Economic Factors and Business Information Flashcards
6 cards from real Series 65 – Uniform Investment Adviser Law Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Economic Factors and Business Information flashcards as text
Which economic indicator is considered a leading indicator of future economic activity?
Answer: Building permits
Building permits are a leading indicator because they signal future construction and economic expansion before it occurs.
When the Federal Reserve raises the federal funds rate, what is the typical effect on bond prices?
Answer: Bond prices fall
When interest rates rise, existing bond prices fall because new bonds offer higher yields, making older bonds less attractive.
Which phase of the business cycle is characterized by rising GDP, falling unemployment, and increasing consumer spending?
Answer: Expansion
The expansion phase features rising economic output, decreasing unemployment, and increased consumer and business spending.
What does a yield curve inversion typically signal?
Answer: A potential recession
An inverted yield curve, where short-term rates exceed long-term rates, has historically been a reliable predictor of recession.
Which of the following best describes the Consumer Price Index (CPI)?
Answer: A measure of changes in the price of a basket of consumer goods and services
The CPI tracks the average change over time in the prices paid by urban consumers for a representative basket of goods and services.
What is the formula for calculating a company's price-to-earnings (P/E) ratio?
Answer: Market price per share divided by earnings per share
The P/E ratio is calculated by dividing the market price per share by the earnings per share, reflecting how much investors pay per dollar of earnings.