CPD Assessment 24.4 Financial Innovations and Evolution

What are economic indicators primarily used for in financial markets?

1. Predicting political events
2. Gauging the economy’s performance
3. Assessing technological advancements
4. Evaluating environmental policies

Which of these is a leading economic indicator?

• Interest rates
• Gross National Product (GNP)
• Share prices
• Consumer Price Index (CPI)

Which indicator is often used to reflect the present economic situation?

1. Bond yields
2. Retail Sales
3. Price of crude oil
4. Unemployment figures

How does one correctly interpret economic indicators?

1. By focusing on a single indicator
2. Utilizing multiple indicators for pattern analysis
3. Relying solely on government data
4. Considering only international indicators

Which factor significantly impacts South African financial markets?

1. Only domestic economic policies
2. Performance of other countries
3. Local cultural trends
4. Domestic sports events

What does the Consumer Price Index (CPI) measure?

1. Unemployment rates
2. Interest rates
3. Changes in price levels of consumer goods and services
4. Gross Domestic Product (GDP)

What is a key characteristic of bundled insurance products like endowment policies?

1. They offer only a risk component.
2. They combine a risk component with a savings or investment element.
3. They are exclusively controlled by the Medical Schemes Council.
4. They allow policyholders to have governance rights in insurance companies.

How is the official unemployment rate in South Africa defined?

1. Anyone without a job
2. Those actively looking for work in the past four weeks
3. Individuals working part-time
4. Discouraged job seekers

What does the Balance of Payments (BoP) record?

1. Domestic sales transactions
2. A country’s transactions with foreign countries
3. In-country financial transactions
4. Internal budget allocations

What are composite business cycle indicators used for?

1. Predicting currency values
2. Estimating economic cycles
3. Calculating tax rates
4. Assessing government policies

What is a primary focus of retail trade sales data?

• The number of retail stores
• Employee performance in retail
• Real value of sales
• Impact of marketing strategies

What does the Purchasing Managers’ Index (PMI) indicate?

1. The profitability of manufacturing companies
2. The performance of the manufacturing sector
3. Employment levels in manufacturing
4. The price of manufactured goods

Which of these is not included in other cyclical indicators closely watched in financial markets?

1. Manufacturing production and sales
2. Mining production and sales
3. Agricultural sector performance
4. Wholesale trade sales

What can cause immediate global financial market movements?

1. Release of a major US economic indicator
2. Changes in local cultural trends
3. Domestic sports events
4. Internal political changes

What challenges the predictive value of economic indicators?

1. Lack of data variety
2. Overreliance on historical data
3. Market participants’ short-term outlook
4. Consistent data accuracy

What forms the basis of neo-classical economists’ theory of market movements?

1. Unpredictable economic conditions
2. Predictable economic man driven by a consistent value system
3. Constantly changing market trends
4. Random financial decisions by investors

What is the ceteris paribus assumption used for in economic prediction?

1. Considering all variables simultaneously
2. Assuming one economic indicator is influencing the financial markets
3. Ignoring market participant behavior
4. Predicting long-term economic trends

How do retail sales data affect financial markets?

1. No impact on equity prices
2. Strong sales are positive for equity prices
3. Weak sales lead to bond price rises
4. Strong sales increase bond prices and decrease yields

 What does the employment rate indicate in the US context?

1. Strength of the US economy
2. The number of people employed in agriculture
3. The effectiveness of government policies
4. The rate of technological advancement

What is the main purpose of the Balance of Payments (BoP)?

1. To measure the country’s debt levels
2. To record a country’s transactions with foreign countries
3. To evaluate the efficiency of government spending
4. To track the changes in national GDP