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Market Analysis

Terms in this set (25)

Which index is the narrowest measure of the market?
A
Wilshire Index
B
Value Line Index
C
NYSE Composite Index
D
Dow Jones Industrial Average
D
Dow Jones Industrial Avgerage
A balance of payments deficit would be narrowed by which of the following?
I Decreased levels of U.S. imports
II Increased sales of U.S. securities to foreign holders
III Increased levels of foreign tourists visiting the United States
IV Increased dividends paid to foreign holders of U.S. securities
I, II, III

I Decreased levels of U.S. imports
II Increased sales of U.S. securities to foreign holders
III Increased levels of foreign tourists visiting the United States
A balance of payments deficit would be widened by which of the following?
I Increased levels of U.S. imports
II Decreased sales of U.S. securities to foreign holders
III Decreased levels of foreign tourists visiting the United States
IV Decreased dividends paid to foreign holders of U.S. securities
I, II, III

I Increased levels of U.S. imports
II Decreased sales of U.S. securities to foreign holders
III Decreased levels of foreign tourists visiting the United States
If the U.S. economy runs balance of trade surpluses, which of the following statements are TRUE?
I U.S. currency values will increase relative to that of foreign countries
II U.S. currency values will decrease relative to that of foreign countries
III U.S. exports should become more expensive to foreign countries
IV U.S. exports should become less expensive to foreign countries
I and III

If our economy consistently runs balance of trade surpluses, then the country is becoming "richer" and its currency value increases relative to that of foreign countries. As the currency value increases, exports become more expensive to foreign countries, so exports decline and the surplus should dissipate over time.
Trading of Swiss francs takes place on the:
A
New York Stock Exchange
B
Over-the-Counter Market
C
Interbank Market
D
C
Interbank Market
All of the following statements are true about the interbank market EXCEPT the market:
A
is unregulated
B
responds to central bank intervention
C
is located in New York City
D
operates 24 hours a day
C
is located in New York City

The interbank market trades foreign currencies across the globe, 24 hours a day. The market is unregulated and responds to central bank buying and selling of currencies.
Review
Trading in the Interbank market will DIRECTLY affect:
I American Depositary Receipt prices in terms of U.S. dollars
II Foreign Currency prices in terms of U.S. dollars
III Future trade deficit or surplus figures
IV Future economic growth
II, III, IV

II Foreign Currency prices in terms of U.S. dollars
III Future trade deficit or surplus figures
IV Future economic growth
Trading in the Interbank market will affect:
I foreign currency prices in terms of U.S. dollars
II future trade deficit or surplus figures
III future economic growth
IV future inflation levels
I, II, III
Trading in the Interbank market will affect all of the following directly EXCEPT:
A
foreign currency prices in terms of U.S. dollars
B
American Depositary Receipt prices in terms of U.S. dollars
C
future economic growth
D
future trade deficit or surplus figures
B
American Depositary Receipt prices in terms of U.S. dollars
Trades of foreign currencies in the interbank market settle:
I Spot
II Cash
III Forward
IV Future
I and III
Speculators in foreign currencies would NOT be subject to which of the following risks?
A
interest rate risk
B
exchange rate risk
C
market risk
D
political risk
A
interest rate risk
The Federal Reserve Bank has made a policy decision to try to strengthen the U.S. Dollar versus the Japanese Yen. Which of the following intervention actions would increase the U.S. Dollar's exchange value?
I Buy U.S. Dollars
II Sell U.S. Dollars
III Buy Japanese Yen
IV Sell Japanese Yen
I and IV
All of the following actions are likely to cause the value of the U.S. Dollar to decline EXCEPT:
A
the Federal Reserve lowers the discount rate
B
U.S. trade is running a widening trade deficit with foreign nations
C
United States investors are making large purchases of foreign securities
D
foreign investors are making large purchases of U.S. securities
Review
D
foreign investors are making large purchases of U.S. securities
If the dollar appreciates against foreign currencies, which of the following statements are TRUE?
I Foreign currencies buy fewer dollars
II U.S. exports are likely to rise
III Foreign imports are likely to rise
IV Foreign goods are more expensive in the U.S.
I and II only
If the dollar falls against foreign currencies, all of the following statements are true EXCEPT:
A
U.S. goods are cheaper to foreign countries
B
U.S. exports are likely to rise
C
foreign currencies buy fewer dollars
D
foreign imports are likely to fall
C
foreign currencies buy fewer dollars

If the dollar falls, U.S. goods become cheaper to foreigners and foreign goods become more expensive in the U.S. Thus, exports are likely to rise and imports are likely to fall. Since the dollar is cheaper, foreign currencies buy more dollars and/or goods.
If the dollar falls against foreign currencies, which of the following statements are TRUE?
I Foreign currencies buy more dollars
II U.S. exports are likely to rise
III Foreign imports are likely to fall
IV Foreign goods are more expensive in the U.S.
ALL the ABOVE
An investor has purchased shares of an international bond fund. The fund will have inferior performance if the value of the:
I U.S. Dollar increases
II U.S. Dollar decreases
III foreign currency increases
IV foreign currency decreases
I and IV

An international bond fund will have securities that are denominated in foreign currencies. If the foreign currency value falls against the dollar, then when the fund's NAV is converted into dollars, proportionately fewer dollars will be created, since each unit of foreign currency buys less dollars. Similarly, if the U.S. Dollar rises against the foreign currency, when the fund's NAV is converted into dollars, proportionately fewer dollars will be created, since each unit of foreign currency buys fewer dollars.
Based solely upon fluctuations in foreign currency exchange rates, the net asset value per share, valued in U.S. dollars, of an "international" bond mutual fund, would increase if:
I the value of the U.S. dollar increases
II the value of the U.S. dollar decreases
III interest rates increase in the United States
IV interest rates increase in foreign countries
II and IV
An investor holds an international bond fund. Regarding the performance of the fund, which of the following statements are TRUE?
I If the foreign currency value rises against the dollar, the fund's Net Asset Value will increase
II If the foreign currency value rises against the dollar, the fund's Net Asset Value will decrease
III If the dollar falls against the foreign currency, the fund will have an inferior performance relative to dollar denominated funds
IV If the dollar falls against the foreign currency, the fund will have a superior performance relative to dollar denominated funds
I and IV
Which of the following economic events would have a negative long term impact on common stock prices?
I Rising interest rates
II Rising capital gains tax rates
III Rising employment rates
IV Rising inflation rates
I, II, IV
A customer viewing virtual trading floor information on the NYSE Website notices that he can see most, but not all, of the stocks included in the Dow Jones Industrial Average, trading on the floor. The customer asks his registered representative why this is the case. The customer should be told that:
A
Of the 30 stocks included in a Dow Jones Industrial Average, a handful do not trade on the NYSE
B
The NYSE only includes the most actively traded Dow Jones Industrial Average stocks in the display
C
These are the companies that have not paid the NYSE to be included in the display
D
The companies that are not displayed have just announced significant news and trading has been halted in those issues until the news is disseminated
A
Of the 30 stocks included in a Dow Jones Industrial Average, a handful do not trade on the NYSE
The largest component of the Dow Jones Averages is:
A
banking and finance
B
transportations
C
utilities
D
industrials
D
industrials
The largest component of the Standard and Poor's 500 Average is the:
A
utilities
B
technology
C
consumer staples
D
industrials
B
Technology
Which of the following indexes is the broadest measure of the market?
A
Value Line Index
B
New York Stock Exchange Composite Index
C
Wilshire Index
D
Standard and Poor's Composite Index
c
Wilshire Index
An investment strategy that apportions investments into different types of securities with different risk/return characteristics is called:

A
dollar cost averaging
B
diversification
C
laddering
D
capital preservation
Review
B
Diversification
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