Quiz 5. Professional level trading knowledge test.

Question 1 of 15

What is the purpose of the efficient market hypothesis in trading?

To show that it is easy to outperform the market consistently
To show that it is impossible to outperform the market consistently
To show that the market is always irrational
To show that the market is always rational

Question 2 of 15

What is the difference between a stock and a bond in trading?

A stock represents ownership in a company, while a bond represents a loan to a company.
A stock represents a loan to a company, while a bond represents ownership in a company.
A stock represents ownership in a government, while a bond represents a loan to a government.
A stock represents a loan to a government, while a bond represents ownership in a government.

Question 3 of 15

What is the purpose of the risk management plan in trading?

To maximise the potential gains in a trade
To guarantee profits in a trade
To minimise the potential losses in a trade
To eliminate the potential risks in a trade

Question 4 of 15

What is a margin call in trading?

A demand by an investor for a broker to deposit additional funds to maintain a minimum margin level.
A demand by a broker to liquidate an investor's position due to a margin shortfall.
A demand by an investor to liquidate a broker's position due to a margin shortfall.
A demand by a broker for an investor to deposit additional funds to maintain a minimum margin level.

Question 5 of 15

What is a dark pool in trading?

A private exchange where large investors can buy and sell securities without revealing their orders to the public.
A public exchange where small investors can buy and sell securities without revealing their orders to the public.
A private exchange where small investors can buy and sell securities without revealing their orders to the public.
A public exchange where large investors can buy and sell securities without revealing their orders to the public.

Question 6 of 15

What is high-frequency trading?

Trading that uses human intuition and experience to make trades.
Trading that focuses on long-term investments rather than short-term gains.
Trading that uses complex algorithms to analyse and execute trades at high speeds.
Trading that only occurs during specific hours of the day.

Question 7 of 15

What is the difference between limit and stop orders?

A limit order is an order to buy or sell a security at the current market price, while a stop order is an order to buy or sell a security once it reaches a certain price.
A limit order is an order to buy or sell a security at a certain price or better, while a stop order is an order to buy or sell a security once it reaches a certain price.
A limit order is an order to buy or sell a security at a certain price or better, while a stop order is an order to buy or sell a security at the current market price.
A limit order is an order to buy or sell a security once it reaches a certain price, while a stop order is an order to buy or sell a security at the current market price.

Question 8 of 15

What is the difference between fundamental analysis and technical analysis?

Fundamental analysis involves analysing charts and market data, while technical analysis involves analysing a company's financial statements and economic indicators.
Fundamental analysis is used to predict short-term price movements, while technical analysis is used to predict long-term price movements.
Fundamental analysis is used to predict long-term price movements, while technical analysis is used to predict short-term price movements.
Fundamental analysis involves analysing a company's financial statements and economic indicators, while technical analysis involves analysing charts and market data

Question 9 of 15

What is “dark data” in the trading industry?

Data that is only available to a select group of traders
Unstructured data that is not captured by traditional trading platforms
Data that is not publicly disclosed by companies
Data that is encrypted and inaccessible to most traders

Question 10 of 15

What is a “black swan” event in trading?

A rare and unforeseen event that has a major impact on financial markets
An event that only affects a specific industry or market sector
A term used to describe high volatility in the markets
A term used to describe fraudulent trading practices

Question 11 of 15

What is a “margin call” in trading?

A request to close out a position in a trading account
A request to transfer funds from a trading account to a bank account
A request to open a new trading account with a different brokerage firm
A request from a brokerage firm to deposit more funds into a trading account to meet minimum requirements

Question 12 of 15

What is the difference between a futures contract and an options contract?

A futures contract gives the holder the right but not the obligation to buy or sell an asset at a certain price, while an options contract gives the holder the obligation to buy or sell an asset at a certain price.
A futures contract gives the holder the right but not the obligation to buy or sell an asset at a certain price, while an options contract gives the holder the right but not the obligation to buy or sell an asset at a certain price.
A futures contract gives the holder the obligation to buy or sell an asset at a certain price, while an options contract gives the holder the obligation to buy or sell an asset at a certain price.
A futures contract gives the holder the obligation to buy or sell an asset at a certain price, while an options contract gives the holder the right but not the obligation to buy or sell an asset at a certain price.

Question 13 of 15

What is a “circuit breaker” in trading?

A trading strategy used to take advantage of small price differences in different markets
A trading strategy used to take advantage of price movements over a longer period of time
A mechanism that prevents insider trading in a particular security
A mechanism that automatically stops trading in a particular security if the price moves too far in either direction

Question 14 of 15

What is a “long squeeze” in trading?

A sudden decrease in the value of a security due to negative news or events
A sudden increase in the value of a security due to positive news or events
A situation where investors who have taken long positions in a security are forced to sell their holdings due to a lack of available funds
A situation where investors who have taken short positions in a security are forced to buy back their positions due to a lack of available shares to borrow

Question 15 of 15

What is the difference between fundamental and technical analysis in trading?

Fundamental analysis examines a company's financial and economic factors, while technical analysis focuses on price movements and trends.
Fundamental analysis focuses on price movements and trends, while technical analysis examines a company's financial and economic factors.
Fundamental and technical analyses look at a company's financial and economic factors.
Fundamental and technical analyses focus on price movements and trends.

Quiz 5. Professional level trading knowledge test.

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