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Free CFA Quantitative Methods Practice Questions & Answers

309 exam-style Quantitative Methods questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.

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Question 1

Which of the following is an example of a multiple regression equation?

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Question 2

Multicollinearity occurs when:

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Question 3

Which of the following best defines an interest rate (or yield)?

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Question 4

Which of the following statements best describes one of the three ways interest rates can be interpreted?

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Question 5

Which of the following best defines opportunity cost in the context of interest rates?

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Question 6

Which of the following best describes the components that make up a nominal interest rate?

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Question 7

Which of the following best describes the real risk‑free interest rate?

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Question 8

The inflation premium in an interest rate primarily compensates investors for?

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Question 9

Which of the following best describes the liquidity premium?

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Question 10

The maturity premium compensates investors for which type of risk?

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Question 11

A corporate bond is trading at a yield of 7.2%. The real risk-free rate is 1.0%, expected inflation is 2.5%, and the bond carries premiums for default risk, liquidity risk, and maturity risk. Which of the following most accurately explains what the additional premiums beyond the real risk-free rate and inflation premium represent?

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Question 12

Which component of an interest rate compensates investors for expected changes in purchasing power?

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Question 13

The real risk-free rate is best described as the return:

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Question 14

A bond with high sensitivity to interest-rate changes must have a high:

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Question 15

Which premium is most likely zero for U.S. Treasury bills?

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Question 16

A corporate bond trades infrequently and has a wide bid-ask spread. Which premium is most affected?

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Question 17

The default risk premium is most closely related to:

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Question 18

If expected inflation increases, which component of the nominal rate must increase?

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Question 19

A long-term bond will generally have a higher yield than a short-term bond primarily because of:

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Question 20

Which component of interest rates is most likely identical for all borrowers in the same currency?

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Question 21

A bond’s yield increases because the issuer’s credit rating was downgraded. Which component increased?

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Question 22

Which premium compensates investors for the risk of selling below fair value?

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Question 23

A nominal interest rate of 9% includes a real risk-free rate of 2%, inflation premium of 3%, and liquidity premium of 1%. The remaining 3% most likely represents:

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Question 24

Which of the following is most likely to increase the liquidity premium of a bond?

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Question 25

The inflation premium is most closely related to:

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Question 26

A bond with a long maturity and poor liquidity will likely have:

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Question 27

Which component of interest rates compensates for the pure time value of money?

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Question 28

A bond’s yield rises because investors expect higher inflation. Which component changed?

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Question 29

Which premium is most likely to vary with the issuer’s financial health?

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Question 30

A bond with a short maturity but high credit risk will have a high:

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Free CFA Quantitative Methods Practice Questions & Answers

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