Stock Exchange
Commerce · 50 practice questions
Importance and functions of the stock exchange; types of securities (stocks, shares, bonds, debentures); procedure of transactions and speculations; the Second-Tier Securities Market (listing requirements, eligible companies, advantages, operating regulations).
- State the importance and functions of the Stock Exchange.
- Identify the different securities traded on it.
- Analyse the procedure of transactions and speculations.
- Appraise the advantages and operating regulations of the Second-Tier Securities Market.
Try a few questions
- Practice question 1
A fundamental principle of investing in securities is the 'risk-return trade-off', which suggests that investments offering potentially higher returns generally also carry
- A.Higher risk, since greater potential reward is usually associated with greater potential for loss
- B.Guaranteed returns with absolutely no possibility of loss
- C.No risk whatsoever
- D.Lower risk than safer, lower-return investments
Show the answer
A. Higher risk, since greater potential reward is usually associated with greater potential for loss
The risk-return trade-off suggests higher potential returns generally come with higher risk.
- Practice question 2
'Insider trading', an illegal practice on the stock exchange, involves trading a company's securities based on
- A.A company's officially published annual report
- B.Publicly available information accessible to all investors
- C.Material, non-public information about the company, giving the trader an unfair advantage over other investors
- D.A stockbroker's general market advice
Show the answer
C. Material, non-public information about the company, giving the trader an unfair advantage over other investors
Insider trading involves trading based on material, non-public information, giving an unfair advantage over others.
- Practice question 3
A 'bear market', the opposite of a bull market, refers to a period during which security prices are generally
- A.Falling, often accompanied by widespread investor pessimism
- B.Rising steadily with strong investor confidence
- C.Fixed permanently by regulation
- D.Available only to institutional investors
Show the answer
A. Falling, often accompanied by widespread investor pessimism
A bear market is a period of generally falling security prices, often with widespread investor pessimism.
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