Practice Test Geeks(CBE) Certified Business Economist Practice Test
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CBE Financial Markets and Instruments Flashcards

6 cards from real CBE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 CBE Financial Markets and Instruments flashcards as text

  1. Which financial market instrument represents a short-term debt obligation issued by the U.S. Treasury with a maturity of one year or less?

    Answer: Treasury bill

    Treasury bills (T-bills) are short-term U.S. government debt instruments with maturities of 4, 8, 13, 26, or 52 weeks.

  2. The yield curve is considered 'inverted' when:

    Answer: Short-term rates are higher than long-term rates

    An inverted yield curve occurs when short-term interest rates exceed long-term rates, which has historically preceded U.S. recessions.

  3. A bond trading at a price below its par value is said to be trading at a:

    Answer: Discount

    A bond trades at a discount when its coupon rate is lower than prevailing market interest rates, causing its price to fall below par.

  4. Which of the following best describes a derivative financial instrument?

    Answer: A contract whose value is derived from an underlying asset

    Derivatives are financial contracts whose value depends on the price of an underlying asset such as stocks, bonds, commodities, or currencies.

  5. The primary market in finance refers to:

    Answer: Where new securities are issued for the first time to raise capital

    The primary market is where companies and governments issue new securities directly to investors, such as through an IPO or bond issuance.

  6. Which measure represents the sensitivity of a bond's price to changes in interest rates?

    Answer: Duration

    Duration measures the weighted average time to receive a bond's cash flows and approximates the percentage price change for a 1% change in interest rates.