Level I

Economics Question

Hello,

I ran into this question using Kaplan practice exams and I’m not quite sure I understand the explanation. Can someone please help me out on this and paraphase? 

An economy is in full-employment equilibrium. If the government unexpectedly decreases the tax rate, in the short run the economy is most likely to experience:

A. An Increase in employment

B. A decrease in price level

C. No change in employment and an increase in price level

Zero Coupon Bonds

When a maturity payment is made on a zero coupon bond does it qualify as a capital gain for the person holding it instead of ordinary income? 

I know from reading that a originial issue discount provision prevents a company from recording a capital gain on a zero coupon bond for lower tax rates and forces them to record the appreciation of the bond as it moves closer to bond as ordinary income. 

Profitablility Index

Hi Guys,

In the book the forumlas for profitablility index is

(NPV/initial cashflow) +1  or (PV of future cashflow)/Initial cashflow.   However I don’t understand why they are different. Surely the PV of future cashflow is the same as the NPV. Also why do you add 1 on one of the equiations and not the other.

CFA language difficult to understand

I’m actually doing better on CFA mocks vs schweser but I’m finding that I spend a lot of time trying to figure out what CFA questions are asking. And I get a lot wrong because the phrasing is weird. Maybe it’s just me but the material is hard enough that I don’t also need to spend time to figure out what “game” this question is getting at. It’s frustrating and unfortunate because this is supposed to be about learning, not trickery to keep your passing rates low. Posting this more out of annoyance but if anybody feels the same way, let me know.

Oligopoly

What does it mean that product differentiation in Oligopoly is homogeneous/ standardized? I might expect homogeneous or differentiated, because the products do not have to be the same, but standardized? Is it also supposed to mean there is no difference between oligopoly and perfect competition (as curriculum says perfect competition differentiation is aslo h/s)… And monopolistic competition is then the only one with differentiated products?

Thanks for explanation

Any practice papers out there?

I’ve solved schweser’s and cfa institute mocks and still have some spare time. Do you have any links to more practice papers?

Burnt out

I feel like I went too hard since beginning of december, now i just want this to be over. does anyone else feel the same way?

Record Retention vs. Misrepresentation

Member incorporates data from World Bank and Central Banks into report. While he does not indicate these sources in his reports, whenever clients ask him he says its from the public domain. When clients ask for the specific website, he provides them with the information. Which standard is most likely violated?

1. Misconduct

2. Record Retention

3. Misrepresentation

Not sure how the answer is 3 instead of 2 for this question.

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