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

Real Estate

Bonds

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

They can be traded at any time

They are tied to an index

They are both deliberately confusing

One investment purchases a group of assets

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 indicates the total shares outstanding multiplied by the current stock price

It measures the volatility of a stock

4 of 15) What is the Sharpe Ratio Index?

A pen that helps you calculate stock prices

A measure of risk that helps you select the right stocks

A conservative way to purchase and sell stocks

A way to spread out your stock sales

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

A company's revenue growth

A company's competition

The price at which the stock trades

A company's profit margins

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

They are spread too thin

They drive their money manager crazy

They create high-risk scenarios

They make more money

7 of 15) What is implied volatility?

A risk probability equation

Something that only impacts option writers

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

A measure of how risk could occur

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

Measure overall market sentiment

Provide a measure of banking interest rates

Offer a precise mathematical formula for pricing options

Indicate who is making money and losing money in options

9 of 15) What partially defines a Bull Market?

Stimulating energy drinks

A positive outlook about the current business cycle

Low stock prices

Lack of investor confidence

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

You may end up with very high losses

The bank holding your mortgage may not agree

You may receive a margin call order.

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

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

Decide how to proceed based on your gut instincts

12 of 15) What are Trailing Stop Orders?

An order that falls behind the actions on the stock market

An immediate order to sell a security

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

An order that comes with a set of conditions

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

A pattern for identifying stocks that are about to rise

A pattern that is not often correct

A bullish signal about prices.

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

14 of 15) What does arbitrage involve?

Price differences across two or more markets for the same investment

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

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

Pay attention to rumors and pure market price indicators

Sell, sell, sell

Skip the research

Use a buy and hold strategy

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