CFA® Level 2 Stock Practice Questions
The free CFA® Level 2 questions that deal with stock, with answers and explanations. The full bank and the timed practice test cover every topic the exam asks about.
Question #3
An investment analyst observed that stock A and stock B have a correlation of 0.85. What does this indicate about the relationship between these two stocks?
Correct answer: C
Explanation
A correlation of 0.85 indicates a strong positive relationship where both stocks tend to move together in the same direction.
Question #8
In a stock market, which phenomenon occurs when investors sell stocks on average, causing stock prices to drop?
Correct answer: D
Explanation
A bear market is characterized by falling stock prices, typically occurring when investors are pessimistic and sell off their holdings en masse.
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