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SERIES 7 > Unit 14- Economics & Analysis > Flashcards

Unit 14- Economics & Analysis Flashcards

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Series 7 Top-off Exam flashcards
1
Q

Definition of a depression

A

severe downturn lasting six quarters with unemployment 15% or more

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2
Q

What is the sequence of the 4 business cycles?

A

Expansion, Peak, Contraction, Trough

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3
Q

How does CPI account for inflation?

A

through constant dollar adjustment

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4
Q

Stagnation

A

prolonged periods of slow or little economic growth, usually accompanied by high unemployment

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5
Q

Stagflation

A

term used to describe the unusual combination of inflation and high unemployment

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6
Q

Leading Indicators to predict economic improvement

A 
money supply (M2), building permits, stock prices, 
initial claims for state unemployment compensation,
new orders for goods, machine tool orders, changes in sensitive material prices
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7
Q

Coincident Indicators (confirm where economy is)

A

employment levels, number of hours worked, personal income, industrial production, GDP, manufacturing and trade sales

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8
Q

Lagging Indicators (change after the economy has begun a new trend)

A

corporate profits, avg duration unemployment, labor costs, ratio of inventories to sales, commercial loans outstanding,

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9
Q

Working Permits (LE/C/LA)

A

LE

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10
Q

New Orders for consumer goods (LE/C/LA)

A

LE

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11
Q

Machine Tool Orders (LE/C/LA)

A

LE

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12
Q

Changes in inventory of durable goods (LE/C/LA)

A

LE

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13
Q

Changes in sensitive materials prices (LE/C/LA)

A

LE

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14
Q

Stock Prices (LE/C/LA)

A

LE

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15
Q

Changes in business and consumer borrowing (LE/C/LA)

A

LE

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16
Q

of Hours Worked (LE/C/LA)

A

C

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17
Q

Employment Levels (LE/C/LA)

A

C

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18
Q

Nonagricultural employment (LE/C/LA)

A

C

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19
Q

Personal Income(LE/C/LA)

A

C

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20
Q

Industrial Production (LE/C/LA)

A

C

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21
Q

GDP (LE/C/LA)

A

C

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22
Q

Corporate Profits (LE/C/LA)

A

LA

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23
Q

Avg Duration of Unemployment (LE/C/LA)

A

LA

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24
Q

Ratio of Inventories (LE/C/LA)

A

LA

25
Q

Commercial Loans Outstanding (LE/C/LA)

A

LA

26
Q

Ratio of Inventories to Sales (LE/C/LA)

A

LA

27
Q

Do Keynesian economists believe in gov intervention or market forces takes over?

A

Gov Intervention- tax levels and gov spending

28
Q

Friedman Theory based on MS

A

money supply

29
Q

Supply Side Economics

A

reduce tax rates as well as gov spending

30
Q

Discount Rate

A

The rate at which the Fed charges its members for short term loans

31
Q

m1

A

currency in circulation and demand deposits

32
Q

m2

A

savings accounts, nonnegotiable CDs, money market funds, overnight repos, time deposits less than $100,000

33
Q

m3

A

including time deposits more than M3 and deposits more than $100,000

34
Q

Loosen the money supply

A

buys securities from banks, lower discount rate, lower reserve requirements

35
Q

Tighten money supply

A

sells securities to banks, raise the discount rate, and raise reserve requirements

36
Q

Disintermediation

A

flow of money from traditional low yielding savings accounts to higher yielding investments in the marketplace

37
Q

Technical Analysis

A

based on historic prices and trading volume patterns

38
Q

Fundamental Analysis

A

based on broad-based economic trends

39
Q

Saucer stock price movement

A

reversal of a downtrend

40
Q

Inverted saucer stock price movement

A

reversal of an uptrend

41
Q

When is the market OVERBOUGHT?

A

when index is rising, but number of declining stocks is rising relative to the number of advancing stocks

42
Q

When is a market OVERSOLD?

A

when an index is decling, but number of advancing stocks is rising relative to number of declining stocks

43
Q

Primary Trend

A

one year or more

44
Q

Secondary Trend

A

3-12 weeks

45
Q

Short-Term Fluctuation

A

hours or days

46
Q

Odd-Lot Trading

A

when small investors buy and sell at the incorrect times

47
Q

When the market is consolidating, the trendline is moving which way?

A

sideways

48
Q

Which index is the narrowest measure of the market?

A

Dow Jones Industrial Average

49
Q

Which index is the broadest measure of the market?

A

Wilshire 5000

50
Q

What are examples of cyclical industries?

A

automobiles / steel

51
Q

Business Development Company (BDC)

A

like closed-end investment companies that fund small start-ups but not venture capital funds
**Allow nonaccredited investors to invest unlike VCs

52
Q

Quick Assets Equation

A

Current Assets - Inventories

53
Q

Are Low Debt Equity Ratios or High Debt Equity Ratios considered more conservative?

A

Low Debt-Equity Ratios

54
Q

Is the more stringent measurement of liquidity current ratio or the acid-test ratio?

A

Acid Test

55
Q

Which are more volatile: short term rates or long term rates?

A

Short Term Rates

56
Q

Which are more reactive to interest rates: long term bonds or short term bonds?

A

Long Term Bonds

57
Q

Which is the most volatile interest rate?

A

Fed Funds Rate

58
Q

Tighten Credit

A

reduction in the availability of loans- to curb inflation

59
Q

What is a defensive stock?

A

One that is least affected by business cycles

SERIES 7 (13 decks)

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