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Give yourself a pat for attempting this quiz! Do remember to attempt the mock exams provided by CFA Institute to prepare for the kind of questions you might get for the exam!
A year ago, a firm issued a 6-yr bond with $1 million face value, with a 5% coupon paid annually. The effective rate at issuance was 4%.
What was the price of the bond at issuance?
A year ago, a firm issued a 6-yr bond with $1 million face value, with a 5% coupon paid annually. The effective rate at issuance was 4%.
What is the most likely current book value of the bond liability? (Use the effective interest method)
A year ago, a firm issued a 6-yr bond with $1 million face value, with a 5% coupon paid annually. The effective rate at issuance was 4%.
What is the recorded amount of cash outflow on the cash flow statement in the first year closest to?
Debbie is choosing between purchasing 2 bonds offered by the same company.
Bond A is a 5-yr, $10,000 par, 4% coupon paid annually. It is offered at par.
Bond B is a 5-yr, $10,000 par, zero coupon bond. It is offered at a discounted price of $8,200.
If coupons does not matter to Debbie, and she just wants the highest IRR for the 5 year term, which bond will she most likely pick?
Company A reports under US GAAP, and Company B reports under IFRS.
Both companies issued a $1 million bond with 7% coupon at par value. Both companies incurred issuance cost of $10,000.
Which of the following is least likely to occur as a result of the bond issue?
To take advantage of the prevailing low interest rates, Tutlis Corp decided to redeem some of its outstanding bonds. Tutlis paid $9.3 million to redeem the bonds. The book value of the bonds redeemed was $8.2 million.
What should be the accounting treatment of this transaction?
An airline that reports under IFRS leased an airplane for 10 years. The annual payments of $15 million is to be made each year on the first day of the lease.
The implicit lease interest rate is 7%. The amount of interest expense recognised by the airline in the first year is closest to:
GammaLease is a vehicle leasing company which refurbishes old trucks to lease out. GammaLease is a US-based company that reports under US GAAP.
Last year, GammaLease refurbished a truck with a total cost of $80,000 to lease to PHZ Transports. The lease is for 5 years, where PHZ will pay GammaLease $30,000 at the end of each year. After the final payment, PHZ will own the truck for no additional payment. The implied interest rate in the lease is 6%.
How should GammaLease account for the lease at inception?
In a review of its defined benefit plan, a firm decided to increase its assumption of life expectancy for males to 80 years, and for female to 85 years.
What is the least likely effect of this change on the firm’s financial statements?
For the last financial year, Moples Corp recorded total revenue of $100,000 and COGS of $40,000.
The interest payments for the year total $8,000.
What is the interest coverage ratio of Moples for the year closest to?
Why is the language of the Learning Outcome Statements (LOS) different from the curriculum?
The LOS are protected under the CFA Institute's copyright, and we don't have permission to duplicate them verbatim. Therefore, we've rephrased the LOS and included alphabetical labels (a, b, c, …) to simplify cross-referencing with the original LOS in the curriculum when needed.
Now available for all Level I topics! Try it now!
Enter a search term (e.g. ‘LIFO reserve’).
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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 game-changer for your CFA success!
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 full-time 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 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.