#1
What is the primary function of a stock exchange?
To facilitate buying and selling of stocks
ExplanationFacilitates trading of securities.
#2
Which of the following is a characteristic of a bull market?
Rising stock prices
ExplanationPeriod of increasing market optimism and rising prices.
#3
Which of the following is an example of a money market instrument?
Treasury bills
ExplanationShort-term debt securities with low risk and liquidity.
#4
Which of the following is NOT a function of a commercial bank?
Regulating interest rates in the economy
ExplanationMonetary policy decisions are typically made by central banks, not commercial banks.
#5
What does IPO stand for?
Initial Public Offering
ExplanationFirst sale of shares to the public by a private company.
#6
What is the purpose of a futures contract?
To bet on the direction of the price of an asset
ExplanationAgreement to buy or sell an asset at a predetermined price at a specified time.
#7
What is the role of a central bank in financial markets?
To regulate interest rates
ExplanationMonetary policy implementation and oversight.
#8
What is the significance of the yield curve in finance?
It represents the relationship between bond yields and maturities
ExplanationIndicator of economic conditions and interest rate expectations.
#9
What does the term 'liquidity' refer to in financial markets?
The ease of converting an asset into cash without affecting its price
ExplanationMeasure of how easily an asset can be bought or sold.
#10
What is the role of a financial regulator?
To ensure fair and transparent financial markets
ExplanationOversees compliance with regulations and promotes market integrity.
#11
What is the key characteristic of a derivative?
Its value is derived from an underlying asset
ExplanationFinancial contract whose value is based on the performance of an underlying asset.