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Are you considering taking the
CFA exam?

Take our CFA Ready quiz to help you understand
what you will need to do to start your CFA journey.

Simply answer 20 multiple choice questions on financial maths and financial reporting.
You’ll then see the answers with explanations on completing the quiz and what your next step could be.

Good luck!

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Section 1: Financial Maths

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Question 1

It costs £5,000 to invest in a project, which generates a return of £13,500 in 5 years time. What is the net present value of the project if the cost of capital is 10%?

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£1,712

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£2,835

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£3,382

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Section 1: Financial Maths

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Question 2

What would you pay for an annuity of £5,000 receivable at the end of each of the next 6 years if your required return is 10%?

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£18.776

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£21,776

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£23,776

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Section 1: Financial Maths

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Question 3

A bond pays a 6% annual coupon with a par value of £100. The bond has a maturity of 20 years. The appropriate yield in the market is 5%. What is the current price of the bond?

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£90.89

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£102.00

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£112.46

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Section 1: Financial Maths

Q1 Title

Question 4

An asset generates returns of 5%, 8% and 10% per annum over a three year period. What is the geometric mean of the returns?

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7.65%

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7.67%

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7.69%

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Section 1: Financial Maths

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Question 5

An asset generates returns of 5%, 8% and 10% per annum over a three year period. What is the standard deviation of the returns?

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2.05%

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2.55%

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3.10%

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Section 1: Financial Maths

Q3 Title

Question 6

An asset generates returns of 5%, 8%, 10%, 4% and 2% per annum over a five year period. What is the median return?

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2%

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5%

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6%

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Section 1: Financial Maths

Q3 Title

Question 7

Over the last 5 years an investor’s portfolio has grown at the following annual rates: 7%, 3%, -2%, -5%, 4%. If the initial investment was £20,000, what is the portfolio worth after 5 years?

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£18,756

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£19,234

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£21,342

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Section 1: Financial Maths

Q1 Title

Question 8

The stated monthly interest rate on a credit card is 4%. What is the annual effective interest rate on the card?

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48%

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52%

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60%

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Section 1: Financial Maths

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Question 9

An investor deposits €10,000 in a bank account earning 6% per annum. What is the total value of the sum invested at the end of 8 years?

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€14,800

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€15,938

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€16,742

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Section 1: Financial Maths

Q3 Title

Question 10

If there is a 30% chance of a recession and a company believes the probability of witnessing both good earnings and a recession is 15%, what is the probability of witnessing good earnings conditional on a recession having occurred?

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4.5%

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45%

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50%

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Section 2: Financial Reporting

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Question 11

The current ratio is defined as:

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Current assets divided by current liabilities

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Total assets divided by current liabilities

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Current assets less inventory divided by current liabilities

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Section 2: Financial Reporting

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Question 12

Preparation of a company’s accounts is the responsibility of:

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The auditors

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The chief financial officer

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The directors

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Section 2: Financial Reporting

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Question 13

Which of the following is least accurate when describing the income statement:

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An alternative name is the statement of comprehensive income

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The statement can be used to assess the company’s performance

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It is a dynamic statement spanning the period between balance sheets

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Section 2: Financial Reporting

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Question 14

If a company reports current assets of $100m, long term assets of $250m and stockholders’ equity of $150m, what must be the total of its current and long term liabilities?

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$200m

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$300m

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$500m

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Section 2: Financial Reporting

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Question 15

What is operating leverage?

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The fixed interest costs included in the income statement as a result of the firm’s capital structure

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Total fixed costs in the income statement

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Fixed costs included in arriving at earnings before interest and tax.

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Section 2: Financial Reporting

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Question 16

Which of the following is not true of the accruals process?

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Accruals result in non cash items passing through the income statement

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Accruals will result in sales being recorded in the period in which cash is received by the firm

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The accruals process relies on estimates and assumptions

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Section 2: Financial Reporting

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Question 17

If goods that cost the company £300 to produce are sold on credit for £450, how much will the firm's net assets change by?

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£150

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£300

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£450

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Section 2: Financial Reporting

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Question 18

If the debt to equity ratio is 0.5 and equity is €200m what is the proportion of debt in the capital structure?

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25%

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33%

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50%

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Section 2: Financial Reporting

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Question 19

Which of the following is not a long lived asset?

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Inventory

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Goodwill

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An investment in an associated company

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Section 2: Financial Reporting

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Question 20

Which of the following is the most accurate definition of depreciation?

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The decline in value of an asset through use

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The method used to allocate the cost of an intangible to the income statement over the assets life

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The spreading of the cost of a tangible asset to match against earnings generated from the assets use, over the assets life

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