Stock Market Quiz Questions And Answers

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Stock Market Quiz Questions And Answers - Quiz

Test your knowledge about the stock market and stocks with this fantastic and straightforward stock market quiz today! The stock market is volatile, and nobody knows where it will go and where it will end up, not even the people who manipulate it themselves or through agencies. In this kind of volatile environment, you need to keep on your toes if you wish to make a profit off of the stocks!


Questions and Answers
  • 1. 

    What is the Stock Market?

    • A.

      The Stock Market is a market where people bet on race horses to gain some money.

    • B.

      The Stock Market is a market where people buy products which the merchants have a lot of stock of

    • C.

      The Stock Market is a market where people can buy stocks which are shares of companies.

    Correct Answer
    C. The Stock Market is a market where people can buy stocks which are shares of companies.
    Explanation
    The correct answer is the third option. The Stock Market is a place where individuals can purchase stocks, which represent ownership in a company. It is a platform where investors can buy and sell shares of publicly traded companies. This allows individuals to invest in and potentially profit from the success of these companies.

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  • 2. 

    What do the bear and the bull stand for?

    • A.

      The bear means stocks are falling and the bull means stocks are going up.

    • B.

      They are signs that the Stock Market is opened and closed.

    • C.

      The bear means stocks are rising and the bull means stocks are falling.

    Correct Answer
    A. The bear means stocks are falling and the bull means stocks are going up.
    Explanation
    The bear and the bull are commonly used symbols in the stock market to represent the direction of the market. The bear symbolizes a downward trend in the market, indicating that stock prices are falling. On the other hand, the bull represents an upward trend in the market, suggesting that stock prices are rising. These symbols are used to help investors and traders understand the current market conditions and make informed decisions about buying or selling stocks.

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  • 3. 

    How many types of stocks there are?

    • A.

      2

    • B.

      4

    • C.

      5

    • D.

      8

    Correct Answer
    B. 4
    Explanation
    There are four types of stocks.

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  • 4. 

    What factors affect stock market?

    • A.

      Natural Disasters

    • B.

      Inflation

    • C.

      Labor strike

    • D.

      Terrorist attack

    • E.

      Changes in oil price

    • F.

      Internal reformation within one company

    • G.

      Annual leave of CEO of a company

    Correct Answer(s)
    A. Natural Disasters
    B. Inflation
    C. Labor strike
    D. Terrorist attack
    E. Changes in oil price
    Explanation
    The factors that affect the stock market include natural disasters, inflation, labor strikes, terrorist attacks, and changes in oil prices. These events can have a significant impact on the economy, leading to fluctuations in stock prices. Natural disasters, such as hurricanes or earthquakes, can disrupt supply chains and cause companies to incur significant losses. Inflation erodes the purchasing power of consumers, affecting corporate profits and investor sentiment. Labor strikes can disrupt production and lead to financial losses for companies. Terrorist attacks create uncertainty and can negatively impact investor confidence. Changes in oil prices affect industries that rely heavily on energy, such as transportation and manufacturing. These factors collectively influence the stock market and can cause volatility in stock prices.

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  • 5. 

    Which statement about blue chips stocks is correct?

    • A.

      Earnings are used for reinvestment in order to maintain the growing trend of the stocks

    • B.

      No dividends

    • C.

      They are traded below its market price

    • D.

      The stocks are consistently profitable with a dividend payment

    Correct Answer
    D. The stocks are consistently profitable with a dividend payment
    Explanation
    Blue chip stocks are well-established companies with a history of consistent profitability. These companies typically pay dividends to their shareholders as a way to distribute a portion of their profits. Therefore, the statement that "the stocks are consistently profitable with a dividend payment" is correct.

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  • 6. 

    Penny stocks refer to low-priced stock investments. These stocks are usually traded in the stock exchange.

    • A.

      True

    • B.

      False

    Correct Answer
    B. False
    Explanation
    Penny stocks do not necessarily refer to low-priced stock investments. While penny stocks are generally low-priced, the term specifically refers to stocks that trade at a very low price and have a small market capitalization. These stocks are typically traded over-the-counter rather than on a stock exchange. Therefore, the statement that penny stocks are usually traded in the stock exchange is incorrect.

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  • 7. 

    ___________________ equips with the potential of a superior level of earnings in the future. The earnings are used for reinvestment in order to maintain the growing trend of these stocks. Therefore, growth stocks do not pay dividends.

    Correct Answer
    Growth Stock
    Explanation
    Growth stocks are stocks that have the potential for higher earnings in the future. These stocks reinvest their earnings back into the company to fuel further growth, rather than paying dividends to shareholders. This strategy allows the company to maintain a growing trend and potentially increase the value of the stock over time. Therefore, growth stocks do not pay dividends to shareholders.

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  • 8. 

    Value stocks are usually traded below the market price. They are considered to have low-term potential growth because of the long-term growth of the company associated with the stocks.

    • A.

      True

    • B.

      False

    Correct Answer
    A. True
    Explanation
    Value stocks are typically traded below the market price because they are considered undervalued by investors. These stocks are believed to have low short-term potential growth, but they are expected to have long-term growth due to the company's fundamentals. Therefore, the statement that value stocks are usually traded below the market price and have low-term potential growth is true.

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  • 9. 

    An "illliquid market"is also called a thin market and is characterized by:

    • A.

      The lack of buyers and sellers

    • B.

      The lack of alternative investment venues

    • C.

      The lack of stocks traded

    Correct Answer
    A. The lack of buyers and sellers
    Explanation
    An illiquid market, also known as a thin market, is characterized by a lack of buyers and sellers. This means that there are fewer participants in the market, resulting in lower trading activity and less liquidity. In an illiquid market, it can be more difficult to buy or sell assets, as there may not be enough interested parties to match orders. This lack of buyers and sellers can lead to wider bid-ask spreads and increased price volatility.

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  • 10. 

    The breadth of the market shows

    • A.

      The number of stocks traded out of the ones listed

    • B.

      The volume of trades

    • C.

      The difference between buying and selling

    Correct Answer
    A. The number of stocks traded out of the ones listed
    Explanation
    The breadth of the market refers to the number of stocks traded out of the ones listed. It indicates the overall activity and participation in the market. A higher breadth suggests a larger number of stocks being traded, which can indicate a more active and liquid market. On the other hand, a lower breadth may indicate lower market activity and limited participation. Therefore, the number of stocks traded out of the ones listed is a valid measure of the breadth of the market.

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  • 11. 

    An "Ask" and "Bid" is the _______ price and _________ price.

    Correct Answer
    lowest price to sell, highest price to buy
    Explanation
    The "Ask" price refers to the lowest price at which a seller is willing to sell a particular asset or security. On the other hand, the "Bid" price represents the highest price at which a buyer is willing to buy the same asset or security. Therefore, the "Ask" price is the lowest price to sell, while the "Bid" price is the highest price to buy.

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  • 12. 

    Book value refers to

    • A.

      The value of the company excluding its tangible assets

    • B.

      The value of the company as done by the external appraiser

    • C.

      Theoretical value of company if all assets are liquidated or sold at prices shown on balance sheet

    Correct Answer
    C. Theoretical value of company if all assets are liquidated or sold at prices shown on balance sheet
    Explanation
    Book value refers to the theoretical value of a company if all its assets were to be liquidated or sold at the prices listed on the balance sheet. It represents the net worth of a company after deducting its liabilities from its assets. This value is based on the historical cost of the assets and does not take into account any appreciation or depreciation in their market value. Book value is often used as a measure of a company's intrinsic value and can be compared to its market value to assess whether a stock is undervalued or overvalued.

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  • 13. 

    An investment is well-hedged if

    • A.

      An investor limits losses on a certain stock by establishing an opposite position in the same stock

    • B.

      It is protected against losses

    • C.

      Both A and B

    Correct Answer
    C. Both A and B
    Explanation
    An investment is well-hedged if the investor limits losses on a certain stock by establishing an opposite position in the same stock. This strategy helps protect against losses by offsetting potential declines in the stock's value with gains from the opposite position. By implementing both A and B, the investor is effectively hedging their investment and minimizing the risk of significant losses.

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  • 14. 

    What does "Short Selling" mean?

    • A.

      Selling securities that the investor has borrowed and prepared to buy back later at a lower price

    • B.

      An trading strategy used to profit from a price decline

    • C.

      Both A and B

    Correct Answer
    C. Both A and B
    Explanation
    Short selling refers to the practice of selling securities that an investor has borrowed, with the intention of buying them back at a later time when the price has decreased. This strategy is used to profit from a decline in the price of the securities. Therefore, the correct answer is "Both A and B" as it encompasses both the act of selling borrowed securities and the intention to profit from a price decline.

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  • 15. 

    The public usually buy stocks from _________  ___________.

    Correct Answer
    stock brokers
    Explanation
    The public usually buy stocks from stock brokers because stock brokers act as intermediaries between buyers and sellers in the stock market. They have access to the necessary resources and expertise to execute stock trades on behalf of their clients. Stock brokers provide valuable services such as market research, investment advice, and assistance in navigating the complexities of the stock market. By buying stocks through stock brokers, the public can benefit from their knowledge and experience in making informed investment decisions.

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  • May 31, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Aug 21, 2011
    Quiz Created by
    Danning
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