CMA Economic & Financial Analysis 3

Question 1

Which of the following best describes the concept of 'purchasing power parity' (PPP)?

Accepted Answer

Exchange rates adjust so identical goods cost the same across countries

Answer

PPP holds that exchange rates should adjust until the same basket of goods costs the same amount in different countries when priced in a common currency.

Question 2

An analyst calculates a company's EV/EBITDA multiple as significantly lower than its industry peers. All else equal, this suggests the company may be:

Accepted Answer

Undervalued relative to peers

Answer

A lower EV/EBITDA multiple than peers suggests the market is paying less per dollar of operating earnings, indicating potential undervaluation.

Question 3

Which type of unemployment is MOST associated with structural changes in the economy, such as automation replacing workers?

Accepted Answer

Structural unemployment

Answer

Structural unemployment results from a mismatch between workers' skills and the needs of the economy, often driven by technological change or industry shifts.

Question 4

A bond with a 5% coupon is trading at a premium. What can be inferred about the relationship between the coupon rate and the yield to maturity?

Accepted Answer

Coupon rate is greater than YTM

Answer

When a bond trades at a premium (above par), its coupon rate exceeds the YTM because investors are willing to pay more than face value for above-market income.

Question 5

The Gini coefficient is used to measure:

Accepted Answer

Income inequality within a population

Answer

The Gini coefficient ranges from 0 (perfect equality) to 1 (perfect inequality), serving as a standard measure of income or wealth distribution.

(CMA) Certified Market Analyst Practice Test

(CMA) Certified Market Analyst Practice Test

CMA Economic & Financial Analysis 3