Stock Market Quiz

Stock Market Quiz

 

1.The stock market can best be characterized as:

a) An electronic bulletin board 

b) An auction

c) Noisy

d) A stock certificate exchange facility

 

Answer: b) An auction

All stock market transactions are auction transactions

with buyer and seller needing to agree on price.

2. At any point in time, the most accurate valuation of a stock price is:

a) The PE ratio

b) The current bid price

c) Midway between the bid and ask price

d) The last ask price

 

Answer: c) Midway between bid and ask 

No one stock price exists – just a seller’s ask and a buyer’s bid

3. To be “on margin” means:

a) At the limit of your financial resources

b) Close to a trading violation

c) To always trade near the open or the close

d) To use your stock as collateral for a brokerage loan

 

 

Answer: d) To use your stock as collateral for a loan

                                                            Beware – if the stock price declines you will get a

                                                                           margin call for more collateral

4. NYSE, TSX and NASDAQ are all examples of:

a) Stock exchanges

b) Growth stocks

c) Small cap stocks

d) Stock symbols

 

Answer: a) Stock exchanges – New York Stock exchange,

                                                  Toronto Stock Exchange, American Stock Exchange

5. Who is Warren Buffet:

a) The founder of Walmart

b) The Oracle of Omaha

c) The founder of Berkshire Hathaway fund

d) A value investor

e) All of the above, except a)

Answer: e) All of the above except a)

A modest value investor from Omaha who is one of the richest men in the world

 6. Candlestick, MACD and Bollinger Bands are all examples of:

a) Industry acronyms

b) Theories of stock price movement

c) Measurements of trading volume

d) Stock charts

 

Answer: d) Stock charts

7. Generally, investors expect to see the greatest trade volumes:

a) At the close

b) Lunchtime – noon to 1 PM EST

c) At the open

d) After a three-day market holiday

 

Answer: a) At the close and c) At the open – overnight automated trades process

8. A trader should generally avoid a “market sell order” for:

a) After hours trading

b) Some mid-day trades

c) Thinly traded stocks

d) All of the above

e) None of the above

 

Answer: d)    All of the above – all have potential for low volume

9. The term “limit down” refers to:

a) In a trader’s sell order – the lowest price that a trade should be processed.

b) The maximum allowable price decline of a stock in a single day

c) The maximum portfolio value decline allowed before a margin call

d) None of the above

 

Answer: b)   The maximum allowable price decline allowed In a single day

– known as a circuit breaker to allow overheated markets to cool off

 

10. The primary responsibility of the SEC is:

a) Monitoring all stock market activity in North America

b) Policing and prosecuting “insider trading”

c) Enforces securities laws in the United States

d) Approving all new IPO share offerings

 

Answer: c) Enforces security laws in the US

                                             The SEC governs all US security transactions