#1
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?
Stock
ExplanationOwnership in a corporation with entitlement to assets and profits.
#2
What does 'ROI' stand for in the context of investment?
Return on Investment
ExplanationMeasure of investment profitability.
#3
What does the term 'bull market' refer to in financial trading?
A market with rising prices
ExplanationPeriod of rising market prices.
#4
In finance, what does the term 'liquidity' refer to?
The ability to quickly convert an asset into cash without significant loss of value
ExplanationEase of converting assets to cash.
#5
What is the purpose of a 'stop-loss order' in financial trading?
To limit potential losses by automatically selling a security if its price falls below a certain level
ExplanationAutomated selling to limit losses.
#6
What is the primary function of a stock exchange?
To facilitate the buying and selling of securities between buyers and sellers
ExplanationFacilitates securities trading.
#7
Which of the following is NOT a characteristic of a limit order in financial trading?
Guarantees execution of the trade
ExplanationLimit orders do not guarantee immediate execution.
#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)
ExplanationTool for trend identification in markets.
#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?
Beta
ExplanationMeasure of asset risk in comparison to the market.
#10
What is the primary objective of a hedge fund?
To generate high-risk adjusted returns
ExplanationAim for high returns with risk management.
#11
Which of the following is an example of a derivative financial instrument?
Futures contract
ExplanationFinancial instrument derived from an underlying asset.
#12
What does the term 'short selling' mean in financial markets?
Selling a security that the seller does not own, with the intention of buying it back later at a lower price
ExplanationSelling borrowed assets to buy back at a lower price.
#13
What is 'arbitrage' in financial trading?
Taking advantage of price differences in different markets
ExplanationExploiting price differences in markets.