Finance Quiz: Introduction to Markets

Question 1 of 13

Which market is generally considered safer?

Company stocks

Bonds

Currencies

Options

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

Volume – if the amount of shares is changing hands quickly

Competition – how many other companies operate in the same market

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

Question 4 of 13

Which of the following are highly illiquid?

Stocks of Apple or Unilever

Justin Bieber or Beyonce concert tickets

Complex financial instruments, such as derivatives

Cash

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 can buy and sell at any time and will buy a stock, even if they don’t have a buyer lined up

They provide both the buy and the sell price of a financial security

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?

Shanghai Stock Exchange (SSE)

Tokyo Stock Exchange (TSE)

New York Stock Exchange (NYSE)

London Stock Exchange (LSE)

Question 9 of 13

What does IPO mean?

It's Probably Overpriced

Immediate Profit Opportunities

Initial Public Offering

Initial Player Offset

Question 10 of 13

What does OTC mean?

Online Travel Company

Other Than Clinton

Over The Counter

Online Trading Company

Question 11 of 13

What does HFT mean?

Horizontal Flight Test

Human Factors in Telecommunications

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

$45.32

$45.37

$40.32

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?

Technological advancements

The Global Financial Crisis of 2008

Rising demand

Falling supply