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Quiz about MarketMaker2
Quiz about MarketMaker2

MarketMaker2 Trivia Quiz


If you liked the first one, you'll love this tough quiz about financial markets

A multiple-choice quiz by ryan2525. Estimated time: 5 mins.
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Author
ryan2525
Time
5 mins
Type
Multiple Choice
Quiz #
4,465
Updated
Dec 03 21
# Qns
10
Difficulty
Tough
Avg Score
5 / 10
Plays
578
- -
Question 1 of 10
1. Federal Reserve Chairmen are frequently described as being 'hawks' or 'doves'. If the current Chairman raised rates by 100 basis points, he would be considered a what?

Answer: (Paul Volcker)
Question 2 of 10
2. What does LIBOR stand for? Hint


Question 3 of 10
3. When pricing options, investors and analysts refer to what model or theory? Hint


Question 4 of 10
4. When trading options, if one believed the markets would see increased volatility in the near future, he or she would use what kind of trading strategy? Hint


Question 5 of 10
5. If one wanted to get a good indication of the overall performance of the equity markets at a certain point in time, he or she would look at the performance of what index? Hint


Question 6 of 10
6. For a number of years, Warren Buffet, the famous investor, refused to invest in a certain sector of the market. What sector was this? Hint


Question 7 of 10
7. The late 1980's saw the rise of many things, including junk bonds takeovers. More we saw a dramatic rise in takeovers which were primarily financed with bank debt, what is this type of transaction called? Hint


Question 8 of 10
8. When the markets are said to undergo a 'correction', they drop by a certain amount. What percentage drop in value constitutes a 'correction'? Hint


Question 9 of 10
9. To find the value of a company, what numbers are typically aggregated and discounted? Hint


Question 10 of 10
10. The great Baring banking family was recently made insolvent by the reckless trading of what type of security? Hint



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Most Recent Scores
Mar 27 2024 : gogetem: 9/10
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quiz
Quiz Answer Key and Fun Facts
1. Federal Reserve Chairmen are frequently described as being 'hawks' or 'doves'. If the current Chairman raised rates by 100 basis points, he would be considered a what?

Answer: Hawk

If a Federal Reserve Chairman raised the Federal Funds rate by 100 bps or 1 percentage point, he would be considered tough on inflation and would therefore be regarded as an inflation 'hawk.'
2. What does LIBOR stand for?

Answer: London InterBank Offering Rate

LIBOR is used as a benchmark for pricing nearly everything in the financial markets. One might refer to a loan priced at 200 basis points over LIBOR, which would mean 2 percentage points over the current LIBOR.
3. When pricing options, investors and analysts refer to what model or theory?

Answer: Black-Scholes Model

The Black-Scholes Model was developed in the late 1980's by two Nobel Laureates who eventually used their model to become extremely rich in the options markets. Today, their model is used daily by anyone who works with derivatives.
4. When trading options, if one believed the markets would see increased volatility in the near future, he or she would use what kind of trading strategy?

Answer: Straddle

A straddle strategy enables the investor to achieve rates of return that are in proportion to the volatility of the markets, with returns increasing as markets fluctuate up or down.
5. If one wanted to get a good indication of the overall performance of the equity markets at a certain point in time, he or she would look at the performance of what index?

Answer: Wilshire 5000

The Wilshire 5000 Total Market Index is a Canada-based index that holds shares of every major corporation in North America and is an excellent indication of overall market performance.
6. For a number of years, Warren Buffet, the famous investor, refused to invest in a certain sector of the market. What sector was this?

Answer: Technology

Much to the dismay of his investors, for quite some time the billionaire money manager refused to participate in the country's technology craze, citing ridiculous valuations and extreme speculation. Later, he relented sufficiently to invest in companies such as IBM and Intel, presumably once things had calmed down a little.
7. The late 1980's saw the rise of many things, including junk bonds takeovers. More we saw a dramatic rise in takeovers which were primarily financed with bank debt, what is this type of transaction called?

Answer: LBO

Leveraged buyouts were popularized by corporate raiders like Carl Icahn who became stinking rich off of every deal.
8. When the markets are said to undergo a 'correction', they drop by a certain amount. What percentage drop in value constitutes a 'correction'?

Answer: 10 percent

When an index loses 10 percent of its value, it is said to have corrected. A recession would require a 20 percent decline.
9. To find the value of a company, what numbers are typically aggregated and discounted?

Answer: Cash Flows

A rough indication of the value of a company is typically the sum of the discounted cash flows. This proves difficult because cash flows are indeed uncertain in the future. This is why the value of a firm is really decided by the markets and not number crunchers.
10. The great Baring banking family was recently made insolvent by the reckless trading of what type of security?

Answer: Futures Contracts

The great family was brought down by one man who traded options on the Nikei index in Tokyo, betting billions that it would climb to a reasonable level over a certain time. Normally a sound strategy, he did not expect a major earthquake which came and destroyed the equity markets in Japan. Since his positions were largely unhedged, his exposure was in the trillions of dollars.

The Barings were sold for change.
Source: Author ryan2525

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