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Bloomberg Market Concepts Questions With Correct Answer1
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Bloomberg Market Concepts Questions With Correct Answer1
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Bloomberg Market Concepts Questions With CorrectAnswers
gross domestic product (GDP) Correct Answer-market value of all final
goods and services produced within a country
GDP = C + I + G + (X-M)
C= personal consumption
I = private investment
G = government spending
X = exports
M = imports
(C = 2/3 of US GDP)
provides backdrop for investing bc is a measure of all economic activity
"actual GDP growth has entirely lost its capacity to surprise... leading
indicators... PMI garners disproportionate attention"
nominal GDP vs real GDP Correct Answer-nominal GDP = $ amount of
GDP
real GDP growth = nominal GDP growth - inflation
(isolates increases in production and/or increases in prices of
goods&services)
,recession Correct Answer-2 successive quarters of negative real GDP
growth
inflation Correct Answer-general increase in prices of goods&services
which diminishes the purchasing power of money
(a unit of money tomorrow would buy less than the same unit of money
today)
primary sources of inflation data Correct Answer-1) personal
consumption expenditures (PCE)
^^ measure of price changes in consumer goods and services
^^ shows what consumers are spending their income on
2) consumer price index (CPI)
^^ based on a representative basket of goods&services
^^ difficulties w/ being truly representative bc times, interests, & tech
change
^^ CPI basket is updated @ start of ea yr to reflect previous yr
unemployment Correct Answer-consumer spending is almost purely
driven by salaries
^^ economy tends to shrink when more people lose their jobs (depresses
GDP growth)
1) nonfarm payrolls
^^ most important unemployment indicator
,^^ measures monthly change in # of US employees
business confidence Correct Answer-businesses make large investments
and hire people when they feel confident there will be additional demand
for their goods&services
1) purchasing managers index (PMI)
^^ index of US manufacturing activity
^^ surveys people in charge of buying goods and services for
corporations
^^ above 50 = optimism, below 50 = pessimism
housing Correct Answer-1) housing starts
^^ before construction begins, must be confident that future home buyers
can assume 30 yr mortgages
^^ after buying a new house, consumer also purchases appliances,
interior decorations, etc
main entities that trade currencies Correct Answer-1) financial
institutions buying&selling securities in foreign currencies
2) corporations selling goods&services across borders
3) travelers changing currencies for personal use
pegged currencies Correct Answer-currencies that are linked to another
currency with a locked exchange rate
, ^^ done to offer impression of certainty
^^ oftentimes difficult to convince others that pegged currency is as
strong as peg
peg currency using FX reserves
^^ "a stack of cash used to manipulate supply and demand of currency"
^^ USD = most common FX reserve currency bc most liquid
govs also lift interest rates to defend pegs
triangular arbitrage Correct Answer-keeping currency matrix fixed so
you can't make money converting between currencies
currency valuation Correct Answer-change in rate of one currency pair
only tells relative value of those two currencies
^^ use trade-weighted baskets to determine overall strength or weakness
of a currency
(identical goods&services should cost the same, no matter where they're
sold around the world)
main currency drivers Correct Answer-1) surprise changes in interest
rates
^^ rise in interest rates in one country will cause that country's currency
to strengthen relative to another
2) surprise changes in inflation
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