Securities Markets and Investment Fundamentals Quiz

Securities markets deal with stocks, bonds, commodities, and derivatives, not insurance.

Investment funds aggregate capital from multiple investors to achieve diversification and economies of scale in investment.

Brokerage firms act as intermediaries between buyers and sellers, executing trades on behalf of clients in exchange for a commission or fee.

Diversification involves spreading investments across various assets to reduce risk exposure.

Primary markets involve the issuance of new securities, while secondary markets facilitate the trading of previously issued securities among investors.

ETFs generally have lower expense ratios due to their passive management style and lower operating costs.

Stocks represent ownership in a company and do not offer fixed interest payments like bonds do.

Bid price is the maximum price a buyer is willing to pay for a security in the market.

Mutual funds provide professional management of investments and diversification across a range of securities.

Liquidity refers to the ease with which an asset can be bought or sold in the market without significantly affecting its price.

The P/E ratio measures a company's current share price relative to its per-share earnings.

Investment banks assist companies in raising capital through underwriting securities and provide advisory services for mergers and acquisitions.

Stocks offer potentially high returns but also involve high risk due to market volatility.

A prospectus provides detailed information about a security being offered for sale, enabling investors to make informed decisions.

Government regulations may impact the securities market, but they are not directly considered a factor influencing demand for a security.

Beta measures the volatility of a security in relation to the broader market.

401(k) retirement accounts offer individuals a tax-advantaged means to save for retirement by allowing contributions to grow tax-deferred until withdrawal.