CFA CFA Global Markets & Trading

Question 1

Which type of market order guarantees execution but not the execution price?

Accepted Answer

Market order

Answer

Limit order

Answer

Stop-limit order

Answer

Good-till-canceled order

Question 2

A limit order to buy a security is placed:

Accepted Answer

At or below the specified limit price

Answer

At or above the specified limit price

Answer

Exactly at the current market price

Answer

Only at the opening price of the trading day

Question 3

The bid-ask spread in financial markets represents:

Accepted Answer

The transaction cost paid by investors and profit for market makers

Answer

The difference between a stock's 52-week high and low

Answer

The yield difference between two bonds of different maturities

Answer

The margin required to hold a leveraged position

Question 4

Which global index is considered the primary benchmark for international developed market equities?

Accepted Answer

MSCI EAFE Index

Answer

S&P 500 Index

Answer

FTSE All-World Index

Answer

Russell 2000 Index

Question 5

Short selling involves:

Accepted Answer

Borrowing shares and selling them with the intent to repurchase at a lower price

Answer

Selling shares held in a portfolio to lock in gains

Answer

Selling futures contracts to hedge a long position

Answer

Liquidating a portfolio to raise cash quickly

Question 6

Margin trading allows investors to:

Accepted Answer

Borrow funds from a broker to purchase more securities than their cash allows

Answer

Trade securities without paying commissions

Answer

Access after-hours trading sessions at better prices

Answer

Eliminate capital gains taxes on profitable trades