Quiz 4. Advanced level trading knowledge test

Question 1 of 15

What is a circuit breaker in trading?

A system that reduces the price of a security in case of a market crash
A system that automatically halts trading in case of a market crash
A system that increases the price of a security in case of a market crash

Question 2 of 15

What is the difference between a market order and a limit order?

A market order is an order to buy or sell a security at a specified price or better, while a limit order is an order to buy or sell a security at the current market price.
A market order is an order to buy or sell a security at the current market price, while a limit order is an order to buy or sell a security at a specified price or better.
A market order is an order to buy or sell a security at the next available price, while a limit order is an order to buy or sell a security at the last available price.

Question 3 of 15

What is the difference between alpha and beta in investing?

Alpha measures a security's risk-adjusted return compared to a benchmark, while beta measures a security's volatility compared to the overall market.
Alpha measures a security's volatility compared to the overall market, while beta measures a security's risk-adjusted return compared to a benchmark.
Alpha measures a security's return compared to the overall market, while beta measures a security's return compared to a benchmark.

Question 4 of 15

What is the difference between a forward contract and a futures contract?

A forward contract is a standardised agreement to buy or sell a security at a future date at a specified price. In contrast, a futures contract is an agreement to buy or sell a security at a future date at a specified price.
A forward contract is a financial instrument that allows traders to speculate on the future price movements of a security. In contrast, a futures contract is a financial instrument that allows traders to hedge against price movements.
A forward contract is an agreement to buy or sell a security at a future date at a specified price. In contrast, a futures contract is a standardised agreement to buy or sell a security at a future date at a specified price.

Question 5 of 15

What is a margin call, and how does it work?

A margin call is a request from a trader for additional funds from their broker to maintain a minimum margin level, and it works by opening new positions if the trader meets the margin requirements.
A margin call is a request from a broker for a trader to deposit additional funds into their account to maintain a minimum margin level. It works by closing the trader's positions if they do not meet the margin requirements.
A margin call is a request from a broker for a trader to reduce their exposure to certain security, and it works by liquidating the trader's positions if they do not comply.

Question 6 of 15

What is a dark pool, and how does it differ from a public exchange?

A dark pool is a public trading venue where buyers and sellers can trade securities anonymously, and it differs from a public exchange in that it does not charge fees or commissions.
A dark pool is a private trading venue where buyers and sellers can trade securities openly, and it differs from a public exchange in that it offers faster execution speeds.
A dark pool is a private trading venue where buyers and sellers can trade securities anonymously, and it differs from a public exchange in that it does not display quotes or order book data to the public.

Question 7 of 15

What is slippage, and how does it impact trading performance?

Slippage is the difference between the expected price of a trade and the actual price at which the trade is executed. It can impact trading performance by increasing transaction costs and reducing profit margins.
Slippage is the time delay between placing an order and its execution, and it can impact trading performance by causing traders to miss out on profitable opportunities.
Slippage is the difference between the bid and asks price of a security, and it can impact trading performance by reducing liquidity in the market.

Question 8 of 15

What is a short squeeze, and how does it occur?

A short squeeze is a situation where traders who have bought security are forced to sell it at a lower price due to a sudden decrease in demand, and it occurs when there is a large number of long positions in a security with a high float.
A short squeeze is a situation where traders who have shorted security are forced to repurchase it at a higher price due to a sudden increase in demand. It occurs when there are many short positions in a security with a low float.
A short squeeze is a situation where traders who have bought security can sell it at a higher price due to a sudden increase in demand, and it occurs when there is a large number of long positions in a security with a low float.

Question 9 of 15

What is the difference between technical analysis and fundamental analysis?

Technical analysis is a method of analysing securities based on financial and economic data, while fundamental analysis is a method of analysing securities based on past price and volume data.
Technical analysis is a method of analysing securities based on past price and volume data, while fundamental analysis is a method of analysing securities based on financial and economic data.
Technical analysis is a method of analysing securities based on qualitative factors such as company culture and management style, while fundamental analysis is a method of analysing securities based on quantitative factors such as earnings and revenue.

Question 10 of 15

What is a butterfly spread, and how is it used in options trading?

A butterfly spread is an options strategy that involves buying a call option and a put option at the same strike price, while selling two call options and two put options at higher and lower strike prices, and it is used to profit from a security's price moving in either direction.
A butterfly spread is an options strategy that involves buying a call option and a put option at different strike prices, while selling two call options and two put options at the same strike price, and it is used to profit from a security's price moving in either direction.
A butterfly spread is an options strategy that involves buying a call option and a put option at the same strike price, while selling two call options and two put options at higher and lower strike prices, and it is used to profit from a security's price staying within a certain range.

Question 11 of 15

What is an order book, and how is it used in trading?

An order book is a list of all executed trades for a security on a particular exchange, and it is used to determine the historical price movements of the security.
An order book is a list of all pending orders for a security on a particular exchange, and it is used to determine the potential price movements of the security.
An order book is a list of all buy and sell orders for a security on a particular exchange, and it is used to determine the supply and demand for the security at different price levels.

Question 12 of 15

What is a black swan event in trading?

An event that is easily predictable
An event that is impossible to predict
An event that occurs only once in a decade

Question 13 of 15

What is the purpose of the Sharpe ratio in trading?

To measure the volatility of an investment
To measure the liquidity of an investment
To measure the risk-adjusted return of an investment

Question 14 of 15

What is the difference between a limit order and a stop order in trading?

A limit order sells a security at a specific price or lower, while a stop order is used to buy a security at a specific price or higher.
A limit order is used to buy a security at the current market price, while a stop order is used to sell a security at the current market price.
A limit order sells a security at the current market price, while a stop order is used to buy a security at the current market price.

Question 15 of 15

What is the purpose of the VIX index in trading?

To measure the volatility of the S&P 500 index
To measure the momentum of the S&P 500 index
To measure the liquidity of the S&P 500 index

Quiz 4. Advanced level trading knowledge test

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