#1
Which of the following is NOT a type of securities market?
Stock market
Bond market
Commodity market
Insurance market
#2
What is the primary function of an investment fund?
To generate income for the fund manager
To provide financial advice to investors
To pool money from investors and invest it in various securities
To regulate the securities market
#3
What is the role of a brokerage firm in securities trading?
To issue securities to the public
To provide investment advice to individuals
To facilitate buying and selling of securities on behalf of clients
To regulate the stock market
#4
What does the term 'diversification' refer to in investment?
Investing in a single asset class
Spreading investments across different assets
Exclusively investing in high-risk securities
Investing in foreign markets only
#5
What is the difference between a primary market and a secondary market?
Primary market deals with new securities issuance, while secondary market deals with already issued securities trading.
Primary market deals with government securities, while secondary market deals with corporate securities.
Primary market is regulated by the government, while secondary market is regulated by private institutions.
Primary market deals with long-term securities, while secondary market deals with short-term securities.
#6
Which of the following statements about exchange-traded funds (ETFs) is true?
ETFs can only be traded on stock exchanges.
ETFs are managed by individual investors.
ETFs do not provide diversification.
ETFs typically have lower expense ratios compared to mutual funds.
#7
Which of the following is NOT a characteristic of stocks?
Ownership stake in a company
Fixed interest payments
Voting rights
Potential for capital appreciation
#8
What is the term used for the price at which an investor can buy a security?
Bid price
Ask price
Market price
Strike price
#9
What is the main advantage of mutual funds for individual investors?
Guaranteed returns
High liquidity
Professional management and diversification
Low risk
#10
What does the term 'liquidity' mean in the context of securities?
The ability to buy securities on margin
The ease of converting an asset into cash without affecting its price
The stability of the securities market
The total value of securities held by an individual
#11
What does the term 'P/E ratio' stand for in finance?
Profit-to-Equity ratio
Price-to-Earnings ratio
Payment-Equity ratio
Portfolio-Expansion ratio
#12
What is the primary function of an investment bank in the securities market?
To lend money to individual investors
To provide financial advice to corporations
To underwrite securities offerings and facilitate mergers and acquisitions
To manage mutual funds
#13
Which of the following investment vehicles typically offers the highest potential return but also carries the highest risk?
Government bonds
Savings accounts
Stocks
Certificates of deposit
#14
What is the purpose of a prospectus in the context of securities offerings?
To provide financial advice to investors
To summarize the performance of a security
To disclose information about the security to potential investors
To facilitate the trading of securities
#15
Which of the following is NOT a factor that influences the demand for a security?
Expected return
Interest rates
Market sentiment
Government regulations
#16
What is the term used for the measure of how much the price of a security moves in relation to the overall market?
Leverage
Beta
Alpha
Standard deviation
#17
What is the primary purpose of a 401(k) retirement account?
To provide health insurance coverage
To facilitate tax-free withdrawals for medical expenses
To provide a tax-advantaged way to save for retirement
To offer life insurance coverage