#1
Which of the following is a characteristic of a bull market?
Rising stock prices
ExplanationBull markets are characterized by rising stock prices.
#2
What is the primary function of a stock exchange?
To facilitate buying and selling of securities
ExplanationStock exchanges facilitate the buying and selling of securities.
#3
Which of the following investment vehicles is generally considered to have the least risk?
Treasury bonds
ExplanationTreasury bonds are considered low-risk investments.
#4
What is the term for a situation where a company offers its shares to the public for the first time?
IPO (Initial Public Offering)
ExplanationAn IPO is when a company offers shares to the public for the first time.
#5
What is the term for the process of spreading investments across various asset classes to reduce risk?
Diversification
ExplanationDiversification involves spreading investments across different asset classes to mitigate risk.
#6
Which of the following is NOT a major type of financial market?
Labor market
ExplanationLabor market is not considered a major type of financial market.
#7
Which investment option typically offers the highest potential returns with the highest risk?
Stocks
ExplanationStocks offer high potential returns but also carry high risk.
#8
What is the term for the simultaneous buying and selling of the same security on different exchanges or markets to profit from price discrepancies?
Arbitrage
ExplanationArbitrage involves profiting from price discrepancies across markets.
#9
What is the term for a situation where investors rush to sell off assets, causing a rapid decline in market prices?
Bear market
ExplanationBear markets involve rapid declines in market prices due to selling pressure.
#10
What is the name of the index that measures the performance of the 30 largest companies listed on the New York Stock Exchange (NYSE) and the NASDAQ?
Dow Jones Industrial Average (DJIA)
ExplanationThe DJIA measures the performance of top companies on the NYSE and NASDAQ.
#11
Which financial instrument provides a steady stream of income to the investor, typically issued by corporations or governments?
Bonds
ExplanationBonds provide a steady income stream and are issued by entities like corporations or governments.
#12
What is the name of the measure that reflects the sensitivity of an investment's price to changes in interest rates?
Beta
ExplanationBeta measures the sensitivity of an investment's price to interest rate changes.
#13
Which of the following economic indicators is NOT typically associated with an expansionary phase of the business cycle?
Declining consumer spending
ExplanationDeclining consumer spending is not associated with an expansionary phase.