Economic & Financial Flashcards
6 cards from real RIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Economic & Financial flashcards as text
Which measure of money supply includes currency in circulation plus demand deposits?
Answer: M1
M1 includes the most liquid assets: currency in circulation and demand deposits (checking accounts).
A bond trading at a premium means:
Answer: Its coupon rate is above the current market rate
A bond trades at a premium when its coupon rate exceeds the prevailing market interest rate.
Duration measures a bond's:
Answer: Sensitivity to interest rate changes
Duration measures a bond's price sensitivity to changes in interest rates.
The Capital Asset Pricing Model (CAPM) calculates expected return using:
Answer: Risk-free rate plus beta times market risk premium
CAPM: Expected Return = Risk-Free Rate + Beta × (Market Return - Risk-Free Rate).
Which of the following best describes deflation?
Answer: A sustained decline in overall price levels
Deflation is a sustained, broad decrease in the general price level of goods and services.
The Sharpe ratio measures:
Answer: Return per unit of total risk
The Sharpe ratio calculates excess return (over risk-free rate) per unit of standard deviation (total risk).
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