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Quiz about Investing in Stocks and Options
Quiz about Investing in Stocks and Options

Investing in Stocks and Options Quiz


Terms and strategies from the investment world

A multiple-choice quiz by ionstox. Estimated time: 4 mins.
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Author
ionstox
Time
4 mins
Type
Multiple Choice
Quiz #
329,534
Updated
Jun 02 23
# Qns
10
Difficulty
Average
Avg Score
8 / 10
Plays
637
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Question 1 of 10
1. When a market is generally going up in value it is known as a ____ market? Hint


Question 2 of 10
2. When a market is going down in value it is known as a _____ market? Hint


Question 3 of 10
3. One strategy to make money when a stock is declining in value is to borrow shares and sell them at the current market price - hopefully these shares can then be rebought at a lower price and returned. This strategy is known by what two-word phrase? Hint


Question 4 of 10
4. Stock options can provide a way to make huge profits when large price moves occur. In order to benefit from a FALLING stock price, an investor would want to own what kind of stock option? Hint


Question 5 of 10
5. Stock options provide a way to make huge profits when large price moves occur. In order to benefit from a RISING stock price an investor would want to own what kind of stock option? Hint


Question 6 of 10
6. It is possible to limit losses on many stock investments. One such way is to institute automatic sell orders if the stock falls to a certain price. This triggers the brokerage firm to sell a particular holding. This is known by what name? Hint


Question 7 of 10
7. If you are feeling optimistic about a stock going up in price, it is possible to acquire more stock than you can afford by buying stock on what? Hint


Question 8 of 10
8. Risky investment strategies where the investor has not limited his/her losses is known as a _______ position. What is the missing word? Hint


Question 9 of 10
9. What is an "odd lot" when it comes to a stock position/holding? Hint


Question 10 of 10
10. Which of the following is not a major USA stock exchange? Hint



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Quiz Answer Key and Fun Facts
1. When a market is generally going up in value it is known as a ____ market?

Answer: Bull

Running full speed ahead...
2. When a market is going down in value it is known as a _____ market?

Answer: Bear

Symbolizing a growling and grumbling attitude. However, there are still ways for investors to make money even when markets or certain stocks are going down.
3. One strategy to make money when a stock is declining in value is to borrow shares and sell them at the current market price - hopefully these shares can then be rebought at a lower price and returned. This strategy is known by what two-word phrase?

Answer: Short Selling

If the price goes up the position/shares must be covered/bought back at a higher price.
4. Stock options can provide a way to make huge profits when large price moves occur. In order to benefit from a FALLING stock price, an investor would want to own what kind of stock option?

Answer: Put options

A put option is a contractual agreement whereby the writer/originator of the "put" guarantees to buy the underlying stock issue at a certain strike price before the expiration date. The buyer of the put can either be seeking to protect his/her stock investment - or make a potentially large profit from a falling stock price.
5. Stock options provide a way to make huge profits when large price moves occur. In order to benefit from a RISING stock price an investor would want to own what kind of stock option?

Answer: Call option

A call option is a contractual agreement whereby the writer/originator of the "call" guarantees to sell the underlying stock issue at a certain strike price before the expiration date. The buyer of the call can make a potentially large profit if the underlying stock price rises.
6. It is possible to limit losses on many stock investments. One such way is to institute automatic sell orders if the stock falls to a certain price. This triggers the brokerage firm to sell a particular holding. This is known by what name?

Answer: Stop loss order

A stop loss order does not guarantee an exit point price. It simply institutes an order to sell. Sometimes gaps in prices occur pre/post trading hours and even during volatile sessions.
7. If you are feeling optimistic about a stock going up in price, it is possible to acquire more stock than you can afford by buying stock on what?

Answer: Margin

If you are wrong and the price of your stock goes down, you can expect to receive a "margin call", in which the brokerage house will demand cash and you must either sell some shares to cover the value loss or make a quick deposit of cash to your account.
8. Risky investment strategies where the investor has not limited his/her losses is known as a _______ position. What is the missing word?

Answer: Naked

This simply means putting yourself in an exposed/uncovered situation, and has nothing to do with exhibitionism!
9. What is an "odd lot" when it comes to a stock position/holding?

Answer: Any number of shares which is not a multiple of 100

Examples of odd lots would be 45, 52 or 87 shares. A "round lot" is a standard block of 100 shares, or increments thereof.
10. Which of the following is not a major USA stock exchange?

Answer: SEC

SEC stands for the Security Exchange Commission. They are supposed to protect investors by ensuring fair practices and overall professional/ethical business operations and practices.

NYSE = New York Stock Exchange
NASDAQ = National Association of Securities Dealers Automated Quotations
AMEX = formerly American Stock Exchange - now known as NYSE Amex Equities
Source: Author ionstox

This quiz was reviewed by FunTrivia editor stedman before going online.
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