Stock Market IQ Test - Investing 101

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1 of 15) Which of the four investments has shown the highest returns historically?

Cash

Stocks

Bonds

Real Estate

2 of 15) Which feature do Exchange-Trade Funds (ETFs) have in common with mutual funds?

They can be traded at any time

One investment purchases a group of assets

They are tied to an index

They are both deliberately confusing

3 of 15) How is the term Beta used to understand stock data?

It is a test to see if a stock will sell in the stock market

It measures the change in stock price compared to yesterday's closing price

It measures the volatility of a stock

It indicates the total shares outstanding multiplied by the current stock price

4 of 15) What is the Sharpe Ratio Index?

A way to spread out your stock sales

A conservative way to purchase and sell stocks

A pen that helps you calculate stock prices

A measure of risk that helps you select the right stocks

5 of 15) What does technical analysis look at for investment purposes?

The price at which the stock trades

A company's profit margins

A company's revenue growth

A company's competition

6 of 15) What happens when an investor over-diversifies?

They create high-risk scenarios

They drive their money manager crazy

They are spread too thin

They make more money

7 of 15) What is implied volatility?

A measure of how risk could occur

A calculation that compares the current market price and theoretical future value

Something that only impacts option writers

A risk probability equation

8 of 15) What does the put versus call interest do?

Measure overall market sentiment

Provide a measure of banking interest rates

Indicate who is making money and losing money in options

Offer a precise mathematical formula for pricing options

9 of 15) What partially defines a Bull Market?

Low stock prices

Stimulating energy drinks

Lack of investor confidence

A positive outlook about the current business cycle

10 of 15) What are the dangers in choosing a short selling strategy?

You may receive a margin call order.

You may end up with very high losses

The bank holding your mortgage may not agree

11 of 15) What is the best course of action when faced with two stocks, one gaining value, the other losing value?

Sell the losing stock and hold onto the winning stock

Become a deer in the headlights and do nothing

Decide how to proceed based on your gut instincts

Sell the winning stock, take the profit, and wait for the losing stock to regain its value

12 of 15) What are Trailing Stop Orders?

An order that falls behind the actions on the stock market

An order that comes with a set of conditions

An order that sets a distance between the market price and a stop order

An immediate order to sell a security

13 of 15) What is a Head and Shoulders pattern?

A pattern that is not often correct

A pattern for identifying stocks that are about to rise

A bearish signal that prices will fall after the pattern formation is done

A bullish signal about prices.

14 of 15) What does arbitrage involve?

Trading one stock for another very quickly

Price similarities in two different markets

A strategy that is risky and may not result in any profit

Price differences across two or more markets for the same investment

15 of 15) What can be learned from Warren Buffet's approach to investing?

Skip the research

Sell, sell, sell

Use a buy and hold strategy

Pay attention to rumors and pure market price indicators

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