Free Access CFA.CFA-Level-I.v2023-07-10.q797 Practice Test (Page 4)

Question 11

Dora receives $10 for each pizza that she sells. However, the marginal cost of pizza production increases with each pizza produced. The marginal cost of the first pizza is $1. How many pizzas will Dora sell?

A.Dora will sell only one pizza, because the first pizza costs the least.

B.Dora will sell pizzas until the marginal cost of the last pizza is $10.

C.We cannot tell what Dora should do from the information given.

Question 12

Which statement is false?

A.Industries with high barriers to entry can still be very competitive.

B.Many cyclical industries produce durable, commodity-like goods such as raw materials, cars, chemicals, construction, paper, steel, and heavy equipment.

C.Company analysis takes place before the analyst has gained understanding of the company's external environment.

Question 13

Nick is bullish on the Big Apple Index, which is currently at 3500. Since he has limited cash, he has decided to buy an at-the-money index option - option price is $10 per share. If the Index rises to 3508 at expiration, the option will be:

A.out of the money.

B.at the money.

C.in the money.

Question 14

Which of the following statements is false?

A.Economists generally oppose trade restrictions because they increase specialization.

B.Economists generally oppose trade restrictions because they reduce efficiency and specialization.

C.Economists generally oppose trade restrictions because they reduce competition.

Question 15

Which of the following would indicate a company is using conservative accounting policies?

A.Investment income is reported as part of revenue.

B.A policy of expensing start-up costs for new businesses.

C.Amortization periods are being extended.

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Question 11

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Question 13

Question 14

Question 15

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