What to know
Identify the rule, formula, or decision criterion before reading the answer choices. CFA Level I distractors often use the right vocabulary with the wrong condition.
Quantitative Methods
Rates and Returns practice questions
Rates and Returns is part of CFA Level I Quantitative Methods. Quantitative Methods questions emphasize time value of money, probability, sampling, hypothesis testing, regression, and return statistics. Use this page to review the controlling ideas, then work through 10 questions with answer explanations and common traps.
Review the worked explanations before moving into adaptive practice. The app version can mix this topic with due reviews and weak related concepts.
Practice this topicHow to practice
Work each item under time pressure, then compare your reasoning with the step-by-step explanation and key takeaway.
Review signal
Missed questions should become scheduled reviews when the error comes from a concept gap, formula setup, or answer-choice trap.
Quantitative Methods
Rates and Returns
An interest rate used by an investor to discount an expected cash flow is best described as a:
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Rates and Returns
For a series of annual returns, the geometric mean return is most appropriate for measuring:
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Rates and Returns
A holding period return of 6.18% is closest to a continuously compounded return of:
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Rates and Returns
A share is purchased for 40, pays a dividend of 1 during the year, and is sold for 43 at year-end. The holding period return is closest to:
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Rates and Returns
A fund earns -5%, 12%, and 8% over three consecutive years. Its annualized compound return is closest to:
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Rates and Returns
An investment requires an outflow of 1,000 today and pays 500 at the end of year 1 and 700 at the end of year 2. The money-weighted rate of return is closest to:
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Rates and Returns
A portfolio starts with 100. At midyear, before an external contribution of 50, the portfolio value is 110. At year-end, the portfolio value is 192. The time-weighted rate of return is closest to:
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Rates and Returns
A portfolio earns a nominal return of 8.50% when inflation is 3.20%. The real return is closest to:
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Rates and Returns
A fund reports a 10.00% gross return before a 1.00% management fee charged on ending assets. The net return is closest to:
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Rates and Returns
An investor buys a fund at 42.00, receives a 0.70 distribution, and sells 195 days later at 44.10. Using a 365-day year, the annualized effective holding period return is closest to:
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