Stock Trading Stock Trading 4

Question 1

What is 'margin trading'?

Accepted Answer

Borrowing money from a broker to purchase securities

Answer

Margin trading involves borrowing funds from your broker to buy more securities than you could with your cash alone, amplifying both gains and losses.

Question 2

Which regulatory body oversees securities markets in the United States?

Accepted Answer

Securities and Exchange Commission (SEC)

Answer

The Securities and Exchange Commission (SEC) is the primary federal agency responsible for enforcing federal securities laws and regulating the securities industry.

Question 3

What is a 'bull market'?

Accepted Answer

A market characterized by rising stock prices and investor optimism

Answer

A bull market is a sustained period of rising stock prices, generally defined as a 20% or more increase from recent lows, accompanied by investor confidence.

Question 4

What is 'earnings per share' (EPS)?

Accepted Answer

Net income divided by the number of outstanding shares

Answer

EPS is calculated by dividing a company's net income by its number of outstanding shares, indicating how much profit is allocated to each share.

Question 5

What is a 'circuit breaker' in US stock markets?

Accepted Answer

A rule that halts trading when major indexes fall by set percentage thresholds

Answer

Circuit breakers are market-wide trading halts triggered when major indexes like the S&P 500 drop by 7%, 13%, or 20% in a single day.

Stock Trading Practice Test

Stock Trading Practice Test

Stock Trading Stock Trading 4