What is the main difference between cognitive errors and emotional biases?
In general, behavioral biases come in two forms: cognitive errors and emotional biases. Both forms of bias, regardless of their source, may cause decisions to deviate from what is assumed by traditional finance theory. What is the main difference between both types of biases? a) Cognitive errors are behavioral biases resulting from faulty reasoning, and
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How is the ownership structure in Raw Land, Farmland and Timberland?
Natural resources, as part of the alternative investments asset class, have some unique products and characteristics, the ownership of these assets can be either institutional or individual. Which of the following natural resources have owners that are mainly institutional? a) Farmland. b) Timberland. c) Raw land. https://vimeo.com/manage/videos/968178924
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How do we value forward commitments at maturity?
Suppose investment company Omicron owns 25,000 common non-dividend paying shares of company ABC with a spot price of $154.58. Omicron enters into a forward contract with a financial intermediary to sell forward 25,000 shares at a forward price of $150 per share in 11 months. Calculate the value per share at maturity of the forward
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How are cash-based or accrual-based principles related to private and public issuers?
When analyzing fixed-income securities, issuers can be either public or private. Which of the following sentence is true according to the CFA Institute? a) Public issuers use accrual-based principles (GAAP) while private issuers use cash-based principles. b) Private issuers use accrual-based principles (GAAP) while public issuers use cash-based principles. c) Both public and private issuers
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What are the main elements in a Company Research Report?
When financial analysts elaborate Company Research Reports there are three main elements, which one of these elements is related to the determination of the business model, the analysis of revenue and revenue drivers, the analysis of operating profitability and working capital, and the analysis of capital investments and capital structure? a) Company Analysis: Forecasting. b)
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What are the main types of capital investments in Corporate Finance?
In the Corporate Issuers (Corporate Finance) area, we define capital investments as those with a life longer than one year, so they are included in the long-term portion of balance sheets. Which of the following types of capital investments is associated to machine replacement and infrastructure improvement? a) Going Concern Projects. b) Regulatory / Compliance
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How is the term “Geopolitics” defined according to the CFA Institute?
In the CFA level I curriculum, there is a reading dealing with Geopolitics. Which of the following sentences better defines this important concept? a) It is the study of how international relations and politics affect geography. b) It is the study of how geography affects politics and international relations. c) It is the study of
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What are the main limitations of Pearson correlation analysis?
The Pearson correlation coefficient is a number between -1 and +1 that measures the consistency or tendency for two investments to act in a similar way. It is used to determine the effect on portfolio risk when two assets are combined. Which of the following sentences better represents the limitations of the correlation analysis implemented
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What is the meaning of the Standard I-B of Professionalism “Independence and Objectivity?
Amelia Bulonska is a highly respected technology sector analyst with Dadu&Fefe and has been asked by another investment firm to be the key spokesperson for a conference it is organizing. This investment firm has offered to pay her all expenses, plus bringing 3 all-expenses paid companions and a golf outing at Pebble Beach which is
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What are the main elements of an Investment Policy Statement (IPS)?
Portfolio planning can be defined as a program developed in advance of constructing a portfolio that is expected to define the client’s investment objectives. The written document governing this process is the investment policy statement (IPS). The main elements of an IPS can be classified into objectives and constraints. Mark the correct sentence in relation
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