BLOOMBERG MARKET CERTIFICATE REVIEW QUESTIONS 2020 | MARKET CERTIFICATE REVIEW QUESTIONS_Graded A

BLOOMBERG MARKET CERTIFICATE REVIEW QUESTIONS 2020 What does the Big Mac index show? a) How the law of one price is true of consumer products b) How currencies may be overvalued or undervalued c) How interest rates and inflation affect trade d) How The Economist magazine estimates inflation Which of these headlines could move a currency pair a) U.S. Stocks Rally on Fed’s Surprise Reduction of Interest Rate b) Railroad Rate Hikes Drive Dichotomy of Necessary c) Hong Kong ‘Firmly Committed’ to Dollar Peg, John Tsang Says d) Grade Inflation: Devaluing B-Schools’ Currency What is the most common target inflation rate for an advanced economy? a) 1% b) 2% c) 3% d) 0% What was the primary goal of Abenomics? a) To reduce inflation by increasing unemployment b) To reign in GDP by reducing business confidence c) To halt the vicious cycle of deflationd) To strengthen the yen to foster consumption of luxury goods Were the two oil crises in the 1970s linked to deflation or inflation? a) Deflation b) Inflation c) Both d) Neither On June 23, 2016, the UK voted to leave the European Union. The white line shows the UK’s main equity index, the FTSE 100, from the start of 2016 to the date on which the UK government notified the European Union of its intent to buy one pound sterling. The Uk is a net importer, meaning the value of imports exceedsthe value of exports. We can be reasonabky surmised from the chart about large UK corporations? a) Their CEOs probably voted toremain in the E.U. b) Their CEOs probably voted to leave the E.U. c) They are probably heavy exporters d) They are probably heavy Importers In early 2016, the same Germany machinery company has interest from four prospective clients from engineering markets: Indonesia, Brazil, Russia, and South Africa. They all want to buy ten machines, but the factory can only produce ten in time. Therefore, the company has to choose only one client. Given the volatility of the domestic currencies of the four prospective clients, the CEO would like tochoose the client which is least likely to cancel the order due to currency volatility. The invoice comes due on June 30, 2016. According to historical currency volatility alone, which prospective client would be least likely to cancel the order (see chart 1)? a) Indonesia b) Brazil c) Russia d) South Africa Imagine you are a Dutch diamond dealer who sources diamonds from South Africa. […] You check the forward rates on offer on the Bloomberg FRD function. You have two options. Exchange euros today at today’s exchange rate to pay him on million rands now, or lock in a forward agreement to convert euros to one million rands in one year’s time and share the forward agreement with him. If you were to do the forward instead of exchanging euros for rands today, approximately how much more or less would you end up with in a year? (see chart 2) a) EUR 4,717 more b) EUR 4,717 fewer c) ZAR 4,717 more d) ZAR 4,717 fewer Legendary investor Warren Buffet said: “Gold gets dug out of the ground…. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyonewatching from Mars would be scratching their head.” Based on this quotation, what quality of gold is he referring to? a) Its durability b) Its scarcity c) Its physical attractiveness d) Its storage costs Here is a chart showing both nominal GDP growth and real GDP growth for a country. Which of the following can be a true statement at the time the chart was captured? a) The country has inflation. The top line is nominal growth and the bottom line is real growth. b) The country has inflation. The bottom line is nominal growth and the top line is real growth. c) The country has deflation. The top line is nominal growth and the bottom line is real growth. d) The country has deflation. The bottom line is nominal growth and the top line is real growth. Which of the following lines is the best leading economic indicator? a) PMI b) Nonfarm payrolls c) Real GDP growth d) U.S. auto sales The “misery index” is often cited in the media as a way to measure consumer pain. It is defined as the inflation rate plus theunemployment rate. Identify the country with the highest “misery index.” a) Argentina b) India c) France d) Italy What tipically happens to nonfarm payrolls, the PMI indicator, and housing starts at the onset of a recession in the United States? a) Nonfarm payrolls go UP, the PMI indicator goes DOWN, the housing starts goes DOWN b) Nonfarm payrolls go DOWN, the PMI indicator goes DOWN, the housing starts goes DOWN c) Nonfarm payrolls go DOWN, the PMI indicator goes UP, the housing starts goes UP d) Nonfarm payrolls go UP, the PMI indicator goes UP, the housing starts goes UP Which of the following qualities of economic indicators do investors prize the most? a) Rigor b) Sample size c) Timeliness of release d) Government sponsorship Why is the release of GDP statistics less interesting to investors than the release of other economic indicators?a) Because governments consistently alter their GDP measurement methods b) Because the formula for GDP includes not only private investment but also other irrelevant factors c) Because GDP is not official government data d) Because GDP statistics are released well after other economic indicators Which of the following important U.S. economic indicators is only available on a quarterly basis? a) Nonfarm payrolls b) CPI c) GDP d) PMI Which economic indicator is most directly linked to unemployment? a) Nonfarm payrolls b) CPI c) GDP d) PMI These charts show data for four countries as of early 2016. For each country, the purple line denotes historic real GDP growth. The white line denotes the consensus estimated real GDP growth. The red line denotes the most pessimistic analyst forecast. The green line denotes the most optimistic analyst forecast. For which country is the mostcontroversy among the analyst community about 2016 growth? (see chart 3) a) Albania b) Dominican Republic c) Russia d) Germany What is the main reason that investment banks create estimates of economic indicators? a) To determine in which countries the banks should operate b) To increase real GDP growth by exporting their intellectual property to foreign investors c) To hold governments accountable for management of their economies d) To know when specific economic data points are a positive or negative surprise Which of the following is the biggest pitfall of economic indicators? a) They do not take into account seasonality b) They are not sufficiently timely to make investment decisions c) They only serve as proxies for economic activities d) They do not consistently presage turning points Here is a chart displaying estimates of the initial jobless claims indicator, one of the main unemployment statistics in the US. It measures the number of new applicants for unemployment benefits.What was the level of the analyst with the most optimistic outlook? (see chart 4) a) 260 b) 274 c) 277 d) 290 Which of the following countries represent 1.3% of total activity traded US debt? (see chart 5) a) Taiwan b) Canada c) Russia d) India What quality of US government bonds causes investors to buy them when market volatility rises? a) US government bonds are denominated in dollars b) US government bonds are stored in bank vaults c) US government bonds are underwritten by global taxpayers d) US government bonds are considered low risk? Why does the US have a strong reputation for creditworthiness? a) Because no country has a many taxable states as the United Statesb) Because America’s wealth means that it does not have to borrow c) Because it has the right to tax the wealthiest population on earth d) Because dollars are backed by the gold at Fort Knox What is one reason why foreign governments lend to the US government? a) To enhance diplomatic relations b) To build liquid FX reserves c) To benefit from the price and yield going up d) To pay for the US budget deficit What does one yellow bar depict in this debt distribution diagram? (see chart 6) a) Coupon repayment b) Principal repayment c) Yield repayment d) Distribution repayment Which one of the following actors benefits when interest rates go up? a) A company with a fixed-rate loan? b) A company about to secure a fixed-rate loan? c) An investor who already owns bonds d) An investor who is about to buy bonds Which percentage of GDP represented by government debt is an indicator that yields will spike? a) 50%b) 90% c) 150% d) There is no general rule What is true of both the UK and the US? a) Both countries print world reserve currencies b) Both countries are highly creditworthy c) Both currencies are used equally in the world FX markets d) Both countries are heavily reliant on long-term borrowing Which would you prefer? a) A 3% annual yield on an investment in 10-year US government bonds? b) A 4% annual yield on a credit risk-free 10-y government bond from the mythical country of Utopia c) A 2% annual yield on an investment in 10-y US government bonds d) A 3% annual yield on a credit risk-free government bond from the mythical country of Utopia. Which would you prefer? a) A 5% annual yield on an investment in 10-y US government bonds b) A 3% annual yield on a risk-free 10-y government bond from the mythical country of Utopia c) A 4% annual yield on an investment in 10-y US government bonds d) A 2% annual yield on a risk-free 10-y government bond from the mythical country of UtopiaWhat is the primary reason for US government bond yields to ripple through the bond market? a) Bond prices move in lockstep in order for the yields to match government bond yields b) The large government bond market competes for investors’ attention via yields c) All governments mandate interest rates as part of their economic policy d) Non-government borrowers are slightly less safe and therefore must offer slightly lower yields A rise in which of the following measures would typically send a government bond price up? a) Creditworthiness b) Inflation c) Interest rates d) Government borrowing Which of the countries shown makes the greatest relative use of short-term government financing? (see chart 7) a) Australia b) Switzerland c) Norway d) Germany - - - - - - -- Continued