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What is CFD
Introduction to Financial Markets
Check your knowledge of the financial markets
Question 1 of 13
Which market is generally considered safer?
Question 2 of 13
In what case would the spread be wider?
When the number of sellers outweighs the number of buyers
When shares are sold and bought regularly and are in high demand
Neither would affect the spread
Question 3 of 13
What doesn’t affect the spread?
Availability – how widely and easily the shares of a company can be traded
Competition – how many other companies operate in the same market
Market volatility – both bad and good news, economic and company specific
Volume – if the amount of shares is changing hands quickly
Question 4 of 13
Which of the following are highly illiquid?
Stocks of Apple or Unilever
Complex financial instruments, such as derivatives
Justin Bieber or Beyonce concert tickets
Question 5 of 13
Liquidity is about how quickly you can exchange, sell or re-sell an asset
Question 6 of 13
Which of the following is false about market makers?
They provide both the buy and the sell price of a financial security
They provide a measure of liquidity with a ready-prepared bid-and-ask spread
They can buy and sell at any time and will buy a stock, even if they don’t have a buyer lined up
They bring buyers and sellers together
Question 7 of 13
Spread margins are very thin for most market makers. But by trading millions of shares over the course of a day, they can make substantial profits.
Question 8 of 13
Which Stock Exchange is the biggest by market capitalisation?
London Stock Exchange (LSE)
New York Stock Exchange (NYSE)
Tokyo Stock Exchange (TSE)
Shanghai Stock Exchange (SSE)
Question 9 of 13
What does IPO mean?
Initial Player Offset
It's Probably Overpriced
Immediate Profit Opportunities
Initial Public Offering
Question 10 of 13
What does OTC mean?
Online Travel Company
Online Trading Company
Other Than Clinton
Over The Counter
Question 11 of 13
What does HFT mean?
Human Factors in Telecommunications
Horizontal Flight Test
Happy Fun Time
High Frequency Trader
Question 12 of 13
Assume the spread on an instrument is 5 cents. What is the ask price, if the bid price is $45.32?
Question 13 of 13
What is not the reason for which the difference between the “bid” and the “ask” spread has narrowed over the years for investors?
The Global Financial Crisis of 2008
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