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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

  1. Which leading economic indicator measures the number of new building permits issued for private housing units?

    Answer: Building permits

    Building permits are a leading indicator because they precede actual construction activity, signaling future economic output and employment in the construction sector.

  2. What is the relationship between a bond's duration and its price sensitivity to interest rate changes?

    Answer: Higher duration means higher price sensitivity

    Duration measures a bond's price sensitivity to interest rate changes; a higher duration indicates greater price volatility for a given change in interest rates.

  3. Which market condition describes a situation where asset prices rise 20% or more from a recent low?

    Answer: Bull market

    A bull market is conventionally defined as a sustained rise of 20% or more in asset prices from a recent trough, reflecting investor optimism and economic expansion.

  4. Which economic concept describes the additional output generated by employing one more unit of a factor of production?

    Answer: Marginal product

    Marginal product measures the change in total output resulting from a one-unit increase in a variable input while holding all other inputs constant.

  5. In the US Treasury market, which security has the longest maturity at issuance?

    Answer: Treasury Bonds (T-Bonds)

    Treasury Bonds are issued with maturities of 20 or 30 years, making them the longest-maturity conventional US government securities.

  6. What does the VIX index primarily measure?

    Answer: Expected volatility of S&P 500 over the next 30 days

    The VIX (CBOE Volatility Index) derives expected 30-day volatility from S&P 500 options prices, earning its nickname as the 'fear gauge' of financial markets.

  7. Which type of economic indicator typically changes direction before the overall economy turns?

    Answer: Leading indicators

    Leading indicators, such as building permits and stock market returns, tend to change direction before the overall economy, making them useful for forecasting future economic activity.