Financial Markets

Question 1

Securities

Answer 1

Tradable financial assets, including stocks and bonds

Question 2

Equities (Shares)

Answer 2

Ownership interests in companies, also known as stocks

Question 3

Stocks

Answer 3

Unit of ownership in a company, giving shareholders voting rights and dividents

Question 4

Bonds

Answer 4

Fixed-income investments reresenting the loan from investor to borrower

Question 5

Money Market Instruments

Answer 5

Short-term financial assets with high liquidity, such as Treasury bills and commercial paper.

Question 6

Capital Growth

Answer 6

Increase in the value of an investment over time.

Question 7

Fixed rate

Answer 7

An interest rate that remains constant for a specified period of time.

Question 8

Junk Bonds

Answer 8

High-yield, high-risk bonds typically issued by companies with lower credit ratings

Question 9

Risk Management

Answer 9

Strategies to minimize financial losses due to market fluctuations.

Question 10

S&P 500

Answer 10

A stock market index tracking the performance of 500 large U.S. companies.

Question 11

Nasdaq

Answer 11

A global electronic marketplace for buying and selling securities.

Question 12

Dow Jones (Dow)

Answer 12

A stock index measuring the performance of 30 large U.S. companies.

Question 13

DAX

Answer 13

A stock index representing 40 major companies listed on the Frankfurt Stock Exchange.

Question 14

CAC 40

Answer 14

A benchmark stock market index in France, covering 40 major companies.

Question 15

FTSE 100

Answer 15

A stock index measuring the 100 largest companies on the London Stock Exchange.

Question 16

Growth Investing

Answer 16

A strategy focused on increasing an investment’s value over time.

Question 17

Income Investing

Answer 17

A strategy focused on generating regular earnings, such as dividends or interest.

Question 18

Income + Growth

Answer 18

A combination investment strategy balancing income generation and capital appreciation.

Question 19

Investment Bank

Answer 19

A financial institution that provides advisory services and facilitates large financial transactions.

Question 20

Pension Fund

Answer 20

A pool of funds set aside for employees’ retirement benefits.

Question 21

Mutual Fund

Answer 21

A professionally managed investment fund pooling money from multiple investors.

Question 22

Insurance Company

Answer 22

A business that provides risk coverage in exchange for premium payments.

Question 23

Endowment

Answer 23

A financial fund donated to an institution, typically used for long-term investment.

Question 24

Liquidity

Answer 24

The ease with which an asset can be converted into cash without affecting its market price.

Question 25

Market Capitalization

Answer 25

The total value of a company's outstanding shares, calculated as share price × total shares.

Question 26

Dividend

Answer 26

A portion of a company’s earnings distributed to shareholders.

Question 27

Blue-Chip Stocks

Answer 27

Shares of well-established, financially stable companies with a history of reliable performance.

Question 28

Bear Market

Answer 28

A market condition where prices are falling, often leading to pessimism.

Question 29

Bull Market

Answer 29

A market condition where prices are rising, leading to optimism among investors.

Question 30

Initial Public Offering (IPO)

Answer 30

The first time a company’s shares are offered to the public for investment.

Question 31

Yield

Answer 31

The income generated by an investment, often expressed as a percentage.

Question 32

Inflation

Answer 32

The rate at which the general level of prices for goods and services rises, reducing purchasing power.

Question 33

Interest Rate

Answer 33

The percentage charged on borrowed money or earned on savings.

Question 34

Exchange-Traded Fund (ETF)

Answer 34

A marketable security that tracks an index, commodity, or asset basket, trading like a stock.

Question 35

Hedge Fund

Answer 35

An investment fund using high-risk strategies to achieve high returns.

Question 36

Derivatives

Answer 36

Financial contracts whose value is derived from an underlying asset, like futures or options.

Question 37

Short Selling

Answer 37

A strategy where an investor borrows shares, sells them, and buys them back later at a lower price.