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CFA Institute Exam CFA-Level-I Topic 1 Question 8 Discussion

Actual exam question for CFA Institute's CFA Level I Chartered Financial Analyst exam

Question #: 8
Topic #: 1

[All CFA Level I Chartered Financial Analyst Questions]

Ted McGovern works in the economics branch of a government bank regulator. When he arrives at work this morning and checks his voicemail, he has a message from the Regional Director asking him to calculate the expected rate of return for a stock market series. More detailed information will be forthcoming in an e-mail. Fortunately, McGovern still has his CFA Program study guides in his office and finds the correct formulas. McGovern logs on to the computer network and downloads an attachment that contains the following estimates:

Overall Assumptions:

Index Estimates â€“ Bull Market:

Index Estimates â€“ Bear Market:

The expected return on the index is closest to:

A67.4%.

B39.4%.

C30.8%.

D98.2%.

Show Suggested Answer

Suggested Answer: C

by Lajuana at Sep 19, 2024, 05:00 PM

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Glory

12 days ago

I'm feeling a bit bearish on this one. 30.8% sounds about right to me. Time to break out the CFA study guides, just like good ol' Ted.

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Ramonita

1 days ago

I agree, 30.8% seems like a reasonable estimate.

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Carey

14 days ago

Whoa, 98.2%? That's more like a bull market on steroids! I'm going with the more realistic answer, B.

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Dahlia

4 days ago

User1: I agree, 98.2% seems too high. I think B, 39.4%, is more realistic.

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Margarett

22 days ago

I see your point, but I still think A) 67.4% makes more sense based on the estimates provided.

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Halina

26 days ago

I disagree, I believe the correct answer is C) 30.8%.

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Marylin

29 days ago

Hmm, let's see. The expected return on the index is closest to 39.4%. Gotta love those bear market estimates, am I right?

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Carman

13 days ago

A) 67.4% seems too high for a bear market.

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Margarett

1 months ago

I think the answer is A) 67.4%.

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