: USD2.50
Maturity: Perpetual
Embedded options: None
Required rate of return: 6.25%

The intrinsic value of this stock is closest to:

4. A company had equipment worth USD50 million on 1 January. During the year, they purchased equipment for USD10 million. On 31 December, the equipment account showed USD40 million. All figures are shown at cost, before depreciation.

The amount of equipment sold during the end of the year, at cost, would be closest to:

5. A stock priced at GBP35.73 is projected to pay dividends of GBP1.50, GBP2.00, and GBP2.50 at the end of the next three years. At the time of the third dividend, the stock is expected to be worth GBP36.23.

If the required rate of return for this stock is 10%, the intrinsic value of the stock is closest to: