This post lesson quiz is to help anchor what you have just learnt and to give you some practise. The questions may not be structured like the kind you are likely to get in the exam.
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Returns Measures
Candice bought 2 bonds at $98 each at t=0, and another bond at $102 at t=1. At t=2, she sold all 3 bonds at $99 each. At t=1 and t=2, she received a coupon of $2 per bond for each period.
The geometric mean return for each period is closest to:
Returns Measures
Candice bought 2 bonds at $98 each at t=0, and another bond at $102 at t=1. At t=2, she sold all 3 bonds at $99 each. At t=1 and t=2, she received a coupon of $2 per bond for each period.
The money-weighted rate of return for each period is closest to:
Seiko bought a mutual fund with an annual 2% management fee. He paid a 0.8% commission to his broker. After 1 year, Seiko sold the funds at a gross return of +15.3%. He was taxed 30% on the gains. His after-tax nominal returns is closest to:
Expected Returns and Standard Deviation of Returns
Johnson invested in a portfolio of 60% stocks, and 40% bonds.
Expected Return | Standard Deviation | |
---|---|---|
Stocks | 14% | 29% |
Bonds | 7% | 13% |
What is the expected return of the portfolio?
Expected Returns and Standard Deviation of Returns
Johnson invested in a portfolio of 60% stocks, and 40% bonds.
Expected Return | Standard Deviation | |
---|---|---|
Stocks | 14% | 29% |
Bonds | 7% | 13% |
If the correlation between stocks and bonds is 0.24, what is the expected standard deviation of the portfolio?
Theory of Portfolio Diversification
Which of these is LEAST likely to be a portfolio on the efficient frontier?
Portfolio | Expected Return | Standard Deviation |
---|---|---|
A | 7% | 14% |
B | 9% | 17% |
C | 8% | 17% |
Investor’s Optimal Portfolio
Reuben is indifferent to these two portfolios:
Portfolio | Expected Return | Standard Deviation |
---|---|---|
A | 7% | 14% |
B | 6% | 17% |
Reuben is most likely a ___________ investor.
Investor’s Optimal Portfolio
An investor’s optimal portfolio is estimated to have 75% risk-free asset, and 25% risky portfolio. The expected return of the risky portfolio is 12%, with a standard deviation of returns of 23%. If the risk-free rate is 4%, what is the expected returns and standard deviation of the portfolio?
Many years ago, I was exactly where you are today—a CFA Level I candidate juggling a demanding full-time career with the daunting CFA curriculum. Coming from a Computer Engineering background, finance was entirely new territory for me. And yes, it was tough!
I struggled with dense textbooks, late-night cramming, and the frustration of concepts that seemed impossible after a long workday. But after passing Level I (barely), I realized something had to change.
Using the Pareto Principle (80/20 rule), I distilled the vast CFA syllabus into essential, easy-to-understand nuggets. I leaned into visual summaries and bite-sized learning sessions that worked around my busy schedule. This smarter approach helped me clear Levels II and III on my first attempts with significantly less stress.
I founded PrepNuggets to share the streamlined strategies and innovative learning methods that transformed my CFA journey. Our mission is simple: leverage technology to make CFA prep more effective, accessible, and enjoyable.
Join the PrepNuggets community today—sign up for your free account, and let our thoughtfully crafted materials propel you toward CFA success without unnecessary overwhelm.
Here’s to your CFA journey!
Keith Tan, CFA
Founder & Chief Instructor, PrepNuggets
Keith is the founder and chief instructor of PrepNuggets. He has a wide range of interests in all things related to tech, from web development to e-learning, gadgets to apps. Keith loves exploring different cultures and the untouched gems around the world. He currently lives in Singapore but frequently travels to share his knowledge and expertise with others.
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