The official Beatthecfa's Challenge questions thread

CFA Level I
#61

Answers in 15 hours. Hint: rus1bus is wrong on one of them at least :stuck_out_tongue: So don’t copy!

#62
  1. A 2. C
#63
  1. A 2. C
#64
  1. A 2. C 2 out of 4 have the same answer, its easy choice for me braah.
#65

I say A C also

#66

A and C are the right answers. Well done everyone! Looks like you won Round 5 quite comprehensively! Back with more later

#67

beatthecfa, please explain why 2) A is wrong. Knowing it is not correct, still I am having hard time explaining it as incorrect. It is: A: If there is a permanent decrease in demand, in the long run the number of firms in the industry falls, and each firm produces a lower output than it was before.

#68

Dear rus1bus If there is a permanent decrease in demand, 2 things will happen: - the demand curve shifts down and price decreases. - price decreases so that companies make loss and get out of business. At that point, as the number of firm decreases, supply curve shifts to the left. Therefore, price increases and quantity decreases. The product quantity in the whole market reduces. But in the long run, existing firms should earn zero economic profit (produce at MR=MC=ATC), if there is no change in ATC, this optimal number of product produced for each firm will stay the same. The correct answer is C because if firms are now suffer loss, it must produce at MR=MC

#69

Thank you manowar. Great explanation. The point I missed was subsequent shift in supply curve to left when supply reduces as a result of some firms shutting down operations. You guys are doing great with beatthecfa’s challenge. Really Admirable. Keep it up! Good luck for exam, though you dont need it!! Regarding explanation for the 1st question, as I understood it. If a bond’s principal is repaid earlier in portions, as against a single bullet repayment at maturity, it increases Repayment Risk in that bond, correct? Repayment Risk is a risk to investor in that bond, when Interest Rates are falling. In falling interest rates, when bond issuer repays some or all of the principal, bond investor will have to re-invest that amount at lower interest rates. Which will bring down his yield on the bond. Thus, with increased Repayment Risk for bonds repaying Principal earlier than maturity, the Z-Spread Increases for that Bond to reflect that Increased Risk.

#70

You are always welcome rus1bus, many thanks to you!

#71

bump

#72

I am really really proud of this one. A whopping 10/10 on the difficulty scale :stuck_out_tongue: Just came to me yesterday. All other things remaining the same, given the issue price, face value and term to maturity, which of the following statements is correct for a 3 month T-Bill with a $1,000 par value. At issuance: A: Money market yield < Bond equivalent yield < Discount basis yield B: Money market yield < Discount basis yield < Bond equivalent yield C: Discount basis yield < Bond equivalent yield < Money market yield D: Discount basis yield < Money market yield < Bond equivalent yield E: Bond equivalent yield < Discount basis yield < Money market yield F: Bond equivalent yield < Money market yield < Discount basis yield Make me proud folks. Proud of YOU that is, I am already quite proud of the question :slight_smile:

#73

C

#74

C

#75

Excellent question bro. The answer to this bitch is D!!

#76

WOOO Man where did you get the rest of these bad boys from? The first few rounds are tougher!!

#77

C

#78

D

#79

C Great question !

#80

damn… is this what the real test is like? these questions are like 5x harder than qbank LOL