Equity Markets and Stock Analysis Test Flashcards
7 cards from real Investment practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Equity Markets and Stock Analysis Test flashcards as text
Which technical analysis indicator is used to identify overbought or oversold conditions on a scale of 0 to 100?
Answer: Relative Strength Index (RSI)
The RSI is a momentum oscillator ranging from 0–100; readings above 70 typically signal overbought conditions while readings below 30 signal oversold conditions.
In fundamental analysis, what does the Debt-to-Equity (D/E) ratio measure?
Answer: The proportion of financing from creditors versus shareholders
The D/E ratio compares total liabilities to shareholder equity, indicating how much debt a company uses relative to equity to finance its operations and assets.
What is 'short selling' in equity markets?
Answer: Selling borrowed shares hoping to repurchase at a lower price
Short selling involves borrowing shares, selling them at the current price, and aiming to buy them back later at a lower price to profit from a price decline.
Which of the following best describes a 'blue-chip' stock?
Answer: A share of a large, well-established, financially stable company
Blue-chip stocks are shares of large, reputable, and financially sound companies with a long history of reliable performance, often included in major indexes like the Dow Jones.
What is the purpose of a stock split?
Answer: To reduce the share price by increasing the number of shares outstanding
A stock split increases the number of shares while proportionally reducing the price per share, making the stock more accessible to investors without changing the company's total market cap.
What is the 'ask price' in stock trading?
Answer: The lowest price a seller is willing to accept for a stock
The ask (or offer) price is the minimum price a seller will accept; buyers must pay at least this price to complete the transaction.
Which of the following is an example of a leading economic indicator for equity market analysis?
Answer: Purchasing Managers' Index (PMI)
The PMI is a leading indicator because it surveys future business activity expectations, providing advance signals about economic direction before GDP or employment data are released.