Skip to main content
ExamWize
Sign up

Series 66 · 8% of the exam

Economic Factors and Business Information practice questions

10 free Economic Factors and Business Information questions for the Uniform Combined State Law Exam (Series 66) exam, each with the correct answer and an explanation for every option.

Start the questionsFree 10-question Series 66 quiz

What this domain covers

The smallest Series 66 domain: how the economy and markets behave, how to read a company's financial statements, and the basic maths used to measure investment risk and return.

Exam weight
8%
On a real exam
≈ 9 questions
In our bank
47 questions

Topics that come up most

  • Business cycle and economic indicators
  • Monetary and fiscal policy, interest rates and the yield curve
  • Balance sheet and income statement basics
  • Types of investment risk (market, inflation, interest rate, liquidity, credit)
  • Quantitative measures: mean, median, standard deviation and beta

How to study it

Learn which way bond prices, the dollar and the yield curve move when the Federal Reserve tightens or eases; a large share of the domain follows from that one chain of cause and effect.

Sample Economic Factors and Business Information questions

Try each one before opening the answer. Original questions written to the official exam objectives.

  1. Question 1

    A balance sheet reports a company's financial position:

    • AAt one point in time
    • BOver a full year
    • COver many years
    • DOnly for its stock price
    Show answer and explanation

    Answer: A) At one point in time

    • ACorrect. It's a snapshot of assets, liabilities and equity.
    • BIncorrect. That describes the income statement.
    • CIncorrect. It's a single-date snapshot.
    • DIncorrect. It shows assets and claims.

  2. Question 2

    When the Fed lowers its policy rate target, borrowing costs across the economy tend to:

    • ARise
    • BFall
    • CStay fixed
    • DDouble
    Show answer and explanation

    Answer: B) Fall

    • AIncorrect. That follows tightening.
    • BCorrect. Easier policy lowers rates.
    • CIncorrect. Rates respond.
    • DIncorrect. They tend to fall.

  3. Question 3

    A stock priced at $60 with earnings of $3 per share has a P/E ratio of:

    • A5%
    • B20
    • C180
    • D3
    Show answer and explanation

    Answer: B) 20

    • AIncorrect. That's the earnings yield.
    • BCorrect. $60 ÷ $3 = 20.
    • CIncorrect. That multiplies instead of dividing.
    • DIncorrect. That's earnings per share.

  4. Question 4

    A company's common stock trades at $45 per share. Its most recent balance sheet shows total assets of $500 million, total liabilities of $200 million, no preferred stock, and 10 million common shares outstanding. What is the stock's price-to-book ratio?

    • A0.67
    • B0.90
    • C1.50
    • D15.00
    Show answer and explanation

    Answer: C) 1.50

    Price-to-book equals market price per share divided by book value per share. Book value per share is (assets − liabilities − preferred) ÷ common shares: $300 million ÷ 10 million = $30, so P/B = $45 ÷ $30 = 1.5.

    • AIncorrect. This inverts the ratio: book value per share ($30) divided by price ($45). That is the book-to-price ratio, not price-to-book.
    • BIncorrect. This uses total assets ($500 million ÷ 10 million shares = $50) as book value per share. Book value is assets minus liabilities, so it is $30 per share, not $50.
    • CCorrect. Book value is $500 million − $200 million = $300 million, or $30 per share across 10 million shares. Price-to-book is $45 ÷ $30 = 1.5.
    • DIncorrect. This subtracts book value per share from price ($45 − $30). Price-to-book is a ratio, so you divide; you don't take the dollar difference.

  5. Question 5

    A country running a trade deficit:

    • AImports more than it exports
    • BExports more than it imports
    • CHas a federal budget deficit
    • DBans all foreign trade
    Show answer and explanation

    Answer: A) Imports more than it exports

    • ACorrect. Spending abroad exceeds sales abroad.
    • BIncorrect. That's a trade surplus.
    • CIncorrect. That's fiscal, not trade.
    • DIncorrect. Trade still occurs.

  6. Question 6

    A company has current assets of $12 million and current liabilities of $7 million. Its working capital is:

    • A$5 million
    • B1.71, the current ratio
    • C$19 million, adding the figures
    • D$84 million
    Show answer and explanation

    Answer: A) $5 million

    • ACorrect. Current assets minus current liabilities.
    • BIncorrect. That's a ratio.
    • CIncorrect. Liabilities are subtracted.
    • DIncorrect. That isn't the calculation.

  7. Question 7

    A common stock pays an annual dividend of $2.40 per share and currently trades at $80 per share. What is its current dividend yield?

    • A0.3%
    • B30%
    • C2.4%
    • D3%
    Show answer and explanation

    Answer: D) 3%

    Current dividend yield is the annual dividend per share divided by the current market price: $2.40 / $80 = 3%. It measures the income a stock pays relative to its price.

    • AIncorrect. This is a decimal-place error. $2.40 / $80 = 0.03, which is 3%, not 0.3%.
    • BIncorrect. This misplaces the decimal in the other direction. 0.03 converts to 3%, not 30%.
    • CIncorrect. This treats the $2.40 dividend as if it were already a percentage and ignores the share price. Yield must relate the dividend to the price.
    • DCorrect. Dividend yield = annual dividend / current market price = $2.40 / $80 = 0.03, or 3%.

  8. Question 8

    A consultant compares several well-diversified portfolios with a measure that divides each portfolio's return above the risk-free rate by the portfolio's beta. Which measure is the consultant using?

    • ASharpe ratio
    • BTreynor ratio
    • CJensen's alpha
    • DInformation ratio
    Show answer and explanation

    Answer: B) Treynor ratio

    The Treynor ratio is (portfolio return − risk-free rate) ÷ beta, so it measures excess return per unit of systematic risk. The Sharpe ratio uses standard deviation (total risk) instead.

    • AIncorrect. The Sharpe ratio divides excess return by standard deviation, which is total risk, not by beta.
    • BCorrect. The Treynor (reward-to-volatility) ratio is excess return over the risk-free rate divided by beta, so it measures return per unit of systematic (market) risk.
    • CIncorrect. Jensen's alpha uses beta to find the return expected under CAPM and reports actual return minus that expected return. It is a difference, not a ratio per unit of beta.
    • DIncorrect. The information ratio divides a portfolio's return above its benchmark by tracking error, not by beta.

  9. Question 9

    The Consumer Price Index (CPI) is used mainly to measure:

    • AInflation
    • BStock returns
    • CTotal output
    • DBank reserves
    Show answer and explanation

    Answer: A) Inflation

    • ACorrect. It tracks prices of a basket of consumer goods and services.
    • BIncorrect. That's a stock index.
    • CIncorrect. That's GDP.
    • DIncorrect. That's a Fed measure.

  10. Question 10

    Over three years, the annual change in the Consumer Price Index goes from 6.5% to 4.1% to 2.8%. Which term best describes this trend?

    • ADeflation, because the general level of prices is going down
    • BDisinflation, because prices are still rising but at a slower rate
    • CStagflation, because inflation is rising while economic growth stalls
    • DPrice controls, because the government is limiting how fast prices can rise
    Show answer and explanation

    Answer: B) Disinflation, because prices are still rising but at a slower rate

    Disinflation means inflation is slowing but still positive. Deflation means the overall price level is actually falling.

    • AIncorrect. Deflation is a steady drop in the general price level, which means a negative inflation rate. Here prices still rose every year.
    • BCorrect. Disinflation is a drop in the rate of inflation while that rate stays positive. Prices keep rising, just more slowly each year.
    • CIncorrect. Stagflation is high or rising inflation together with weak growth and high unemployment. Inflation here is falling, and no growth data is given.
    • DIncorrect. Price controls are legal limits on prices, a policy tool, and not a term for a trend in the inflation rate. Nothing in the data suggests prices are capped by law.

Economic Factors and Business Information: FAQs

How much of the Series 66 exam is Economic Factors and Business Information?

Economic Factors and Business Information is 8% of the Series 66 exam by the official exam guide's weighting, which on a 110-question form works out to roughly 9 questions. The real exam's exact split varies by form.

What does the Economic Factors and Business Information domain cover?

The smallest Series 66 domain: how the economy and markets behave, how to read a company's financial statements, and the basic maths used to measure investment risk and return.

How should I study Economic Factors and Business Information for Series 66?

Learn which way bond prices, the dollar and the yield curve move when the Federal Reserve tightens or eases; a large share of the domain follows from that one chain of cause and effect.

Where can I practise more Economic Factors and Business Information questions?

This page has 10 free Economic Factors and Business Information questions with answers. The ExamWize Series 66 question bank has 47 questions in this domain. Every practice exam result breaks your score down by domain, and Review Mode re-drills the questions you missed.

Other Series 66 topics

Also: 15 free questions across all topics, the Series 66 cheat sheet and the study guide.

Get Economic Factors and Business Information exam-ready

The full Series 66 bank has 47 Economic Factors and Business Information questions. Timed practice exams match the real exam's length and domain weights, every result shows your score per domain, and Review Mode re-drills the questions you missed.

See the full Series 66 practice examsTake the free diagnostic

Not affiliated with NASAA; questions are original, written from the official exam outline, and never copied from the real exam.