Bloomberg Market Concepts with perfect solution rated A+ Latest
edition 2024
1. "New news" moves markets. Accordingly, the economic indicators that heralds "new news" are of
the most value to traders and investors.
timeliness of release. Correct answer
2. GDP statistics are typically released by the government a month or more after the period in
question, by which point dozens of other indicators have been released.
Because GDP statistics are released well after other economic indicators. Correct answer
3. Nonfarm payrolls, CPI and PMI are published monthly. GDP is only published on a quarterly basis.
GDP. Correct answer
4. Which economic indicator is most directly linked to unemployment?
nonfarm payrolls. Correct answer
5. What is the main reason that investment banks create estimates of economic indicators?
to know when specific economic data points are a positive or negative surprise. Correct answer
6. Which of the following is the biggest pitfall of economic indicators?
1. they do not take into account seasonality
2, they are not sufficiently timely to make investment decisions
3. they only serve as proxys for economic activity
4. they do not consistently presage turning points
4. they do not consistently presage turning points. Correct answer
7. In 1994, the Mexican peso declined against the US dollar by 37% during the so-called Tequila Crisis.
What exacerbating factor did Mexico's Tequila Crisis have in common with the Argentine crisis of 2002?
both countries had large dollar-denominated debts. Correct answer
8. What are 3 examples of failed pegs?
Correct answer
1. British sterling against the Deutsch mark in 1992
2. Mexican peso against the US dollar in 1994
3. Argentine peso against the US dollar in 2002
9.
What is an example of a failed peg?
Hong Kong dollar aginst the US dollar in 1997. Correct answer
10. Currency market mechanics summary:
Correct answer
-the US dollar equivilent of 5T of currencies are traded every day
-1971 marked the dawn of the modern currency market
-several contries peg their currencies to other currencies
-locked exchange rates are not actually set in stone but are government aspirations
-floating currencies move against one another in a matrix
-the US dollar is the world's reserve currency and is the most heavily traded currency
11. What generally happens when a central bank unexpectedly increases interest rates?
the currency strengthens. Correct answer
12. What driver weakened the Swiss frank?
a surprise change in inflation expectations. Correct answer
13. What does the Big Mac index show?
how currencies may be undervalues or overvalued. Correct answer
14. What are 3 main short-term drivers of currency valuation?
surprise changes in interest rates, inflation, and trade. Correct answer
15. By what mechanism so interest rates affect currency value?
Global investors are attracted by higher bond yields in high interest rate countries. Correct answer
16. Which headlines could move a currency pair?
US Stocks Rally of Fed's Surprise Reduction of Interest Rate. Correct answer
17. Currency Valuation Summary:
Correct answer
-the value of a currency is relatice and not absolute
-trade-weighted baskets express currency overall strength and weakness
-in the long run, the "law of one price" drives currency values
-in the short run, there are three main drivers of currency valuation:
1. surprise changes in interest rates
2. surprise changes in inflation
3. surprise changes in trade
18. What is the most common target inflation rate for an advanced economy?
2%. Correct answer
19. What was the primary goal of Abenomics?
to halt the vicious cycle of deflation. Correct answer
20. Were the two oil crises in the 1970s linked to deflation or inflation?
Inflation. Correct answer
21. Central Banks an Currencies summary:
Correct answer
-central bankers control the levers of the currency markets
-the standard inflation target is 2% for industrialized nations
-inflation can lead to a vicious cycle of pay increases leading to price increases
-deflation can lead to a vicious cycle of purchase deferrals and layoffs