Free NASAA Series 66 (Uniform Combined State Law Examination) Economic Factors and Business Information Practice Questions
Economic factors and business information on the NASAA Series 66 exam cover macroeconomic indicators, monetary and fiscal policy, financial statement analysis, quantitative methods, and fundamental valuation techniques.
Sample Questions
Question 1
Easy
A company reports a current ratio of 2.5. Which of the following best describes what this ratio indicates?
Solution
D is correct. The current ratio is defined as current assets divided by current liabilities, so a value of 2.5 indicates the firm holds $2.50 of current assets for every $1.00 of current liabilities. It is a short-term liquidity measure used to assess the firm's ability to meet obligations coming due within one year.
Question 2
Medium
What is the present value of $25,000 to be received in 8 years, assuming a discount rate of 7% compounded annually?
Solution
C is correct. The present value of a single future cash flow is . Substituting, .
Question 3
Hard
An investment adviser reviews a client's equity portfolio and notes that the R-squared versus the S&P 500 benchmark is 0.85. Which of the following is the most accurate interpretation of this statistic?
Solution
Choice D is correct because R-squared (the coefficient of determination) measures the proportion of a portfolio's return variance that is attributable to movements in the benchmark. An R-squared of 0.85 means 85% of the portfolio's variability in returns is explained by benchmark movements, with the remaining 15% due to factors specific to the portfolio.