Stock Trading Stock Trading 3

Question 1

What does 'beta' measure in stock analysis?

Accepted Answer

A stock's volatility relative to the overall market

Answer

Beta measures how much a stock's price tends to move relative to the broader market; a beta above 1 means higher volatility than the market.

Question 2

What is an 'ETF'?

Accepted Answer

A fund that holds a basket of securities and trades on an exchange like a stock

Answer

An Exchange-Traded Fund (ETF) holds a collection of assets and trades on a stock exchange throughout the day at market prices.

Question 3

What happens to existing shareholders during a 2-for-1 stock split?

Accepted Answer

They receive double the shares at half the price per share

Answer

In a 2-for-1 stock split, shareholders receive two shares for every one they held, and the price per share is halved, keeping total value unchanged.

Question 4

What is 'insider trading' in the context of US securities law?

Accepted Answer

Buying or selling securities based on material non-public information

Answer

Insider trading refers to buying or selling a security based on material information not available to the public, which is illegal under SEC regulations.

Question 5

What does 'going long' on a stock mean?

Accepted Answer

Buying a stock with the expectation its price will rise

Answer

Going long means purchasing a stock with the expectation that its price will increase, allowing you to sell later at a profit.

Stock Trading Practice Test

Stock Trading Practice Test

Stock Trading Stock Trading 3