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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?
Neither would affect the spread
When the number of sellers outweighs the number of buyers
When shares are sold and bought regularly and are in high demand
Question 3 of 13
What doesn’t affect the spread?
Competition – how many other companies operate in the same market
Availability – how widely and easily the shares of a company can be traded
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?
Justin Bieber or Beyonce concert tickets
Stocks of Apple or Unilever
Complex financial instruments, such as derivatives
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 a measure of liquidity with a ready-prepared bid-and-ask spread
They bring buyers and sellers together
They provide both the buy and the sell price of a financial security
They can buy and sell at any time and will buy a stock, even if they don’t have a buyer lined up
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?
Tokyo Stock Exchange (TSE)
New York Stock Exchange (NYSE)
Shanghai Stock Exchange (SSE)
London Stock Exchange (LSE)
Question 9 of 13
What does IPO mean?
It's Probably Overpriced
Initial Public Offering
Initial Player Offset
Immediate Profit Opportunities
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
Happy Fun Time
High Frequency Trader
Horizontal Flight Test
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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