CFM Financial Markets & Economic Indicators 3

Question 1

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?

Accepted Answer

Unemployment Rate

Answer

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.

Question 2

In foreign exchange markets, a country's currency appreciates when:

Accepted Answer

Its interest rates rise relative to trading partners

Answer

Higher domestic interest rates attract foreign capital seeking better returns, increasing demand for the domestic currency and causing appreciation.

Question 3

What is the primary purpose of the Securities and Exchange Commission (SEC) in US financial markets?

Accepted Answer

Protecting investors and maintaining fair, orderly markets

Answer

The SEC's mission is to protect investors, maintain fair and orderly markets, and facilitate capital formation through enforcement of securities laws.

Question 4

Which term describes the risk that a counterparty in a financial transaction will fail to fulfill its contractual obligations?

Accepted Answer

Counterparty risk

Answer

Counterparty risk (also called credit risk) is the probability that the other party in a financial contract defaults on their payment or delivery obligations.

Question 5

When the US dollar strengthens against foreign currencies, what is the typical impact on US multinational corporations?

Accepted Answer

Foreign revenues translate to fewer dollars

Answer

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.

(CFM) Certified Fund Manager Practice Test

(CFM) Certified Fund Manager Practice Test

CFM Financial Markets & Economic Indicators 3