For which of the following reasons are both fundamental and technical analyses criticized?
Because neither can accurately predict future stock price movements 100.0%
Because it is difficult to decide which one will help a person make more money 0.0%
Because the numbers needed are not readily available 0.0%
Because there are other strategies which work better 0.0%
How can a trader implement a goal always to earn 10% on stocks, and never to lose more than 2%?
By setting limit and stop loss orders on all transactions using those criteria 0%
By actively watching the stocks and try to judge when to sell 0%
BY using it as a loose guideline 0%
By asking their friends to keep them on track 0%
How can market cycles be utilized in trading stocks?
They offer no help in trading stocks. 0%
By indicating when to invest in bonds 0%
By recognizing the declines in the market when stocks can be purchased at a lower price 0%
By letting an investor know when to sell their IBM stock 0%
How is risk measured?
It is measured by classifying risk into one of the three levels of risk. 0%
Individually; each investor assesses their own risk tolerance level. 0%
As a letter: a,b,c or d 0%
Someone else assesses your risk level. 0%
How often should a trader revaluate the holdings in their portfolios?
Daily 0%
Continuously, but not daily 0%
Yearly 0%
Never 0%
In a bear market, what is a short term rally referred to as?
Bear Market Rally 0%
Bull Market Rally 0%
Bull Market 0%
Bear Market 0%
Is a stop loss order a buy or sell order?
A buy order 0%
A sell order 0%
Can be either 0%
Is neither 0%
What are the obstacles to achieving stock trading goals?
The stock market itself 0%
Inability to trade on foreign exchanges 0%
A career as a stock broker 0%
People or things which will require the trader to maneuver around them to reach their goals 0%
What do decreasing interest rates typically mean for the stock market?
Stock prices will decrease in general. 0%
Stock prices will increase in general. 0%
There will be no effect on stock prices at all. 0%
Drastic changes in stock prices will be witnessed but it is not possible to determine in which direction. 0%
What does the acronym "OTCBB" stand for?
On the Counter Buying Board 0%
On the Courier Bulletin Board 0%
Over the Counter Bulletin Board 0%
Other Time Counting Buying Board 0%
What does the saying "buy low sell high" mean?
Buy a stock when employee morale is low, sell it when it is high 0%
Invest in bonds when stock prices are high 0%
Purchase a stock when interest rates are low, sell when they are high 0%
Purchase a stock when it is at a discounted price, sell it once it has gained value in the market 0%
What factors does technical analysis primarily rely on?
Financial reports 0%
Management reports 0%
Past Price and volume 0%
Market indicators 0%
What form of analysis would a "Value Investor" utilize to identify stock opportunities?
Fundamental Analysis 0%
Technical Analysis 0%
Capital Asset Pricing Model 0%
All of the above 0%
What happens to a stop loss order when the trigger price is reached?
The order converts to a market order to sell. 0%
The seller is notified to log into their account to execute the order. 0%
The stock is purchased. 0%
An options contract is sold for the security at the trigger price. 0%
What happens to an investment if risk is mitigated properly?
Nothing specific happens to any one investment; risk mitigation is an overall portfolio tool. 0%
The stocks you purchase are guaranteed to increase. 0%
It makes for a zero sum game, with no losses or profits. 0%
Risk is assigned to someone else. 0%
What impact does the "herd" have on market trends?
It has no impact. 0%
It makes the market move in an upward direction. 0%
It leads to an increase in taxation. 0%
It dictates which way the market will run. 0%
What is "capitalization"?
The value of a company based on the number of shares outstanding and the stock price 0%
The amount of capital the founders have placed in the company 0%
The amount of debt the company holds 0%
The retained earnings value of the company 0%
What is a "speculative stock"?
A stock which has a proven track record for slow growth 0%
A stock which is high risk and has the potential for large returns or large losses 0%
A stock with a guaranteed return 0%
A stock which trades on the NASD 0%
What is a "trailing stop" order?
An order in which an investor actively changes the stop loss price of the order based on current market prices 0%
A multi tiered stop loss order 0%
A stop order placed after the purchase of the underlying stock 0%
A stop order placed before buying the underlying stock 0%
What is a good indicator of a stock being volatile?
The stock price has highs of $50 and lows of $35 in the previous year. 0%
The graph of the stock indicates it hits new highs and lows almost monthly. 0%
The management is not qualified. 0%
The stock does not declare dividends. 0%
What is a secular trend?
A near term trend 0%
A predicted trend in the future 0%
A past trend 0%
A long term trend 0%
What is a sudden and unexpected drop in stock prices on the stock market referred to as?
Market mechanics 0%
Market normalization 0%
Stock market magnitude 0%
Stock market crash 0%
What is another name for a market cycle?
Market Nomination 0%
Economic Cycle 0%
Gap Cycle 0%
Straddle 0%
What is meant by "day trading"?
Trading during market hours 0%
Trading stocks on foreign markets 0%
Purchasing stocks and selling them on the same day 0%
Holding stocks for a short period of time, not more than a week 0%
What is meant by "diversification"?
Buying as much of one stock as possible 0%
Buying only speculative stocks 0%
Purchasing stocks from varying industries to reduce overall risk 0%
Purchasing options contracts 0%
What is meant by "stop loss order"?
A stock order to purchase a stock at a specific price 0%
An order to purchase a stock after it has lost a percentage 0%
An order placed at a price lower than the current price to liquidate a stock and maintain a profit 0%
An order to purchase a stock at a specific price 0%
What is meant by "technical analysis"?
An analysis which uses fundamental information about a company 0%
An analysis which is done on a stock after it is purchased 0%
An analysis technique which utilizes both qualitative and quantitative factors 0%
A stock price analysis technique using technical aspects of a stock 0%
What is meant by a "day order"?
Buying and selling stock on the same day 0%
Contract for the stock symbol "DAY" 0%
An order which is only good for the current day, and expires if not executed at the end of the day 0%
An order that is open indefinitely 0%
What is meant by a "lagging indicator"?
A market statistic which indicates what changes will typically take place after changes in the stock market 0%
A report put out by the stock exchange 0%
One stock price dictating the price of another stock 0%
Insider information 0%
What is meant by a "leading indicator"?
A market statistic which changes after a change in stock prices 0%
A report put out by the stock market 0%
Insider information 0%
A market statistic which typically indicates ahead of time what the market will do 0%
What is meant by a "margin account"?
A stock account with a guaranteed margin return 0%
A type of stock which sells at a discount 0%
A type of account that can only trade options 0%
A type of stock trading account which essentially borrows money from the stock brokerage to purchase stocks 0%
What is meant by using the straddle stock trading strategy?
Selling a call option and purchasing a put option 0%
Purchasing two call options at different prices 0%
Owning both call and put stock options at the same stock price 0%
Purchasing two put options at different prices 0%
What is portfolio management?
Having a suite of investments to reach a goal while minimizing risk 0%
Buying shares all in one industry 0%
Actively trading stocks in your portfolio 0%
Selling securities which are not performing 0%
What is the "date of declaration" with reference to stocks?
The date a stock is initially sold 0%
The date of the financial report release 0%
The date the fiscal year ends 0%
The date a dividend is declared 0%
What is the "gap" trading strategy?
Trading a stock when its opening price is different from the previous day's closing price 0%
Trading stock in the company GAP 0%
Looking for consistent companies who return large dividends 0%
Buying and selling the same stock at different prices at the same moment 0%
What is the difference between a stock trader and a stock investor?
There is no difference. Both terms refer to people who invest in stocks. 0%
Stock traders are the same as stock brokers but stock investors are not. 0%
Stock traders profit on short term price changes, stock investors profit on long term growth. 0%
A stock investor invests only in blue chip stocks, a stock trader only in risky stocks. 0%
What is the duration of a market cycle?
One year 0%
Depends on the product, market, economic situation, and cannot be stated 0%
Limited to 10 years at the most 0%
Typically two years 0%
What is the ideal number of portfolios for an experienced trader?
What is the main advantage of a stop loss order?
It limits all risk. 0%
It protects the investor's profit without his having to monitor the stock price constantly. 0%
It limits an investor's profit. 0%
It creates opportunities for a straddle. 0%
What is the most important principle to be followed in goal setting?
Set goals far beyond your reach as motivation 0%
Don't set too many goals 0%
Set goals but then don't worry about them 0%
Set realistic and achievable goals 0%
What is the primary goal of technical analysis?
Identifying trends to predict short term price movements 0%
Helping build a retirement plan 0%
Identifying stocks with potential for large increases in the next two years 0%
Finding indications of interest rate direction 0%
What is the primary method to mitigate risk?
Diversifying investment holdings 0%
Day trading 0%
Purchasing only tech stocks 0%
Purchasing stock in the company you work for 0%
What is the primary theory behind fundamental analysis?
All stocks rise in price eventually. 0%
Profits can be made in the near term by purchasing mispriced securities. 0%
Interest rates are the primary indicator of stock prices. 0%
The management needs direction. 0%
What is the purpose of a stop loss order?
To set a purchase price on a stock 0%
To write an option contract at the trigger price 0%
To sell a stock at the purchase price before losing money 0%
To protect profits already made on a stock investment 0%
What is the purpose of setting trading goals?
To meet the requirements set by the SEC 0%
To minimize taxes 0%
To have a measurable and achievable target 0%
To guarantee success 0%
What is the purpose of using screening factors?
They help focus on a specific industry. 0%
They guarantee against any losses. 0%
They help investors decide when to exit an investment. 0%
They are preset criteria that any investment must meet before an investor will consider it a viable investment. 0%
What is the relationship between fundamental and technical analyses?
They are mutually exclusive, and an analyst would use one or the other, never both. 0%
They must both be used together. 0%
They can both be used to complement each other, but cannot be used together. 0%
They are very exclusive techniques that should both be avoided. 0%
What is the term used for selling a stock without owning the stock?
Short Selling 0%
Margin Selling 0%
Fundamental Selling 0%
Technical Selling 0%
What is the type of analysis conducted using past earnings, past stock prices, and other qualitative and quantitative facts about a company called?
Technical Analysis 0%
Valuation 0%
Break Even Analysis 0%
Fundamental Analysis 0%
What market stage would a company focus on for increasing sales?
Growth 0%
Idea stage 0%
Decline 0%
Peak 0%
What should a trader do if one portfolio is outperforming another?
Sell off all stock in the worst portfolio. 0%
Switch the portfolios around so they all have the same return. 0%
Depends on the goals of each portfolio; they could still all be meeting expectations. 0%
Do extensive analysis on the stocks. 0%
What stage of the market cycle is characterized by product exploration?
Growth stage 0%
Decline 0%
Peak 0%
Idea stage 0%
What strategy would an investor with a short time frame most likely use?
Buying mutual funds 0%
Buying certificates of deposit 0%
Investing in large blue chip stocks for the dividends 0%
Day trading 0%
What type of transaction is a limit order?
A buy order 0%
A sell order 0%
Can be either 0%
Is neither 0%
What would a company at the peak of the business cycle consider doing?
Selling off the division 0%
Reworking the product or offering an additional product, as the current product is likely to start declining 0%
Spending on marketing to increase sales 0%
Hiring additional staff 0%
What would be the appropriate limit price for the following example: A stock is currently trading at $20, and the investor believes he can buy it for 10% less.
$18 0%
$20 0%
$22 0%
$17 0%
What would be the appropriate order to place in the following example? An investor owns a stock currently trading at $20. They purchased it at $10. They want to ensure they have at least an 80% re...
Place a stop loss at $18 0%
Place a sell limit order at $16 0%
Place a buy limit order at $10 0%
Place a buy limit order at $22 0%
What would be the objective of a conservative trader's portfolio?
Short selling stocks 0%
Long term returns over time 0%
Risky trading 0%
Short term returns 0%
What would be the risk tolerance level of a retired government worker in general?
High 0%
Moderate 0%
Varies indefinitely 0%
Low 0%
What would credit risk be used to assess?
The management's personal credit score 0%
The company's ability to pay its long term debts 0%
The correctness of a technical analysis 0%
A business's ability to acquire debt capital 0%
When is the straddle trading strategy appropriate?
When the price may move by a small amount 0%
When an investor believes there will be a large decrease in stock prices 0%
When an investor believes there will be a large increase in stock prices 0%
When an investor believes there will be a large stock price movement, but does not know in which direction 0%
When the stock market is moving upwards consistently, what may temporarily happen?
A market crash 0%
A market correction 0%
A market magnitude 0%
A market normalization 0%
Which of the following is a risk of trading stocks on a foreign stock exchange as compared to trading it domestically?
Growth rate risk 0%
Taxation risk 0%
Legal risk 0%
Exchange rate risk 0%
Which of the following is a way for a trader to track their progress towards their goals?
Just keeping it in the back of their minds 0%
Changing their goals to what they have already achieved 0%
Creating reports and charts which map their progress alongside with the goal 0%
Not bothering about setting goals 0%
Which of the following is a way to quantify the risk of a given security?
Looking at what peers think of the stock 0%
Using technical analysis 0%
Using fundamental analysis 0%
Calculating the probability and magnitude of potential loss 0%
Which of the following is an advantage of having multiple portfolios instead of only one?
It lowers the trader's tax obligations. 0%
It makes it easier for the trader to trade and profit. 0%
It eliminates all risk. 0%
Goals can be set for each portfolio and tracked separately. 0%
Which of the following is an assumption made by a technical analyst?
The stock price does not reflect market information currently. 0%
No one else has recognized the stock as a good investment. 0%
All stocks will increase in the long run. 0%
The stock price already reflects all news and news events and they do not impact a stock's price. 0%
Which of the following is not one of the cycles in the market?
Growth 0%
Idea stage 0%
Decline 0%
Rapid recession 0%
Which of the following would a fundamental analyst examine?
Managerial reviews 0%
Financial forecasts 0%
Company strategy plans 0%
Company financial statements 0%
Which of the following would be a good example of risk mitigation?
Purchasing only small cap stocks 0%
Purchasing stocks in three industries 0%
Purchasing stocks all in one industry 0%
Purchasing only blue chip stocks 0%
Which of the following would be a stock trading goal?
Making lots of money 0%
Earning 20% return on the invested capital within 1 year 0%
Trading only in bear markets 0%
Selling call options 0%
Which of the following would be an indication of market decline?
Increase in crime 0%
Increase in jobs available 0%
Decrease in crime 0%
Increase in auto sales 0%
Which of the following would most likely be a way to classify various portfolios?
By the tax laws which apply 0%
By the number of shares outstanding 0%
By the time the securities were purchased 0%
By the time horizon of the investments contained in it 0%
Which of the following would not be an example of managing risk?
Investing completely in a new biotech firm 0%
Diversifying an investment to ten different companies 0%
Purchasing three mutual funds 0%
Buying both stocks and bonds 0%
Which type of analysis relies on charting?
Fundamental 0%
Technical 0%
Both Fundamental and Technical 0%
Neither Fundamental nor Technical 0%
Why are younger people more apt to take on riskier investments?
They have a longer time horizon to allow for the risky investments to increase over time, and are immune to the short term changes. 0%
They do not know the value of money in the long run. 0%
They have less knowledge and do not know the potential for loss. 0%
There are short term gains to be made. 0%
Why do goals have to be specific?
In order to tell others 0%
In order to be achievable and measurable 0%
In order to get something done 0%
In order to be able to change them 0%
Why do investors often expect stock prices to rise at the beginning of the year?
Because the new year means companies can restart and forget the past 0%
Because the management is always more driven 0%
Because the year end sales typically bolster profits and increase demand 0%
Because employee cuts are made reducing expenses typically after the holidays 0%
Why is an investor unlikely to hold growth, value, small cap, and index portfolios all at once?
Because he has too much time to manage them 0%
Because they have completely different investment perspectives 0%
Because taxes would be excessive if he does not do it 0%
Because it is too difficult to earn a high return on any one portfolio 0%
Why is it important for an investor to know their risk tolerance level before trading stocks and investing in general?
Because it is required by law 0%
Because it helps in tax planning 0%
Because it helps them decide which industry to invest in 0%
Because they can then match their risk tolerance level to the types of stocks they are purchasing 0%
Why is it important to recognize what stage of the market cycle a company is in?
Because companies are required by law to report the stage 0%
Because it helps decide whether to hire or fire employees 0%
Because it indicates what the potential growth/decline rate is going to be in the near term 0%
It is not important at all. 0%
Why is it important to write down trading goals?
So that they may become more real and not be forgotten 0%
So that you may be able to throw them out if you are unable to meet them 0%
So that you may be able to tell people you are a successful trader because you set goals 0%
So that you may be able to ensure success 0%
Why should goals be changeable?
They should not be; they should be set only once. 0%
Because it allows people never to have to achieve them 0%
Lest you should forget your goals. 0%
So that you may be able to refine your goals on the basis of the progress you are making 0%
Why would a stock trader want to create various portfolios?
So that each portfolio may be taxed separately 0%
So that each portfolio may contain one stock 0%
So that each portfolio may be set up to meet specific goals 0%
So that they may be able to sell all the stocks within a portfolio more easily 0%
Why would a trader liquidate a portfolio?
Because it is illegal to hold it too long 0%
To avoid being labeled as a day trader 0%
Because it has made too much money already 0%
Because he is no longer interested in the classification of stock 0%
Why would an investor invest only in companies which have a history of paying dividends?
Because it creates an income stream 0%
Because it is a low risk investment 0%
Because it creates a return on investment 0%
All of the above 0%
Why would an investor not utilize a stock trading strategy?
Because they cost money 0%
Because of the belief that they do not work, and are a wasted effort 0%
Because not enough data available 0%
Because they are only for the wealthy 0%
Why would an investor use a limit order to buy?
Because they want to pay more than the current price 0%
Because they want to sell the stock in the future 0%
Because they want to purchase a certain stock at a price lower than its current price without constantly monitoring the stock price 0%
Because they want to limit their market risk 0%