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series 86 practice exam 1B. questions and and answers verified 2024
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series 86 practice exam 1B. questions and and answers verified 2024
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series 86 practice exam 1BA U.S. manufacturer imports steel from Japan. The company manufactures
the steel into parts and exports them for sale into Japan. The yen has recently
devalued. All of the following items will decrease, EXCEPT:
A Revenue
B Operating expenses
C Operating profit margin
D Cost of goods sold
B Operating expenses
The operating expenses of the company are expressed in U.S. dollars. These
expenses are unaffected by a devaluation of the yen against the dollar. The
cost of goods sold will decrease since the yen has declined in value against
the dollar. The decline of the yen, however, will also decrease the revenue the
company will receive once the yen (received for the sale of the parts) are
converted into U.S. dollars. A portion of the cost of goods sold (machinery and
labor) is payable in U.S. dollars. The devaluation of the yen will not impact this
portion of the cost of goods sold. Since the operating expenses will not be
affected by the currency change and the decrease in the revenue would be a
greater percentage than the percentage decrease in cost of goods sold, the
profit margin will decrease.
,All of the following are leading economic indicators, EXCEPT:
A. New orders for consumer goods and services
B. Manufacturing and trade sales
C The S&P 500 stock index
D. Money suppl
B. Manufacturing and trade sales
Manufacturing and trade sales is a coincident indicator; the others are leading
indicators.
All of the following factors are pertinent when determining fixed-charge
coverage, EXCEPT?
A Interest, whether expensed or capitalized
B Amortization of debt expense
C Rental expense that can be demonstrated to be representative of interest
D. Paid-in capital
, D. Paid-in capital
All of the items are pertinent when determining fixed-charge coverage except
paid-in capital. Furthermore, the ratio of earnings-to-fixed charges uses pretax
earnings from continuing operations plus the full amount of losses of majority-
owned subsidiaries, provided the debt of the subsidiary is guaranteed by the
parent.
Relevant financial information to answer the following question is found by
using Exhibit 1, Exhibit 2, Exhibit 3, and Exhibit 4. (Clicking each link will open
that exhibit into a new window).
What can an analyst project from these four exhibits?
A Hospital spending is highly correlated with drug spending
B There is no correlation between prescription drugs sales and overall
healthcare expenditures
C. Prescription drugs should continue to grow, but at a slower rate
D Generic prescriptions should decline as a percentage of prescription sales
C. Prescription drugs should continue to grow, but at a slower rate
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