CFM Financial Markets & Economic Indicators 4

Question 1

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

Accepted Answer

Building permits

Answer

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

Question 2

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

Accepted Answer

Higher duration means higher price sensitivity

Answer

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.

Question 3

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

Accepted Answer

Bull market

Answer

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.

Question 4

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

Accepted Answer

Marginal product

Answer

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

Question 5

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

Accepted Answer

Treasury Bonds (T-Bonds)

Answer

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

(CFM) Certified Fund Manager Practice Test

(CFM) Certified Fund Manager Practice Test

CFM Financial Markets & Economic Indicators 4