Finance Quiz: Introduction to Markets

Question 1 of 13

Which market is generally considered safer?

Currencies

Company stocks

Bonds

Options

Question 2 of 13

In what case would the spread be wider?

When the number of sellers outweighs the number of buyers

Neither would affect the spread

When shares are sold and bought regularly and are in high demand

Question 3 of 13

What doesn’t affect the spread?

Volume – if the amount of shares is changing hands quickly

Market volatility – both bad and good news, economic and company specific

Competition – how many other companies operate in the same market

Availability – how widely and easily the shares of a company can be traded

Question 4 of 13

Which of the following are highly illiquid?

Justin Bieber or Beyonce concert tickets

Stocks of Apple or Unilever

Cash

Complex financial instruments, such as derivatives

Question 5 of 13

Liquidity is about how quickly you can exchange, sell or re-sell an asset

False

True

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 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

They provide a measure of liquidity with a ready-prepared bid-and-ask spread

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.

True

False

Question 8 of 13

Which Stock Exchange is the biggest by market capitalisation?

Tokyo Stock Exchange (TSE)

Shanghai Stock Exchange (SSE)

London Stock Exchange (LSE)

New York Stock Exchange (NYSE)

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?

Other Than Clinton

Online Travel Company

Over The Counter

Online Trading Company

Question 11 of 13

What does HFT mean?

Happy Fun Time

High Frequency Trader

Human Factors in Telecommunications

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?

$40.32

$45.32

$45.37

$45.27

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?

Rising demand

The Global Financial Crisis of 2008

Falling supply

Technological advancements