Practice Test Geeks(CPT) Certified Pro Trader Practice Test
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Cryptocurrency & Digital Assets Flashcards

7 cards from real CPT practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Cryptocurrency & Digital Assets flashcards as text

  1. A trader notices that a DeFi token's price on DEX A is $50 while on DEX B it is $52. What strategy would a professional trader employ?

    Answer: Arbitrage by buying on DEX A and selling on DEX B to capture the spread

    Cross-exchange arbitrage exploits price inefficiencies by simultaneously buying the cheaper asset and selling it where it trades higher, minus transaction costs.

  2. What does 'TVL' (Total Value Locked) measure in the DeFi ecosystem?

    Answer: The aggregate value of crypto assets deposited into DeFi protocols

    TVL represents the total USD value of crypto assets currently deposited as liquidity or collateral across DeFi protocols, used as a measure of ecosystem health.

  3. In a crypto options market, what does a trader achieve by buying a 'put option' on Bitcoin?

    Answer: The right to sell Bitcoin at a specified strike price before expiration

    A put option gives the holder the right, but not the obligation, to sell the underlying asset at the strike price, profiting when the asset's price falls below the strike.

  4. What is 'impermanent loss' in the context of providing liquidity on automated market makers (AMMs)?

    Answer: The temporary reduction in value compared to simply holding assets, caused by price divergence in a liquidity pool

    Impermanent loss occurs when the price ratio of pooled assets changes from deposit time, causing LP holdings to be worth less than simply holding the assets outside the pool.

  5. Under the Howey Test, which element is NOT required to classify a crypto asset as a security?

    Answer: Decentralized governance structure

    The Howey Test requires (1) investment of money, (2) in a common enterprise, (3) with expectation of profits, (4) derived from efforts of others — decentralization is not one of the four prongs.

  6. What is the primary risk of using high leverage (e.g., 100x) when trading crypto perpetual futures?

    Answer: Liquidation of the entire position from a small adverse price movement

    At 100x leverage, a price move of just 1% against the position can trigger forced liquidation, wiping out the entire margin deposited as collateral.

  7. What does 'proof of reserves' provide to cryptocurrency exchange customers?

    Answer: Cryptographic verification that an exchange holds sufficient assets to cover all customer balances

    Proof of reserves uses Merkle trees and cryptographic attestations to let users independently verify that an exchange holds 1:1 backing for all customer deposits.