What is a common type of financial instrument that represents ownership in a corporation and entitles the owner to a portion of the company's assets and profits?
Bond
Derivative
Stock
Mutual fund
#2
What does 'ROI' stand for in the context of investment?
Return on Investment
Risk of Inflation
Rate of Interest
Revenue on Investment
#3
What does the term 'bull market' refer to in financial trading?
A market with falling prices
A market with stagnant prices
A market with rising prices
A market with high volatility
#4
In finance, what does the term 'liquidity' refer to?
The ability to quickly convert an asset into cash without significant loss of value
The potential for high returns on an investment
The overall profitability of a company
The level of debt a company holds
#5
What is the purpose of a 'stop-loss order' in financial trading?
To execute a trade at a specific price or better
To limit potential losses by automatically selling a security if its price falls below a certain level
To automatically buy a security when its price reaches a certain level
To place a trade at the current market price
#6
What is the primary function of a stock exchange?
To provide investment advice to individual investors
To facilitate the buying and selling of securities between buyers and sellers
To regulate the financial markets
To provide loans to companies for expansion
#7
Which of the following is NOT a characteristic of a limit order in financial trading?
Executes at a specific price or better
Guarantees execution of the trade
May not execute if the specified price is not met
Can be used to buy or sell securities
#8
Which of the following is an example of a technical analysis tool used by traders to identify trends in financial markets?
Moving average convergence divergence (MACD)
Net present value (NPV)
Price-to-earnings ratio (P/E)
Dividend yield
#9
Which of the following is a measure of the systematic risk of a security or a portfolio in comparison to the market as a whole?
Alpha
Beta
Gamma
Delta
#10
What is the primary objective of a hedge fund?
To provide guaranteed returns to investors
To generate high-risk adjusted returns
To minimize risk and maximize returns
To invest solely in government securities
#11
Which of the following is an example of a derivative financial instrument?
Common stock
Corporate bond
Futures contract
Treasury bill
#12
What does the term 'short selling' mean in financial markets?
Buying a security with the intention of holding it for a long time
Selling a security that the seller does not own, with the intention of buying it back later at a lower price
Selling a security and immediately buying it back
Selling a security with the expectation of immediate profit
#13
What is 'arbitrage' in financial trading?
Investing in high-risk assets
Taking advantage of price differences in different markets
Long-term investment strategy
Predicting market movements based on historical data