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 moneyweighted 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 aftertax 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% riskfree asset, and 25% risky portfolio. The expected return of the risky portfolio is 12%, with a standard deviation of returns of 23%. If the riskfree rate is 4%, what is the expected returns and standard deviation of the portfolio?
Are you a CFA Level I candidate, or someone who is exploring taking the CFA exam? Four years ago, I was in your shoes. I am a Computer Engineering graduate and have been working as an engineer all my life. Having developed a keen interest in finance, I decided on a career switch to the finance field and enrolled into the CFA program at the same time.
Adjusting to the drastic career change was tough. I naturally neglected the preparation for my Level I exam in June 2014. It was not until the middle of March 2014 that I realized I only had a little more than 2 months to the exam. To compound my problems, I basically did not have a preparation strategy. Having no background in finance at all, I tried very hard to read the curriculum from cover to cover, but eventually that fell flat. I can still recall the number of times I dozed off while studying, or just going back and forth trying to understand even the simplest concept. My mind simply could not keep up after a hard day at work.
Does all these sound familiar to you? Well, take heart. No matter how bleak it seems, at least sit for the exam and treat it as a learning experience. That was basically my attitude as I burrowed through my exam prep with toil and stress. By God’s grace, I did pass my Level I exam in June 2014. It was an experience I would not want to revisit though.
For the Level II exam, I endeavoured not to repeat the mistakes I made. Based on the Pareto 80/20 principle, I learnt to extract the most essential bits from the curriculum enough to give me that 80% result to pass. Being a visual learner, I took notes and summaries in pictorial form. Instead of reserving huge segments of time to study, I carved out pockets of time to learn and practise – accommodating to my fulltime job. I managed to pass my Level II and Level III exams consecutively with considerably less effort and stress than when I did my level I.
I love the CFA Program and truly value the skills and ethics that are imparted to make me a better finance professional. My desire is to help candidates who are keen to pursue this path to do so in the most effective and painless process as possible – based on the lessons that I learnt as a candidate. I have set up PrepNuggets with the vision to revolutionise learning by using technology, catering to the short attention span that we can afford. If this makes sense to you, join the PrepNuggets community by signing up for your free student account. I am confident that the materials that we have laboriously crafted will bring you closer to that dream pass with just that 20% effort. Let us do the hard work for you.
Regards,
Keith Tan, CFA
Founder and 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 elearning, 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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Have you ever gotten stuck in your study because you can’t remember a formula, or what a specific term means? Now, say goodbye to scanning through all the videos and ploughing through pages and pages just to find what you are looking for. All the important formulas, definitions and diagrams you need for the exam are now at your fingertips at prepnuggets.com/glossary.
What’s more, these quick references are deeply integrated in our lessons, so you get a good idea of what the lesson covers even before watching the video. The references also point you to specific video lessons where it is covered, so you can quickly access the corresponding video to learn more about the term.
Available now for all Level I topics, this service is exclusive for our Premium and Pro members only. We will progressively add the rest of the topic areas over the next few months.
We think this is a gamechanger for your CFA success!
On the 1st of March 2018, we took a bold step of faith to put our Financial Reporting and Analysis (FRA) course on Udemy.
For those of you who are new to Udemy, it is the world’s largest marketplace for online courses. Think of it like the EBay of online courses.
So imagine our trepidation in pitting our course in this highly competitive platform, against the many CFA prep providers already entrenched on the platform.
Overwhelming.
Yes, that’s the word that aptly describes the response to our course from the Udemy community.
The “Best Seller” tag from Udemy is attached to only one best selling course in its category. In just 1 month, our FRA course became the best selling CFA course on the platform. If you do a search for ‘CFA Level 1’, our course comes out on top in the search rankings.
Since the launch on 1 March, we have had more than 250 paid enrolments. While we are heartened by this figure, nothing beats knowing that our course has reached 50 countries around the world! It was simply heartwarming to receive messages from students from countries we barely know about, telling us how much they love the course and their wish that we would produce more of such courses. This certainly spurs us on to produce more materials to ease the burden of CFA candidates worldwide.
As of today, our course has a high average rating of 4.8 out of 5.0. 74% of the reviewers gave us 5 stars! We take this as endorsement that we are doing things right, and will continue in using the Pareto principle approach for our course materials. There are, of course, constructive feedback as well, and we aim to incorporate some of the feedback in producing the upcoming courses.
We are working hard to bring more of our courses to Udemy! We realise some candidates prefer to purchase courses as they need individually, so we endeavour to give more options to our potential students. Check out our Udemy Courses Page to find out which of our courses are available on Udemy for your purchase.
If you have purchased our course on Udemy and would like to continue with the PrepNuggets study approach for other topics, we have an awesome upgrade offer to Premium membership for you!
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