CFA

Question 1

Which component of the cash flow statement may be prepared under the indirect method?

Answer 1

Operating

Investing and Financing sections must be prepared under the direct method

Question 2

Inventory Turnover

Answer 2

Cost of Goods Sold/ Average Inventory Value

Question 3

A country has a comparative advantage over another if what cost for the good is less than its trading partner?

Answer 3

Opportunity Cost

Question 4

The Ricardian Trade model states that a country captures more gains from trade if

Answer 4

The terms of a trade are closer to its partners autarkic prices than its autarkic

Question 5

According to Heckscher-Ohlin Model, when trade opens

Answer 5

The abundant factor gains relative to the scare factor in each country

Question 6

Current Account Formula

Answer 6

(Exports- Imports) + net Income from Abroad + Net Current Transfer

Question 7

Trade deficit

Answer 7

When a country imports more things than it exports to that country.

The other country will have a trade surplus

Question 8

GDP

Answer 8

GDP = Consumption + Gross private Domestic Investment + Government Spending

Question 9

National Income

Answer 9

National Income = GDP - CCA

Question 10

Savings balance of trade)

Answer 10

S = I + (G-T) + (X-M)

Question 11

Sustainable Growth Rate

Answer 11

The Growth in the labour force + Growth of labour productivity

Question 12

Convergence of incomes over time between emerging market countries and developed countries is most likely the result of…

Answer 12

Diminishing marginal productivity of capial

Question 13

First Degree Price Discrimination

Answer 13

Charges customers the maximum price that they are willing to pay for a good or service

Question 14

Second Degree Price Discrimination

Answer 14

Discounts for items purchased in bulk

Question 15

Third-degree Price Discrimination

Answer 15

Occurs when a company charges a different price to different groups of consumers

Question 16

Economic Profit

Answer 16

Revenue from sales-Opportunity costs from all inputs

Question 17

Income Effect

Answer 17

The change in demand for a good as a result of a change in income

Question 18

Substitution Effect

Answer 18

The change in demand for a product can be attributed to the consumer switching to/from cheaper alternatives as the price changes.

Question 19

Precautionary Money Demand

Answer 19

The act of holding real balances of money for use in a contingency

Question 20

Transaction Money demand

Answer 20

Money in its liquid forms, especially cash and checking account balances. Demand arises from the absence of perfect synchronization of payments and receipts.

Question 21

Speculative money demand

Answer 21

The desire to have money for the purchase of an asset.

Question 22

Money Neutrality

Answer 22

The theory is that an increase in the money supply will lead to a long-run increase in the price level while leaving variables such as output and employment unaffected. Therefore, there is no real effect on economic equilibrium.

Question 23

The Fisher Effect

Answer 23

The tendency for nominal interest rates to change to follow the inflation rate

Question 24

The Fisher Equation

Answer 24

Real interest rate = nominal interest rate - expected inflation rate

Question 25

Laspeyrs Price Index Formula

Answer 25

sum (observation price*Base Qty) / sum (base price *Base Qty.)

Question 26

Nominal Data

Answer 26

Categorical values that are not amenable to being organized in a logical order. (qualitative data)

Question 27

Cross-sectional data

Answer 27

A collection of observations gathered at a single point on a variety of varaibles

Question 28

Panel Data

Answer 28

Cross sectional data taken at many points in time

Question 29

Pareto Chart

Answer 29

A bar chart that organizes categories by frequency in descending order and includes a line displaying cumulative relative frequency

Question 30

Word Cloud

Answer 30

Used to visualize and represent unstructured textual data

Question 31

A tree map is best suited to illustrate

Answer 31

Value differences in categorical groups

Question 32

A heat map is best suited for visualizing

Answer 32

The degree of correlation between different variables

Question 33

Bubble Line Chart

Answer 33

The recommended tool if the goal is to make comparisons of three or more variables over time

Question 34

What is the harmonic mean used for?

Answer 34

finding average per unit price

Question 35

Type 1 Error

Answer 35

Rejecting a true Null hypothesis

Question 36

Type 2 Error

Answer 36

Failing to reject a false null

Question 37

Power of a test

Answer 37

The probability of correctly rejecting the null.