#1
Which of the following is NOT a type of financial investment?
Stocks
Bonds
Savings account
Real estate
#2
Which of the following investment vehicles typically offers the highest liquidity?
Real estate
Stocks
Government bonds
Money market funds
#3
Which of the following is NOT a factor affecting the price of a bond?
Market interest rates
Issuer's credit rating
Bond's par value
Dividend yield
#4
What is the main advantage of investing in a mutual fund?
Professional management
Higher potential returns
Low liquidity
Limited diversification
#5
What does the term 'compound interest' refer to in finance?
Interest calculated only on the initial principal
Interest earned on both the initial principal and the accumulated interest
Interest calculated daily
Interest earned from stock investments
#6
What is the primary function of a stock exchange?
To issue bonds
To provide loans to companies
To facilitate the buying and selling of securities
To regulate investment banks
#7
What is the primary difference between stocks and bonds?
Stocks represent ownership, while bonds represent debt.
Stocks have a fixed interest rate, while bonds do not.
Stocks offer guaranteed returns, while bonds carry risk.
Stocks have a maturity date, while bonds do not.
#8
Which of the following statements is true about diversification in investment?
Diversification reduces risk by investing in a variety of assets.
Diversification increases risk by concentrating investments.
Diversification is only suitable for large investors.
Diversification is not relevant for long-term investments.
#9
Which of the following is a characteristic of a growth stock?
High dividend yield
Stable earnings
Low price-to-earnings ratio
Potential for high capital appreciation
#10
What is the primary objective of fundamental analysis in investment?
To study historical stock prices.
To analyze financial statements and economic indicators to evaluate a company's intrinsic value.
To predict short-term market movements.
To track market sentiment.
#11
What is the purpose of the P/E ratio in stock analysis?
To measure the profitability of a company.
To assess the liquidity of a company.
To evaluate the growth potential of a company.
To compare a company's current share price to its per-share earnings.
#12
Which of the following is considered a defensive investment?
Technology stocks
Consumer staples stocks
Biotech stocks
Emerging market stocks
#13
What is the Sharpe ratio used for in finance?
To measure the risk-adjusted return of an investment.
To predict future stock prices.
To calculate dividends on stocks.
To determine the maturity of a bond.
#14
What does the term 'alpha' refer to in investment analysis?
The return of an investment compared to the overall market.
The level of risk associated with an investment.
The duration of an investment.
The liquidity of an investment.
#15
What is the primary risk associated with investing in options?
Credit risk
Liquidity risk
Interest rate risk
Time decay
#16
What is the significance of the efficient market hypothesis (EMH) in finance?
It suggests that financial markets are always efficient and accurately reflect all available information.
It argues that financial markets are inefficient and prone to speculation.
It proposes that government intervention is necessary to regulate financial markets.
It emphasizes the importance of behavioral biases in investment decision-making.