Which of the following best defines the stock market?
a) A platform where bonds are traded
b) A marketplace where securities like stocks and bonds are bought and sold
c) A place for only government bond trading
d) A place where commodities are exchanged
What is a stock?
a) A government bond
b) A type of loan issued by a corporation
c) A share of ownership in a company
d) A type of currency exchange
Which of the following is an example of a security?
a) A piece of land
b) A corporate bond
c) An antique painting
d) A business license
What is the primary goal of securities analysis?
a) To predict stock prices with certainty
b) To evaluate the value of securities and make investment decisions
c) To regulate stock markets
d) To determine the profitability of a company only
Which of the following is a characteristic of a ‘bull market’?
a) Prices of securities are falling
b) There is widespread pessimism in the market
c) Prices of securities are rising
d) There is uncertainty about economic conditions
Which of the following is an example of a primary market transaction?
a) Buying stocks on the New York Stock Exchange
b) Buying newly issued shares of stock directly from a company during an IPO
c) Trading bonds in the secondary market
d) Selling options contracts in the open market
What does ‘liquidity’ mean in the context of securities?
a) The ability to buy securities without affecting their price
b) The ease with which an asset can be bought or sold without affecting its price
c) The creditworthiness of the issuer
d) The maturity date of a bond
Which of the following is an example of fundamental analysis?
a) Examining a company’s financial statements and economic factors
b) Studying the past price movements of stocks
c) Analyzing trends in interest rates
d) Watching news reports about market rumors
Which financial ratio is often used in stock analysis to assess a company’s profitability?
a) Dividend yield
b) Price-to-earnings ratio (P/E)
c) Debt-to-equity ratio
d) Return on equity (ROE)
What does a ‘bear market’ refer to?
a) A market where stock prices are rising
b) A market in which stock prices are falling
c) A market that is stable with no significant price changes
d) A market characterized by low liquidity
Which of the following is a method used to analyze the value of a stock?
a) Technical analysis
b) Emotional analysis
c) Market sentiment analysis
d) Political analysis
What is the purpose of a stock split?
a) To increase the total value of a shareholder’s investment
b) To decrease the total number of shares in circulation
c) To lower the price per share and make it more accessible to a wider range of investors
d) To change the company’s business operations
What is a stockbroker’s primary function?
a) To provide investment advice to the government
b) To buy and sell stocks and bonds on behalf of clients
c) To predict the future movements of stock prices
d) To offer loans to investors
What is a ‘blue-chip stock’?
a) A stock with high volatility and risk
b) A stock from a well-established company with a history of stable earnings
c) A stock from a company in the startup phase
d) A stock that has recently been downgraded by analysts
What does ‘market capitalization’ (market cap) refer to?
a) The total amount of money a company has raised through bonds
b) The total value of a company’s outstanding shares of stock
c) The net income of a company
d) The total amount of company debt
Which of the following is true about bonds?
a) They represent ownership in a company
b) They are considered debt securities
c) They have no maturity date
d) They are issued only by governments
Which of the following is used to describe the performance of an entire market or a sector?
a) Equity ratio
b) Index
c) Dividend payout ratio
d) Interest rate
What is the role of a securities analyst?
a) To make predictions about interest rates
b) To evaluate financial data and market trends to advise investors on securities purchases
c) To monitor market rumors and disseminate information
d) To determine government regulations for securities trading
What does the price-to-earnings (P/E) ratio indicate?
a) The return on investment from a stock
b) The relationship between the stock price and the company’s earnings per share
c) The value of dividends relative to stock price
d) The rate of return on the company’s total assets
Which of the following is typically used to measure a company’s risk?
a) Beta coefficient
b) Price-to-earnings ratio
c) Dividend yield
d) Return on investment
What does a high ‘beta’ value indicate for a stock?
a) The stock is less volatile than the market
b) The stock is more volatile than the market
c) The stock has high dividend yields
d) The stock has a low price-to-earnings ratio
What is an IPO (Initial Public Offering)?
a) The process by which a company repurchases its shares from the public
b) The first time a company offers its shares to the public for sale
c) The process of issuing bonds to raise capital
d) The procedure for merging with another company
What does ‘diversification’ mean in investment strategy?
a) Investing all funds in a single stock to maximize returns
b) Spreading investments across different asset classes to reduce risk
c) Purchasing only government bonds
d) Trading stocks frequently to take advantage of short-term price movements
What is the primary risk associated with investing in stocks?
a) Market risk or the potential for stock price fluctuations
b) The risk of company bankruptcy
c) Inflation risk
d) Currency risk
