Finance Quiz: Introduction to Markets

Question 1 of 13

Which market is generally considered safer?

Company stocks

Options

Bonds

Currencies

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?

Cash

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

True

False

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.

False

True

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?

$45.27

$40.32

$45.32

$45.37

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

Rising demand

Technological advancements

Falling supply

Finance Quiz