專業(yè)提供cfa frm各級課程教程

2016LevelIIMockExam:MorningThemorningsessionofthe2016LevelIICharteredFinancialAnalyst?MockExaminationhas60questions.Tobestsimulatetheexamdayexperience,candidatesareadvisedto2016LevelIIMockExam:MorningThemorningsessionofthe2016LevelIICharteredFinancialAnalyst?MockExaminationhas60questions.Tobestsimulatetheexamdayexperience,candidatesareadvisedtoallocateanaverageof18minutesperitemset(vignetteand6multiplechoicequestions)foratotalof180minutes(3hours)forthissessionoftheexam.1-EthicalandProfessional7-EthicalandProfessional13-19-FinancialReportingand25-FinancialReportingand31-Corporate37-43-49-55-AlternativeByaccessingthismockexam,youagreetothefollowingtermsofuse:Thismockexamisprovidedtocurrently-registeredCFAcandidates.Candidatesmayviewandprinttheexamforpersonalexampreparationonly.Thefollowingactivitiesarestrictlyprohibitedandmayresultindisciplinaryand/orlegalaction:accessingorpermittingaccessbyanyoneotherthancurrently-registeredCFAcandidates;copying,postingtoanywebsite,emailing,distributingand/orreprintingthemockexamforanypurpose?2016CopyrightedbyCFAInstitute.AllrightsEthics–ThegovernmentofadevelopingcountryEthics–Thegovernmentofadevelopingcountrypublishedarequestforproposal(RFP)forthedevelopmentpoliciestoimprovethebusinessconductofitscapitalmarketslicensees,withthehopeofimprovingconfidencelevelsamonginvestors.KingfisherFinancialDevelopmentPartnersrespondedwithadetailedproposalincludingthejustificationsforwhythefirmshouldwintheJustification1:WithateamofthreeCFAcharterholders,KingfisherismorequalifiedthancompetitorstodesignpoliciestoupholdandenhancecapitalmarketJustification2:EachteammembermustannuallyrenewhisorhercommitmenttoabidebyCFAInstituteCodeofEthicsandStandardsofProfessionalConduct(CodeandJustification3:Inaddition,everyteammemberpassedeachleveloftheCFAexamontheKingfisherislaternotifiedthatithadwonthetender.TheKingfisherteamconsistsofteamleaderJuma,CFA,andhistwoassociates,VimalBachu,CFA,andAnilaPatel,CFA.Kingfisherandthegovernmentagreethatthefirststeptowardimprovingmarketintegrityistocreateanindustry-widecodeofconductbasedontheCodeandStandards.AlthoughtheCodeandStandardsarenotintendedtobeadoptedinfullbythegovernment,thedecisionismadetoconcentrateonfourmainareas:professionalism,capitalmarketintegrity,dutiestoclients,andinvestmentrecommendations.LevelsofFinancialservicesprofessionalsmustactinaprofessionalmanneratalltimestohelpprotectintegrityofthecountry’scapitalmarkets.Assuch,financialservicesprofessionalsmustensurethattheymeetataminimumthreemajorrequirements.Professionalsmust(1)discloseallconflictsofinterest,(2)selectivelydifferentiateservicestoclients,and(3)outlineallmanagercompensationarrangementsforinsiderinformationobtainedismanagedinsuchawayastopreventtheinvestingpublicfrombeingdisadvantaged.Inaddition,nofinancialservicesprofessionalcanknowinglyparticipateinanyactivitydevisedtomisleadinvestorsordistortanyprice-settingmechanism.DutiestoByaccessingthismockexam,youagreetothefollowingtermsofuse:Thismockexamisprovidedtocurrently-registeredCFAcandidates.Candidatesmayviewandprinttheexamforpersonalexampreparationonly.Thefollowingactivitiesarestrictlyprohibitedandmayresultindisciplinaryand/orlegalaction:accessingorpermittingaccessbyanyoneotherthancurrently-registeredCFAcandidates;copying,postingtoanywebsite,emailing,distributingand/orreprintingthemockexamforanypurpose?2016CopyrightedbyCFAInstitute.Allrights專業(yè)提供CFA/FRM各級全套視頻課程資料微信Clients’interestsmustcomebeforethoseofthefinancialClients’interestsmustcomebeforethoseofthefinancialservicesfirmand/oritsstaff.Toensureclients’interestsareprotected,allportfoliosmustbeinvestedaccordingtoeachclient’sinvestmentplanandmustbewelldiversifiedacrossallassetclassesavailable.Furthermore,fundmanagersmustannuallyreviewclientneedsandobjectivesandrebalanceportfoliosifrequired.InvestmentAllinvestmentrecommendationsshouldbemadeafterextensiveresearchundertakenbyoronofthefirm.Inaddition,eachresearchreportRequirement1:bereviewedbypeersassoonaspracticaltoensureadequatebasisandRequirement2:beassessedtodeterminethequalityoftherecommendationovertime,Requirement3:onlyincludenamesofteammemberswhotookpartintheresearchandwiththeTheKingfisherteamandthegovernmentcommitteemeettoagreeonthedraftcodeofMembersofthegovernmentcommitteesuggestthefollowingadditionalpolicy:“EachfinancialservicesfirmmusthaveacompliancesupervisortoensurethatTask1:systemsareinplacetodetectviolationsoflaws,rules,regulations,firmpolicies,andindustry-widecodeofconductandtoenforceinvestment-relatedcomplianceTask2:thefirmhasadequatedocumentedcompliancepoliciesandproceduresandittrainspersonnelonthesameandmakessurethepoliciesandproceduresarefollowed;Task3:inadequateproceduresareidentifiedandrecommendationstocorrectinadequatearesubmittedtoseniormanagementforapprovaland WhichofKingfisher'sstatementsintheRFPregardingitsqualificationsmostlikelyviolatesJustificationJustificationJustificationAnswer=Byaccessingthismockexam,youagreetothefollowingtermsofuse:Thismockexamisprovidedtocurrently-registeredCFAcandidates.Candidatesmayviewandprinttheexamforpersonalexampreparationonly.Thefollowingactivitiesarestrictlyprohibitedandmayresultindisciplinaryand/orlegalaction:accessingorpermittingaccessbyanyoneotherthancurrently-registeredCFAcandidates;copying,postingtoanywebsite,emailing,distributingand/orreprintingthemockexamforanypurpose?2016CopyrightedbyCFAInstitute.AllrightsItisaviolationofStandardVII(B):ReferencetoItisaviolationofStandardVII(B):ReferencetoCFAInstitute,theCFADesignation,andtheProgramtoimplythatthecompetenciesofaCFAcharterholderaresuperiortothoseofothersnotholdingthedesignation.Itisnotaviolation,however,tofactuallystatethatcharterholdersmustannuallyrenewtheircommitmenttoabidebytheCodeandStandardsorthateachoftheteammemberspassedallthreeCFAexamsontheirfirstattempt.CFALevelStandardVII(B):ReferencetoCFAInstitute,theCFADesignation,andtheCFAWithregardtotheproposedpolicystatementrelatingtoLevelsofProfessionalism,whichrequirementleastlikelyreflectsanyoftheCFAInstituteStandardsofProfessionalCompensationConflictsofinterestAnswer=suchservicesarenotofferedselectively.Thedifferentservicelevelsshouldbedisclosedtoclientsandprospectiveclientsandshouldbeavailabletoeveryone.ArequirementtodiscloseallconflictsofinterestwouldnotviolateStandardVI(A):DisclosureofConflicts,norwouldtheoutlineofallcompensationarrangementsviolateStandardIV(B):AdditionalCompensationCFALevelStandardIII(B):FairDealing;StandardVI(A):ConflictsofInterest;StandardIV(B):AdditionalCompensationArrangementsviolateanyCFAInstituteStandardsofProfessionalYes,withregardtomaterialnonpublicYes,withregardtomarketmanipulationAnswer=Kingfisher'sproposedgeneralprinciplesrelatedtoCapitalMarketIntegrityproperlyaddressprincipleStandardII(A):MaterialNonpublicInformationandStandardII(B):MarketManipulation.StandardII(A)doesnotdisallowthepossessionofinsiderinformationbutdoesdisallowusingtheinformationtotakeunfairadvantageofthegeneralinvestingpublic.StandardByaccessingthismockexam,youagreetothefollowingtermsofuse:Thismockexamisprovidedtocurrently-registeredCFAcandidates.Candidatesmayviewandprinttheexamforpersonalexampreparationonly.Thefollowingactivitiesarestrictlyprohibitedandmayresultindisciplinaryand/orlegalaction:accessingorpermittingaccessbyanyoneotherthancurrently-registeredCFAcandidates;copying,postingtoanywebsite,emailing,distributingand/orreprintingthemockexamforanypurpose?2016CopyrightedbyCFAInstitute.Allrights專業(yè)提供CFA/FRM各級全套視頻課程資料微信misleadinginformationandtransactionsthatdeceiveorwouldbelikelytomisleadmarketparticipantsbydistortingtheprice-settingmechanismoffinancialinstruments.CFALevelStandardII(A):MaterialNonpublicInformation;StandardII(B):MarketpreventviolationsofCFAInstituteStandardsofProfessionalConduct?Therequirementcallingfora(n):diversifiedperiodicreview.Answer=StandardIII(A):Loyalty,Prudence,andCarerequiresaclient'sportfoliotobemanagedinvestmentguidelinesagreedonwiththeclient.Someclients'investmentobjectivesmaynotallowforadiversifiedportfolioacrossallassetclassesavailable.Therefore,itmayviolateStandardIII(A)toincludeallassetclassesavailable.CFALevel"CFAInstituteGuidanceforStandardsI–VII,"CFAInstituteStandardIII(A):Loyalty,PrudenceandCareWhichofKingfisher'sproposedrequirementsregardinginvestmentrecommendationsisRequirementRequirementRequirementAnswer=ItisrecommendedthatfirmsdevelopandusemeasurablecriteriaforassessingthequalityresearchtohelpcomplywithStandardV(A):DiligenceandReasonableBasis.Therefore,theresearchrecommendationsneedtobeassessedtodeterminetheirvalidityovertime.Didtheprocessandtheanalyst'sviewleadtotherightrecommendation?Ifovertimerecommendationsconsistentlyprovetobewrong,perhapstheresearchprocessesneedtobechanged—ortheanalyststhemselves.CFALevelByaccessingthismockexam,youagreetothefollowingtermsofuse:Thismockexamisprovidedtocurrently-registeredCFAcandidates.Candidatesmayviewandprinttheexamforpersonalexampreparationonly.Thefollowingactivitiesarestrictlyprohibitedandmayresultindisciplinaryand/orlegalaction:accessingorpermittingaccessbyanyoneotherthancurrently-registeredCFAcandidates;copying,postingtoanywebsite,emailing,distributingand/orreprintingthemockexamforanypurpose?2016CopyrightedbyCFAInstitute.AllrightsStandardV(A):DiligenceandReasonableWhichofthefollowingtaskssuggestedbythegovernmentcommitteewouldleastconformtoStandardIV(C):ResponsibilitiesofTaskTaskTaskAnswer=Task1isinsufficientinthatStandardIV(C):ResponsibilitiesofSupervisorsrequirestoenforcenon-investment-relatedpoliciesaswellasinvestment-relatedCFALevel"CFAInstituteGuidanceforStandardsI–VII,"CFAInstituteStandardIV(C):ResponsibilitiesofSupervisors專業(yè)提供CFA/FRM各級全套視頻課程資料微信Byaccessingthismockexam,youagreetothefollowingtermsofuse:Thismockexamisprovidedtocurrently-registeredCFAcandidates.Candidatesmayviewandprinttheexamforpersonalexampreparationonly.Thefollowingactivitiesarestrictlyprohibitedandmayresultindisciplinaryand/orlegalaction:accessingorpermittingaccessbyanyoneotherthancurrently-registeredCFAcandidates;copying,postingtoanywebsite,emailing,distributingand/orreprintingthemockexamforanypurpose?2016CopyrightedbyCFAInstitute.AllrightsEthics–Ninemonthsago,MakennaEthics–Ninemonthsago,MakennaAdam,CFA,wasdismissedfromherjobasanequityresearchanalystTranscontinentalBrokerageCompany,apubliclylistednationwidestockbrokeragecompany.Unabletofindnewemployment,AdamestablishesanInternet-basedbusiness,AdamResearchLtd.,sellingresearchreportstoindividuals,institutionalinvestors,andsell-sidefinancialservicescompanies.AdamrecognizesthatshemustmakenumerousdisclosuresonherwebsitetocomplywiththeCFAofEthicsandStandardsofProfessionalConduct(CodeandStandards)aswellastheCFAInstituteResearchObjectivityStandards.ShebelievesitisimportanttocomplywiththeCodeandStandardstohelpimproveherbusinessprospects.AdamclearlydisplaysthefollowingclaimonthehomepageofAdamResearch’swebsite:canbeassuredthatallresearchisaccurate,althoughactualoutcomesmaydifferfromforecastedoutcomes.Ourresearchreportsclearlydistinguishbetweenfactsandopinionsbytheanalystwritingtheresearchreport.Analystsarealsofreetovoicetheirownopinionswhenmakingrecommendationswithoutfearofreprisaltoensuretheirindependence.AlsoclearlydisplayedonthehomepageisanadditionaldisclosureregardingpotentialconflictsAdamResearchLtd.and/oritsemployeesandassociatesmayoccasionallyholdsharesinanythecompanieswecover.PleasecontactusfordisclosureconcerningourshareInaddition,Adamcreatesastockratingsystem,againpostingitonthewebsiteforherclientspotentialclientssotheycanunderstandthebasisforhowAdamResearchrecommendationsaremade.Shedescribestheratingsystemasfollows:Thefirmusesdifferentrecommendationcategories(outperform,neutral,andunderperform),alongwithanindicationregardingrisksforeachtypeofinvestorandthetimeframeinwhichthesharesareexpectedtoreachtheirtargetprice.Adamrealizesshemustproduceresearchreportsquicklytohaveproducttosell.Herfirstreportherformeremployer,Transcontinental,andisbasedinpartonlastyear’sannualreport.BecausesheisaformeremployeeandashareholderinTranscontinental,AdamisconvincedsheknowsallaspectsofthecompanyverywellanddecidesnottomeetwithTranscontinentalmanagement.Shepublishesthereport,clearlystatingsheisaformeremployeeandcurrentshareholder.Todrivetraffictoherwebsite,sheallowsfreeaccesstothereport,leavingitonthesiteevenafterTranscontinentalreportsitsyear-endfinancialresults.Shereceivesanexcellentresponse,withroughly45%ofhermarketinglistdownloadingthereport.incontrasttootheranalystreportsrecommendinga“sell.”Asaresult,Adamisinvitedtoparticipateaninteractiveinternetchatroomdiscussionduringwhichsherecommendsa“buy”Byaccessingthismockexam,youagreetothefollowingtermsofuse:Thismockexamisprovidedtocurrently-registeredCFAcandidates.Candidatesmayviewandprinttheexamforpersonalexampreparationonly.Thefollowingactivitiesarestrictlyprohibitedandmayresultindisciplinaryand/orlegalaction:accessingorpermittingaccessbyanyoneotherthancurrently-registeredCFAcandidates;copying,postingtoanywebsite,emailing,distributingand/orreprintingthemockexamforanypurpose?2016CopyrightedbyCFAInstitute.AllrightsTranscontinentalandusestherestofthetimetoadvertiseAdamResearch.Onseveraloccasions,Adammentionsherwebsite’sURL.RecognizingtheneedtohavewrittenimplementationpoliciesbecauseAdamisnolongertheonlyonewritingresearchreports,shecreatespoliciesandprovidesthemtothenewemployeesbeforepostingthemontheAdamResearchwebsiteforclientstodownload.ThesepoliciesareprovidedinExhibit1.AdamResearchCompanyPoliciesand WhichofthefollowinginitialclaimsmadeonthehomepageofAdamResearch'swebsiteAccuracyofresearchreportsByaccessingthismockexam,youagreetothefollowingtermsofuse:Thismockexamisprovidedtocurrently-registeredCFAcandidates.Candidatesmayviewandprinttheexamforpersonalexampreparationonly.Thefollowingactivitiesarestrictlyprohibitedandmayresultindisciplinaryand/orlegalaction:accessingorpermittingaccessbyanyoneotherthancurrently-registeredCFAcandidates;copying,postingtoanywebsite,emailing,distributingand/orreprintingthemockexamforanypurpose?2016CopyrightedbyCFAInstitute.Allrights專業(yè)提供CFA/FRM各級全套視頻課程資料微信DocumentContentResearchObjectivityThisdocumentdescribestheprocessrequiredtodeterminewhetherthereisindependenceandobjectivityinthefirm’sresearch,withinstructionstomakethispolicyavailabletoallinvestorsandemployees.Procedurescitedincludesupervisoryprocedurestoensurecompliance,annualattestation,andadherencetointernalauditrequirements.Thisdocumentdescribescompliancepoliciesandprocedurestoensureresearchobjectivityandlistsallactivitiesconsideredtobeviolationsandtheresultingdisciplinarysanctions,includingdismissalfromthefirm.TradingPoliciesThisdocumentdescribesthepoliciesdesignedtomanagecoveredemployees’personalinvestmentsandtradingactivitiestoensuretheinterestsoftheclientsarealwaysplacedbeforethecompany,itsemployees,andtheirimmediatefamilies,includingprohibitionoffrontrunningandparticipationinsubjectcompanyIPOs.Inaddition,coveredpersonsarebannedfromtradingagainstthecompany’srecommendationsunlessforfinancialhardshipreasons.Alltradesmustbeapprovedinadvance.Answer=TheCFAInstituteResearchObjectivityStandardscannotAnswer=TheCFAInstituteResearchObjectivityStandardscannotensuretheaccuracyofresearchandrecommendations,contrarytothestatementmadebyAdam.Actualeventswilloftendifferfromforecastsonwhichinvestmentrecommendationsaremade.CFALevel“CFAInstituteResearchObjectivityAdamResearch'swebsitedisclosureregardingpotentialconflictsofinterestleastlikelytherecommendationsforcompliancewiththeCFAInstituteResearchObjectivityStandardsconcerningthe:Answer=ThedisclosuresgivenonthewebsiteareverybriefandarenotcomprehensiveorTheyalsoarenotdesignedtobeinformative,especiallyconcerningshareownershipofspecificcompanies,becausetheyrequireclientstocontactAdamfordisclosureconcerningsharepositions.Thedisclosurerecommendationsareverycomprehensive.CFALevel"CFAInstituteResearchObjectivityStandard10.0–Disclosures;RecommendedProceduresforWhichcategoryofAdamResearch'sstockratingsystemcouldmostlikelybeimprovedtoRecommendationInvestorTimeAnswer=Therecommendationratingcategoryusedisrelative,soabenchmark,index,orshouldbeclearlyidentified.AdamdoesnotspecifythebenchmarkCFALevel"CFAInstituteResearchObjectivityStandard11.0–RatingSystem;RecommendedProceduresforByaccessingthismockexam,youagreetothefollowingtermsofuse:Thismockexamisprovidedtocurrently-registeredCFAcandidates.Candidatesmayviewandprinttheexamforpersonalexampreparationonly.Thefollowingactivitiesarestrictlyprohibitedandmayresultindisciplinaryand/orlegalaction:accessingorpermittingaccessbyanyoneotherthancurrently-registeredCFAcandidates;copying,postingtoanywebsite,emailing,distributingand/orreprintingthemockexamforanypurpose?2016CopyrightedbyCFAInstitute.Allrights10.TheresearchreportonTranscontinentalmostlikely10.TheresearchreportonTranscontinentalmostlikelymeetsrecommendationsforwiththeCFAInstituteResearchObjectivityStandardswithregardreasonableandadequatetimelinessofresearchreportsandrecommendations.relationshipswithsubjectcompanies.Answer=AdamdisclosesherformerrelationshipwiththesubjectcompanyaswellashershareholdingtheCFALevel"CFAInstituteResearchObjectivityStandards"Standard6.0–RelationshipswithSubjectCompaniesDidAdam'sparticipationinaninteractiveinternetchatroomdiscussionmostlikelywithrecommendationsforcomplianceoftheCFAInstituteResearchObjectivityStandardsandStandardsofProfessionalConduct?No,becausesheistryingtomanipulatetheshareNo,becauseshedidnotmakesufficientAnswer=Adamfailedtomakesufficientdisclosuresbynotinformingtheaudienceofhershareholdingthesubjectcompany,asrequiredbytheCFAInstituteResearchObjectivityStandard2.0–PublicAppearances.Additionally,sheshouldhavedisclosedtotheaudiencewhetherawrittenresearchreportisavailable,theapproximatecost,andhowareadermightacquirethereport.CFALevel"CFAInstituteResearchObjectivityStandard2.0–PublicAppearances;RecommendedProceduresfor專業(yè)提供CFA/FRM各級全套視頻課程資料微信Byaccessingthismockexam,youagreetothefollowingtermsofuse:Thismockexamisprovidedtocurrently-registeredCFAcandidates.Candidatesmayviewandprinttheexamforpersonalexampreparationonly.Thefollowingactivitiesarestrictlyprohibitedandmayresultindisciplinaryand/orlegalaction:accessingorpermittingaccessbyanyoneotherthancurrently-registeredCFAcandidates;copying,postingtoanywebsite,emailing,distributingand/orreprintingthemockexamforanypurpose?2016CopyrightedbyCFAInstitute.Allrights12.WhichofAdam12.WhichofAdamResearch'smentionedcompanypoliciesandproceduresgiveninExhibit1ComplianceandPersonalInvestmentsandResearchAnswer=infullcompliancewiththeResearchObjectivityStandards,Adamwouldneedtoaddressallelevencomponentsofthestandardrequirements.CFALevel"CFAInstituteResearchObjectivityStandards"Standard9.0–ComplianceandEnforcementByaccessingthismockexam,youagreetothefollowingtermsofuse:Thismockexamisprovidedtocurrently-registeredCFAcandidates.Candidatesmayviewandprinttheexamforpersonalexampreparationonly.Thefollowingactivitiesarestrictlyprohibitedandmayresultindisciplinaryand/orlegalaction:accessingorpermittingaccessbyanyoneotherthancurrently-registeredCFAcandidates;copying,postingtoanywebsite,emailing,distributingand/orreprintingthemockexamforanypurpose?2016CopyrightedbyCFAInstitute.AllrightsEconomics–CharlesHollingsworthisaninvestmentstrategistatDrawbridgeAssetEconomics–CharlesHollingsworthisaninvestmentstrategistatDrawbridgeAssetPartners(Drawbridge),internationalinvestmentfirm.HeismeetingwithequityanalystAndrewGillibrandandfixed-incomeanalystElianaNavarrotodiscussnewinvestmentopportunitiesandtheeconomicfactorstheyshouldconsiderastheymaketheirinvestmentselections.Hollingsworthbeginsthemeetingwiththefollowing"Beforewelookatnewinvestmentopportunities,Iwanttoreviewsomepriortransactions.fewmonthsago,Drawbridgeenteredintoacarrytradeinasetofcurrencies.Thismorning,wewereunfortunatelyforcedtocloseoutthepositionatasizablelossasaresultofunexpectedmarketvolatility."Hollingsworth"Earlierintheyear,DrawbridgehedgedalongexposuretotheAustraliandollar(AUD)byAUD5millionforwardagainsttheUSdollar(USD);theall-inforwardpricewas0.8940(USD/AUD).Itisnowthreemonthspriortothesettlementdate,andIwanttomarktheforwardpositiontomarket."Exhibit1providesinformationaboutcurrentratesintheforeignexchangeOncompletionoftheagendaitemsrelatingtotheforeignexchangemarkets,Hollingsworthandteammoveontonewinvestmentopportunities.Theybeginwithadiscussionabouttherelationshipbetweeneconomicgrowthandtheperformanceofequityanddebtmarkets.Gillibrand:"Whenweconsiderourequityinvestmentsoverthelongterm,ourprimaryfocusshouldontherateofGDPgrowth.Forlongertimehorizons,changesinearningsandtheprice/earningsmultiplearerelativelylessimportantindeterminingappreciationinthestockmarket."Navarro:"Whenwelookatourfixed-incomeinvestments,weshouldkeepinmindthathigherratespotentialGDPgrowthwilltranslateintohigherrealinterestratesandhigherexpectedrealassetByaccessingthismockexam,youagreetothefollowingtermsofuse:Thismockexamisprovidedtocurrently-registeredCFAcandidates.Candidatesmayviewandprinttheexamforpersonalexampreparationonly.Thefollowingactivitiesarestrictlyprohibitedandmayresultindisciplinaryand/orlegalaction:accessingorpermittingaccessbyanyoneotherthancurrently-registeredCFAcandidates;copying,postingtoanywebsite,emailing,distributingand/orreprintingthemockexamforanypurpose?2016CopyrightedbyCFAInstitute.Allrights專業(yè)提供CFA/FRM各級全套視頻課程資料微信CurrentForeignExchangeSpotrateThree-month-36.8/-Three-monthLiborThree-monthLiborHollingsworth:"AnticipatingchangesinpotentialGDPcanbequitelucrativeforusbecauseHollingsworth:"AnticipatingchangesinpotentialGDPcanbequitelucrativeforusbecausecreditagenciesoftenusethegrowthofpotentialGDPasaninputinevaluatingsovereignrisk.Ingeneral,thereisaninverserelationshipbetweenestimatedpotentialGDPgrowthandcreditquality."TheeconomicgrowthprojectionsfortwoofthecountriesinwhichDrawbridgeisconsideringnewinvestmentsarepresentedinExhibit2.HollingsworthpreferstheSolowgrowthaccountingequationtocalculatepotentialGDPgrowthratherthanthemoresimplisticlaborproductivitygrowthaccountingequation.Theconversationthenturnstothetopicofconvergence.Navarrosays:"EventhoughCountryB'scapitagrowthisexpectedtoexceedthatofCountryAforsometime,accordingtotheneoclassicalmodel,eventuallybothcountrieswillexperiencethesamegrowthratebecausethemodelassumesallcountrieshaveaccesstothesametechnology."Althoughbothcountrieshadbelow-averagelevelsofpercapitaGDP50yearsago,overtime,thepercapitaGDPgrowthrateofCountryChasrisenrapidlyandfornearly20yearshasbeenwellaboveaverage.ThegrowthrateforCountryD,however,hasrisenmoreslowly.Today,CountryCranksamongtheadvancedeconomieswhereasCountryDremainsadevelopingnation.Byaccessingthismockexam,youagreetothefollowingtermsofuse:Thismockexamisprovidedtocurrently-registeredCFAcandidates.Candidatesmayviewandprinttheexamforpersonalexampreparationonly.Thefollowingactivitiesarestrictlyprohibitedandmayresultindisciplinaryand/orlegalaction:accessingorpermittingaccessbyanyoneotherthancurrently-registeredCFAcandidates;copying,postingtoanywebsite,emailing,distributingand/orreprintingthemockexamforanypurpose?2016CopyrightedbyCFAInstitute.AllrightsLong-TermGrowthInflationRateGrowthinTotalofCapitalCapital(%)Labor(%)13.TheprimaryfactorthatwasmostlikelythecauseofDrawbridge'soutcomein13.TheprimaryfactorthatwasmostlikelythecauseofDrawbridge'soutcomeinitscarryflighttostop-lossAnswer=Theprimaryreasonforcrashrisksisrelatedtothefactthatcarrytradesareleveraged:Theyieldcurrencyisborrowed,withproceedsinvestedinthehigh-yieldcurrency.Theleveragemagnifiestheeffectoflossesandgainsrelativetotheinvestors'equitybase.Inlow-volatilitymarkets,investorscanbecomecomplacentandallowpositionstogrowlargeinasearchforyield.Thiscrowdedpositioningtendstounwindrapidlywhenamarketshockoccursbecausemanytraderstrytoexittheirpositionsalmostsimultaneouslybeforetheleverageeffectswipeouttheirequity.Stop-lossordersaretriggered,andgiventhemarketuncertainty,thereisaflighttosafetythatfurtherincreasesdemandforthelow-yieldcurrency.CFALevel"CurrencyExchangeRates:DeterminationandForecasting,"MichaelR.RosenbergandA.BarkerAnswer=Byaccessingthismockexam,youagreetothefollowingtermsofuse:Thismockexamisprovidedtocurrently-registeredCFAcandidates.Candidatesmayviewandprinttheexamforpersonalexampreparationonly.Thefollowingactivitiesarestrictlyprohibitedandmayresultindisciplinaryand/orlegalaction:accessingorpermittingaccessbyanyoneotherthancurrently-registeredCFAcandidates;copying,postingtoanywebsite,emailing,distributingand/orreprintingthemockexamforanypurpose?2016CopyrightedbyCFAInstitute.AllrightsRealPerCapitaGDP50YearsGDP/CapitaPast50YearsCFALevel"CurrencyExchangeRates:DeterminationandCFALevel"CurrencyExchangeRates:DeterminationandForecasting,"MichaelR.RosenbergandA.BarkerWhichofthestatementsabouteconomicgrowthandtheperformanceofequityandmarketsistheleastAnswer=Thereisadirectrelationship,notanindirectone,betweenestimatedpotentialGDPgrowthcreditquality:Highergrowthleadstohigherquality—thatis,animprovementinthelikelihoodofpromisedcashflowsoccurring.CFALevel"EconomicGrowthandtheInvestmentDecision,"PaulKutasovicSection3Based