CACS Paper 2 Practice Questions - Client Advisor Competency Standards (CACS) Paper 2 - Industry And Product Knowledge Exam

A surprise 50 bp cut in the central bank policy rate, with unchanged inflation expectations, most directly tends to:

Automatically raise long-end real yields by the same 50 bp Lower short-term money-market yields and support risk asset valuations via easier financial conditions Raise required equity returns while leaving discount rates unchanged in all models Remove FX risk from all multi-currency portfolios automatically

Correct Answer:

Lower short-term money-market yields and support risk asset valuations via easier financial conditions

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