Financial Markets & Economic Indicators Flashcards
7 cards from real CFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Markets & Economic Indicators flashcards as text
Which economic indicator is released monthly by the Bureau of Labor Statistics and measures the percentage of the labor force that is unemployed and actively seeking work?
Answer: Unemployment Rate
The unemployment rate, published in the BLS monthly Employment Situation report, measures the fraction of the labor force without jobs but actively searching for employment.
In foreign exchange markets, a country's currency appreciates when:
Answer: Its interest rates rise relative to trading partners
Higher domestic interest rates attract foreign capital seeking better returns, increasing demand for the domestic currency and causing appreciation.
What is the primary purpose of the Securities and Exchange Commission (SEC) in US financial markets?
Answer: Protecting investors and maintaining fair, orderly markets
The SEC's mission is to protect investors, maintain fair and orderly markets, and facilitate capital formation through enforcement of securities laws.
Which term describes the risk that a counterparty in a financial transaction will fail to fulfill its contractual obligations?
Answer: Counterparty risk
Counterparty risk (also called credit risk) is the probability that the other party in a financial contract defaults on their payment or delivery obligations.
When the US dollar strengthens against foreign currencies, what is the typical impact on US multinational corporations?
Answer: Foreign revenues translate to fewer dollars
A stronger dollar reduces the dollar value of foreign-currency revenues when repatriated, negatively impacting the reported earnings of US multinationals with significant overseas operations.
Which measure represents the total market value of all goods and services produced within a country's borders in a given period?
Answer: Gross Domestic Product (GDP)
GDP measures economic output within a country's geographic borders regardless of producer nationality, distinguishing it from GNP which measures output by a country's nationals.
In equity markets, what is the significance of the 'ex-dividend date'?
Answer: The date after which new buyers are not entitled to the declared dividend
On and after the ex-dividend date, a stock trades without the value of its next dividend payment; buyers on or after this date do not receive the declared dividend.