25 Free Online CFA Level 1 Practice Questions on Equity Markets

Giving the superior advantages to CFA candidates, 25 Free Online CFA Level 1 Practice Questions on Equity Markets provide the most updated practice questions for your next exams. Most of them are sticked to the common CFA mock exams and practice exams from the CFA Institute and third-party providers. You can completely take these questions any time at anywhere without any cost because they’re totally free and taken online. You will be led throughout the content in the candidate body of knowledge to have a deep insight of knowledge for the next exam. Only practice just makes you fill up your weaknesses and have a good grasp of the dry material in the CFA curriculum. Try it out to compare your score with others in the comment below! Hope you pass!
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Market price / Book value per share.

• Total return
• Book value
• Risk
• Price to Book

Amount owed to investors in servicing the debtEx: Interest payments.

• Total return
• Cost of the debt
• Common shares
• Book value

GDR is issued outside of US and outside of its own home country.ADR is a US security that is traded on a U.S. exchange.

• Depository Receipts
• Convertible preferred shares
• Types of private equity investments
• Global vs American Depository receipts (GDR vs ADR)

Net Income / Average BVEBVE = Book value of equityorNet Income / BVEBVE = Book value at the beginning of the year.

• Return on Equity
• Total return
• Debt vs Equity
• Depository Receipts

Uncertainity of its expected total returnCalculating standard deviation of expected return.

• Risk
• Price to Book
• Book value
• Total return

Minimum rate of return the company must earn, on its investments to satisfy all providers of capital.

• Private equity securities
• Puttable common shares
• Callable common shares
• WACC - Weighted average cost of capital

Debt is a liabilityEquity is not.

• Book value
• Debt vs Equity
• Return on Equity
• Total return

Combination of common shares and debt.Has higher dividends than common shares but not contractually obligated.No voting rights.

• Puttable common shares
• Common shares
• Callable common shares
• Preference shares

Company can buy back shares from investors at a pre-determined price. This is to reduce the dividend payments to preserve cash.

• Callable common shares
• Puttable common shares
• Common shares
• Callable common shares are riskier

1. Illiquid2. Financial statements are difficult to obtain.3.

• Return on Equity
• Private equity securities
• Puttable common shares
• Preference shares

R = (Sale price - Purchase Price + Dividends ) / Purchase Price

• Book value
• Debt vs Equity
• Risk
• Total return

1. To prevent money coming in and going out frequently. (Volatality).2. To make sure that domestic people can particiate easily.3. To prevent giving control to foreign investors.

• Convertible preferred shares
• Investors holding equity vs Debt
• Foreign restrictions on domestic companies - Reasons
• Equity securities risk level

Allows a company to be traded on a foreign exchange.Sponsored DR -> Investors have rights as a equity investorUnsponsored DR-> Investors buys from institutions and the institutions retains the rights.

• Debt vs Equity
• Return on Equity
• Total return
• Depository Receipts

Investors can sell the shares to the company at a pre-determined price.

• Callable common shares
• Preference shares
• Puttable common shares
• Common shares

Because, the shares can be called at a set price even if the market price or future potential is very high.

• Common shares
• Puttable common shares
• Callable common shares are riskier
• Callable common shares

Takes place during annual meeting.Shareholders can vote via proxy.

• Debt vs Equity
• Shareholder's voting
• Statutory vs Cumulative voting
• Preference shares

Allows investors to convert their preferred shares to common shares.Allows investors to profit from the price of common shares.

• Preference shares
• Callable common shares
• Convertible preferred shares
• Puttable common shares

Represents ownership interests.Has voting rights.Companies may pay cash dividends but not obligated to.

• Book value
• Common shares
• Puttable common shares
• Preference shares

Statutory voting -> One vote per share for each director/elected memberCumulative Voting -> Total votes = Total Shares * Number of elected posts. The shareholder can split the total votes in any way want.

• Return on Equity
• Shareholder's voting
• Statutory vs Cumulative voting
• Debt vs Equity

Cumulative preference shares -> Allows dividends to be accumulated. When dividends are not paid, it needs to be paid in the next period.Non cumulative -> No such criteria.

• Why preference shares are less risky?
• Preference shares
• Convertible preferred shares
• Cumulative preference shares vs non-cumulative

Assets - LiabilitiesWhen net income increases, the book value also increases.

• Risk
• Total return
• Common shares
• Book value

The securities have higher risk level compared to bills, bonds. They earn higher rates of return compared to government bonds.

• Private equity securities
• Preference shares
• Equity securities risk level
• Puttable common shares

1. Venture capital.2. Leveraged buyouts.3. Private investment in public equity.

• Private equity securities
• Investors holding equity vs Debt
• Debt vs Equity
• Types of private equity investments

Equity investors seeks capital / price appreciation and dividend income.Debt investors seeks interest income and return of principle.

• Return on Equity
• Investors holding equity vs Debt
• Types of private equity investments
• Cost of the debt

1. The dividends are known.2. They get dividends before common shareholders.3. The amount after the company is liquidated is known.

• Preference shares
• Convertible preferred shares
• Callable common shares are riskier
• Why preference shares are less risky?