#1
Which of the following is NOT a financial market?
Stock market
Bond market
Real estate market
Consumer market
#2
What does ROI stand for in investment?
Rate of Increase
Return on Investment
Risk of Investment
Revenue of Interest
#3
What is the role of a financial intermediary?
To regulate financial markets
To provide loans to individuals
To connect savers with borrowers
To manage government finances
#4
Which of the following is a characteristic of a bull market?
Decreasing investor confidence
Rising stock prices
High unemployment rates
Declining economic growth
#5
What does the term 'liquidity' refer to in financial markets?
The ease of converting assets into cash without significant loss
The total value of assets held by a company
The number of outstanding shares of a company
The level of debt in a company
#6
Which of the following is NOT a type of financial risk?
Interest rate risk
Market risk
Economic risk
Transaction risk
#7
Which of the following is a primary market transaction?
Buying stocks on the stock exchange
Trading bonds in the secondary market
Purchasing shares in an IPO
Selling commodities on a futures exchange
#8
What does the Efficient Market Hypothesis (EMH) suggest?
Markets always reflect all available information
Markets are always volatile
Investors should rely solely on technical analysis
Fundamental analysis is not useful
#9
What is the formula for calculating compound interest?
A = P(1 + r)^t
A = P + rt
A = P / (1 + r)^t
A = P * (1 - r)^t
#10
What does the P/E ratio indicate about a stock?
Profitability
Dividend yield
Market sentiment
Debt level
#11
What is the purpose of diversification in investment?
To concentrate investments in one asset class
To minimize risk by spreading investments across different assets
To maximize returns by investing in high-risk assets
To avoid investing in foreign markets
#12
What is the role of a clearinghouse in financial markets?
To regulate stock exchanges
To facilitate the settlement of trades
To manage investment portfolios
To provide loans to investors
#13
Which of the following is a derivative instrument?
Stock
Bond
Option
Certificate of Deposit
#14
What is a 'blue chip' stock?
A stock with a low market capitalization
A stock issued by a new startup
A stock of a large, stable, and financially sound company
A stock with high volatility
#15
What is the concept of 'buying on margin'?
Borrowing money from a bank to purchase securities
Purchasing securities with one's own funds
Buying securities with the intention to hold them long-term
Selling securities to minimize losses
#16
What is the difference between a mutual fund and an exchange-traded fund (ETF)?
Mutual funds are actively managed, while ETFs are passively managed.
Mutual funds trade throughout the day, while ETFs only trade at market close.
Mutual funds have higher liquidity than ETFs.
Mutual funds are only available to institutional investors, while ETFs are available to retail investors.
#17
What is the concept of 'short selling'?
Borrowing securities from a broker and selling them in the hope that their price will decrease
Buying securities with the intention to hold them long-term
Selling securities to minimize losses
Buying securities at a lower price and selling them at a higher price