Financial Instruments and Market Concepts Quiz Test your knowledge of financial markets with questions on derivatives, stock exchanges, risk, liquidity, options trading, investment portfolios, and more.
#1
Stock
Bond
Futures contract
Certificate of deposit
#2
Issuing bonds to raise capital
Trading financial derivatives
Facilitating the buying and selling of securities
Providing loans to corporations
#3
Bonds
Preferred stock
Options
Mutual funds
#4
Bonds represent ownership in a corporation
Bonds have higher potential returns compared to stocks
Bonds have fixed interest payments and a specified maturity date
Bonds are considered low risk and low return investments
#5
To maximize profits for its shareholders
To regulate interest rates in the economy
To provide loans to individual consumers
To issue currency notes for circulation
#6
Common stock
Corporate bond
Treasury bill
Real estate investment trust (REIT)
#7
To provide liquidity to existing shareholders
To allow private companies to raise capital by selling shares to the public
To facilitate the trading of existing shares in the secondary market
To issue new bonds to raise capital for expansion
#8
Stocks
Options
Treasury bills
Corporate bonds
#9
The ease of converting an asset into cash without affecting its price
The total value of all assets in a portfolio
The annual rate of return on an investment
The maximum loss an investor is willing to bear
#10
To concentrate risk in one asset
To minimize risk by spreading investments across various assets
To maximize returns by investing solely in high-risk assets
To avoid taxes on investment gains
#11
To regulate the stock market
To provide liquidity by buying and selling securities
To issue new shares of stock
To advise investors on their portfolio strategies
#12
Short-term maturity
High liquidity
High risk
Low interest rate
#13
To facilitate the buying and selling of securities for individual investors
To provide loans to corporations for their operational needs
To underwrite and issue securities for corporations
To regulate the stock market to ensure fair trading practices
#14
Borrowing securities from a broker and selling them with the intention of buying them back at a lower price
Buying securities with the intention of holding them for a long-term investment
Selling securities with the intention of buying them back at a higher price
Exchanging one currency for another in the foreign exchange market
#15
The option is profitable if exercised
The option is unprofitable if exercised
The option price equals the market price of the underlying asset
The option has expired worthless
#16
Futures contracts are standardized and traded on exchanges, while forward contracts are customized and traded over-the-counter
Forward contracts have no expiration date, while futures contracts have a set expiration date
Futures contracts are only used for commodities, while forward contracts can be used for any asset
Forward contracts can only be settled by physical delivery, while futures contracts can be settled with cash or physical delivery
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