Stock Trading Practice Test
Value investors frequently utilize the DCF method to determine the fair value of a company or business. The acronym DCF stands for
Explanation
DCF (discounted cash flow) is a valuation approach for estimating future cash flows.
An investment's value is determined by its predicted future cash flows. DCF
Analysis seeks to determine the current worth of an investment based on historical data.
based on estimates of how much money it will make in the future
If you want to practice stock trading but don't want to risk any money, you can use the
Explanation
A virtual trading platform can assist you in learning how to trade in the stock market. This is a site where you
may practice trading, learn investment methods, and gain a better understanding of the stock market. You
make a blunder and grow from it. As the name implies, virtual trading is identical to live trading.
What single ticker symbol was superseded by the stock symbols MMI and MSI?
Explanation
The correct answer
MOT
Individuals or institutions who are licensed to buy and sell stocks are referred to as ____. You'll need them to make the real transactions if you wish to trade stocks.
Explanation
A stockbroker is a regulated broker, broker-dealer, or registered investment adviser who can provide financial
advisory and investment management services to financial market participants as well as execute transactions
like the purchase or sale of stocks and other investments in exchange for a commission, markup, or fee, which
can be based on a flat rate, percentage of assets, or hourly rate. The phrase can also refer to financial institutions
that provide similar services.
M & A is a phrase that usually refers to
Explanation
Mergers and acquisitions (M&A) is a broad phrase that refers to a variety of financial transactions that combine
firms or assets, such as mergers, acquisitions, consolidations, tender offers, asset purchases, and management
acquisitions.
The Volatility Index (VIX) is a
Explanation
The Chicago Board Options Exchange's CBOE Volatility Index, abbreviated as VIX, is a prominent gauge of the
stock market's expectation of volatility based on S&P 500 index options. The CBOE calculates and distributes
it in real time, and it's sometimes referred to as the fear index or fear gauge.
Coffee, cocoa, sugar, wheat, and corn are all examples of
Explanation
Coffee, cocoa, sugar, corn, wheat, soybean, fruit, and livestock are examples of ft commodities, or softs.
Commodities that are farmed rather than mined are referred to as soft commodities; the latter (such as oil,
copper, and gold) are referred to as hard commodities.
When a stock buyer establishes a maximum price that he or she is willing to pay, the buyer is putting a
Explanation
A limit order allows you to choose a price for buying or selling a stock. If and when the share price hits the
limit price you've set, the order is filled.
Stocks can be used to make money if you
Explanation
Buying low and selling high is a common trading strategy that allows traders to profit from a market's tendency
to rise and fall. As a critical trading method, anyone interested in participating in the market should be familiar
with and skilled enough with the tactic to be able to judge market conditions.
Which of the following isn't (or was) a stock exchange?
Explanation
The correct answer
HQSX
EBITDA is an acronym for
Explanation
EBITDA is an acronym meaning earnings before interest, taxes, and depreciation "earnings before interest,
tax, and depreciation amortization and depreciation ".. The term refers to the outcome of interest.
Fixed assets and immaterial assets are subject to taxes and depreciation
The current share price multiplied by the entire number of shares of a company's stock equals the current share price.
Explanation
It is computed by multiplying the entire number of a company's outstanding shares by the current market
price of one share, which is commonly referred to as "market cap."
When the margins are compressed,
Explanation
When the expenses of producing a product or providing a service climb faster than the product's or
service's sales price, margin compression occurs. As a result, profit margins are under pressure.
The organization that establishes the regulations for pattern day trading is known as
Explanation
The Financial Industry Regulatory Authority (FINRA), a trading regulatory organization in the United States,
established the pattern day trader rule to "discourage persons from trading excessively." To limit risk, the rule
requires traders to hold at least $25,000 in their margin trading accounts on any given day.
Stocks with tiny bottom-to-top trading ranges in a particular timeframe are considered
Explanation
Low Beta Stocks Beta is the result of a calculation that determines a stock's relative volatility in respect to
a benchmark. The S&P 500 is usually, but not always, the gold standard for US stocks. Beta is a type
of regression analysis that can be beneficial to investors of all risk levels.
The PE of a stock is
Explanation
One of the most often utilized tools by investors is the price-to-earnings ratio (P/E).
which investors and analysts use to determine the relative value of a stock
The P/E ratio can be used to determine if a stock is undervalued or overvalued.
undervalued.
When the price of a stock drops from its historical highs to a previously-attained lower milestone, this is referred to as a
Explanation
A slight pullback or change in the direction of a financial asset, such as a stock or index, is referred to as a
retracement. A short-term shift in the price of a stock is referred to by the word, which is used by technical
analysts to assess the price of securities.
An initial public offering (IPO) has recently been launched by a company. This implies that it has been
Explanation
When a small company goes public, it signifies its firm has grown to the point where it has a lot of room to
develop. Expansion necessitates the acquisition of additional funds. In order to raise funds, the company
goes public in order to reach as many investors as possible.
One of Benjamin Graham's stock-picking tactics was
Explanation
When you subtract the long-term assets component from total assets, you get NCAV, which is a very
conservative assessment of a company's value in the event of liquidation. Benjamin Graham developed
the NCAV approach and net-net investing in the 1930s, and it was regarded to be a fair proxy for determining
a company's real-world solvency worth.
The average price of a stock over a 50-day rolling period is
Explanation
(Close Price - 50 Day MA) / 50 Day MA * 100 is the formula. The 50 Day Moving Average is a stock price
average over the last 50 days that often works as a support or resistance level for trading, according to
Stockopedia. By definition, the moving average will always lag behind the price.
A ____ is when a firm buys shares of its stock from current shareholders.
Explanation
The company either buys shares on the open market or allows its shareholders to tender their shares to the
company at a fixed price. This activity, also known as a share buyback, reduces the number of outstanding
shares, increasing demand for the shares as well as the price.
FOREX is a term that is used to
Explanation
Foreign exchange, often known as Forex or FX, is the process of exchanging two foreign currencies, such
as the South African Rand (ZAR) for the Indian Rupee (INR). Market participants include both sellers and
buyers who participate in currency exchanges on the Forex market.
The book "The Intellient Investor" was written by
Explanation
Benjamin Graham's The Intelligent Investor, first published in 1949, is a well renowned book on value investing.
The book explains how to use value investing to make money in the stock market. The book has long been one
of the most popular investment books, and Graham's legacy lives on.
In general, the P/B Ratio stands for
Explanation
The P/B ratio, or price-to-book ratio, is a financial measure that compares a company's current market value
to its book value (where book value is the value of all assets minus liabilities owned by a company). The computation
can be done in two ways, but the outcome should be the same in both cases.
Total Assets and Total Liabilities information can be found in the
Explanation
The balance sheet shows the overall assets of the organization as well as how those assets are financed,
whether through debt or stock. A statement of net worth or a statement of financial status are other terms
for the same thing. The fundamental equation that the balance sheet is founded on is Assets = Liabilities + Equity.
Financial Analysis Course at the CFI