Finra Exam Series-6 Topic 7 Question 80 Discussion

Actual exam question for Finra's Series-6 exam

Question #: 80
Topic #: 7

In 2008, Mr. Conservative bought a 1-year Treasury bill that was yielding 1.63%. The average annual rate of inflation in 2008 was 3.85%. In this case:

AMr. Conservative earned a nominal return of +3.85% on his T-bill investment.

BMr. Conservative earned a real return of -2.22% on his investment.

CMr. Conservative earned a real return of +1.63% on his investment.

DMr. Conservative earned a nominal return of +2.22% on his investment.

Show Suggested Answer

Suggested Answer: A

Among other things, the trade confirmation that Anna receives must stipulate the items described in Selections I and III only. The trade confirmation that Anna receives from GetErDone must stipulate the time and date of the transaction, the number of shares sold, and the price at which they were sold. The exchange or ECN on which the transaction was executed is not provided on the confirmation statement. Whether GetErDone acted as a principal or a broker in the transaction does need to be stipulated, but in this instance GetErDone acted as a broker, not a principal. GetErDone did not itself buy the shares from Anna.

by Garry at Jun 19, 2024, 03:31 PM

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1 months ago

Wait, what? If the T-bill yield was 1.63% and inflation was 3.85%, how can he earn a nominal return of 3.85%? That doesn't add up.

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Odette

6 days ago

B) Mr. Conservative earned a real return of -2.22% on his investment.

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Han

22 days ago

A) Mr. Conservative earned a nominal return of +3.85% on his T-bill investment.

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Crissy

2 months ago

But the inflation rate was higher than the yield, so the real return must be negative.

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Louis

2 months ago

I disagree, I believe the answer is C.

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Crissy

2 months ago

I think the answer is B.

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