Series 66 Domain 1 (Quiz 4): Economic Factors and Business Information

Submit Cancel

Welcome to your Series 66 Practice Quizzes.

Note: We designed four (4) parts of practice quizzes for each Domain. Each part has 25 questions.

Domain 1 (part 4): Economic Factors and Business Information. (25 questions)

Please click NEXT to start your Free Series 66 Practice Quizzes right away.

Best of Luck!

Series 66, Economic Factors and Business Information,Series 66

Beta is most frequently measured against which of the following?

A. A) Dow Jones Industrial Average

B. B) S&P 500

C. C) Nasdaq Composite Index

D. D) S&P 100

None

Series 66, Economic Factors and Business Information,Series 66

If your customer is pursuing an aggressive stock buying strategy, which of the following is most suitable for him?

A. A) ABC stock with a beta coefficient of 1.0

B. B) GHI stock with a beta coefficient of 1.20

C. C) Convertible bonds of a mid-cap company

D. D) DEF stock with a beta coefficient of 0.93

None

Series 66, Economic Factors and Business Information,Series 66

An investor's portfolio has a beta coefficient of 0.85. If the overall market declined by 10% over the course of a year, the portfolio's value has likely

A. A) increased by 10.85%

B. B) decreased by 8.5%

C. C) increased by 8.5%

D. D) decreased by 11.76%

None

Series 66, Economic Factors and Business Information,Series 66

XYZ Corporation has a beta of 1, and ABC has a beta of 1.4. XYZ has returned 12% and ABC 18.8%. Based on this information ABC had alpha of

A. A) 4.8%

B. B) 18.8%

C. C) 6.8%

D. D) 2%

None

Series 66, Economic Factors and Business Information,Series 66

If a stock has a beta of less than 1.0, the stock's price will

A. A) not increase as much as the market when the market is up

B. B) decrease more than the market when the market is down

C. C) increase more than the market when the market is up

D. D) decrease regardless of whether the market is up or down

None

Series 66, Economic Factors and Business Information,Series 66

A stock traded on the Nasdaq Stock Market has a beta of 1.20. One could expect that the stock's volatility compared to the S&P 500 would be

A. A) too variable to tell

B. B) 20% less volatile

C. C) 20% more volatile

D. D) negatively correlated to the S&P

None

Series 66, Economic Factors and Business Information,Series 66

Assume Frank has a portfolio with an actual return of 10.50% for the past year. The portfolio beta equals 1.25, the return on the market equals 9.75%, and the risk-free rate of return equals 3%. Based on this information, what is the alpha for Frank's portfolio and did it out outperform or underperform the market?

A. A) −0.9375%, underperform

B. B) −1.6875%, underperform

C. C) +9.1875%, outperform

D. D) +3.3750%, outperform

None

Series 66, Economic Factors and Business Information,Series 66

In portfolio theory, the alpha of a security or a portfolio is

A. A) the difference in the expected return of the portfolio, given the portfolio's beta, and the actual return the portfolio achieved

B. B) a measure of the variance in returns of a portfolio divided by its average return

C. C) the portfolio's average return in excess of the risk-free rate divided by the standard deviation in returns of the portfolio

D. D) the risk of the portfolio associated with the macroeconomic factors that affect all risky assets

None

Series 66, Economic Factors and Business Information,Series 66

An investment adviser representative is researching a security and notices that its beta is zero. Which of the following securities is probably the subject of that research?

A. A) A public utility stock

B. B) An ETF tracing the index of gold stocks

C. C) A 91-day U.S. Treasury bill

D. D) A 5-year U.S. Treasury note

None

10.

Series 66, Economic Factors and Business Information,Series 66

A customer's portfolio has a beta coefficient of 1.1. If the overall market increases by 10%, the portfolio's value is likely to

A. A) decrease by 10%

B. B) increase by 10%

C. C) increase by 11%

D. D) decrease by 11%

None

11.

Series 66, Economic Factors and Business Information,Series 66

When a stock has a beta of less than 1, this indicates that

A. A) it will have a high level of systematic risk

B. B) it will, on average, give a return below that of the market

C. C) it will have a high level of unsystematic risk

D. D) it will, on average, give a return in excess of that of a stock with a beta of greater than 1

None

12.

Series 66, Economic Factors and Business Information,Series 66

Which of the followings measures should be used to assess the risk-adjusted return of an active portfolio manager?

A. A) Beta

B. B) Alpha

C. C) Theta

D. D) Gamma

None

13.

Series 66, Economic Factors and Business Information,Series 66

Which of the following are likely to have a low beta?

A. A) Software stocks

B. B) Public utility stocks

C. C) Technology stocks

D. D) Aerospace stocks

None

14.

Series 66, Economic Factors and Business Information,Series 66

Which of the following purchases is most suitable for an investor pursuing an aggressive investment strategy?

A. A) DOH stock with a beta coefficient of 0.7

B. B) GHI stock with a beta coefficient of 1.3

C. C) LMN stock with a beta of -0.6

D. D) AMF stock with a beta coefficient of 1.0

None

15.

Series 66, Economic Factors and Business Information,Series 66

A. A) +9.1875%, outperform

B. B) −1.6875%, underperform

C. C) +3.3750%, outperform

D. D) -.9375%, underperform

None

16.

Series 66, Economic Factors and Business Information,Series 66

In a rising market, which of the following is least volatile?

A. A) A stock with an alpha of 0.5

B. B) A stock with an alpha of 2.0

C. C) A stock with a beta of 2.0

D. D) A stock with a beta of 0.5

None

17.

Series 66, Economic Factors and Business Information,Series 66

An investment adviser representative is looking for a suitable investment for a client. The IAR wishes to find something that will offer an attractive return commensurate with its systematic risk. The choices have been narrowed to Security C and Security L, and the selection will be based on alpha. C has a beta of 1.0 and earned 13%, while L has a beta of 0.8 and earned 10.1%. The alpha of Security L is

A. A) +0.3

B. B) −2.9

C. C) +2.9

D. D) −0.3

None

18.

Series 66, Economic Factors and Business Information,Series 66

Julian and Jane are discussing risk-return measures. Julian states that "beta is used when looking at the performance of a fund or portfolio and refers to the extent of any outperformance against its benchmark." Jane disagrees and says that "outperformance of a fund or portfolio is actually measured by standard deviation." Which of the following statement is correct?

A. A) Only Jane is correct.

B. B) Both Julian and Jane are correct.

C. C) Both are incorrect.

D. D) Only Julian is correct.

None

19.

Series 66, Economic Factors and Business Information,Series 66

If a security has an anticipated return of 8.7% and a standard deviation of 14.6%, you would expect the returns to have a 95% probability (assuming a normal distribution) of falling between

A. A) −5.9 and +23.3%

B. B) −20.5 and +37.9%

C. C) 0 and 37.9%

D. D) 8.7 and 23.3%

None

20.

Series 66, Economic Factors and Business Information,Series 66

The statistical measurement that indicates how much an investment's returns have fluctuated compared with its average return over a period of time is known as

A. A) beta

B. B) standard deviation

C. C) Sharpe ratio

D. D) duration

None

21.

Series 66, Economic Factors and Business Information,Series 66

A senior citizen had the following scenarios presented to him by his IAR. Which one had the lowest volatility?

A. A) Stock high return: +9%; low return: −2%; Standard Deviation: 4.9%

B. B) Stock high return: +5%; low return: −1%; Standard Deviation: 3.6%

C. C) Stock high return: +18%; low return: −4%; Standard Deviation: 8%

D. D) Stock high return: +12%; low return: −2%; Standard Deviation: 5.5%

None

22.

Series 66, Economic Factors and Business Information,Series 66

When analyzing a security's standard deviation, which of the following statements accurately describes observations according to a normal frequency distribution curve?

A. A) Approximately 97.5% of all observations will be within two standard deviations on either side of the mean.

B. B) Approximately 95.5% of all observations will be within three standard deviations of the mean.

C. C) Approximately two-thirds, or 68%, of observations will be within one standard deviation on either side of the mean.

D. D) Approximately 97.5% of all observations will be within three standard deviations of the mean.

None

23.

Series 66, Economic Factors and Business Information,Series 66

Plymouth Standard's common stock has an average return of 12%; its returns fall within a range of –2% to +26% approximately 68% of the time. Which one of the following numbers is closest to the standard deviation of returns of Plymouth Standard's stock?

A. A) 28%

B. B) 8%

C. C) 14%

D. D) 19%

None

24.

Series 66, Economic Factors and Business Information,Series 66

A concern of some investors is the volatility of a security. Securities with a higher volatility exhibit a greater variability in their returns. A statistical measure used to predict the volatility of a security by examining the dispersion in a set of historical returns is

A. A) geometric mean.

B. B) beta.

C. C) correlation.

D. D) standard deviation.

None

25.

Series 66, Economic Factors and Business Information,Series 66

The statistical measurement that indicates how much an investment's returns have fluctuated, compared to its average return, over a given period of time is known as

A. A) convexity

B. B) R-squared

C. C) beta

D. D) standard deviation.

None

1 out of 25

Time is Up!

Time's up