CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

An investor can choose to invest in T-bills paying 5% or a risky portfolio with an end-of-year expected cash flow of $132,000. If the investor requires a risk premium of 5%, what would she be willing to pay for the risky portfolio?
A. $108,000
B. $120,000
C. $145,000
Explanation: 132,000/(1+5%+5%) = 120,000

User Contributed Comments 3

User Comment
ksnider you can calculate it with a PV on the calculator
dipu617 FV = 132000
I/Y = 10% (risk premium + risk-free rate)
N = 1
[CPT]
PV = 120,000
lastduke ...just divide 132/1.1
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