CCE Cryptocurrency Trading & Investment 4

Question 1

What does the Sharpe ratio measure in a cryptocurrency portfolio?

Accepted Answer

Risk-adjusted return relative to a risk-free rate

Answer

The Sharpe ratio divides excess return over the risk-free rate by the standard deviation of returns, quantifying how much return is earned per unit of risk.

Question 2

Which indicator combines price and volume to gauge buying or selling pressure?

Accepted Answer

On-Balance Volume (OBV)

Answer

OBV is a cumulative indicator that adds volume on up-days and subtracts volume on down-days, revealing whether volume is flowing into or out of an asset.

Question 3

What is a 'wick' (or shadow) on a candlestick chart?

Accepted Answer

The thin line showing the high and low beyond the open/close range

Answer

The wick (shadow) extends above and below the candle body to represent the highest and lowest prices reached during the time period, outside the open/close range.

Question 4

In options trading on crypto, what does an 'in-the-money' call option mean?

Accepted Answer

The underlying asset price is above the call option's strike price

Answer

A call option is in-the-money when the current market price of the underlying asset exceeds the option's strike price, giving it intrinsic value.

Question 5

What does 'HODL' represent as an investment strategy?

Accepted Answer

Holding through volatility rather than actively trading

Answer

HODL (originally a misspelling of 'hold') describes the strategy of retaining cryptocurrency holdings long-term despite price volatility, avoiding short-term trading decisions.

(CCE) Certified Cryptocurrency Expert Practice Test

(CCE) Certified Cryptocurrency Expert Practice Test

CCE Cryptocurrency Trading & Investment 4