Quiz: Test your stock market vocabulary (Part 1 of 2)

What must you do if your stock broker is "flipping"? Should you feel afraid if you were offered a "warrant"? If indeed the stock market is "illiquid", how would you take the "poison pill"?

Take this quiz and see how much you know about the stock market jargon. You'd be surprised that some familiar words have different meanings in the context of stock market trading.

All set? Grab a pen and a piece of paper and make sure you don't cheat!

1) When someone asks you to "hit" shares do you:

A) go and throw your stock certificate at the nearest recycle bin?
B) cancel an order to buy or sell? or
C) buy or sell a stock at a particular price posted on the trading board?

2) Under your "street name" is

A) your complete address for your brokers' record?
B) the shares you own registered in the name of your broker or
C) the code name of one broker trading through another broker

3) When a broker offers you a "warrant" it is equivalent to:

A) handing in your account number
B) a long-term form of investment product usually attached to a bond or preferred stock
C) it gives the holder the right to buy a fixed number of a company's common shares at a price that is set higher than the stock's current price at the time of its offering
D) I'm sure it's B and C
E) Can it be A and C?

4) EBITDA is earnings before interest, tax, depreciation and amortization. It is useful to know because:

A) it is a more accurate measure of a company's earnings
B) it tells the investor how much cash a business raises before interest is paid
C) it is hard to manipulate
D) definitely it's A and C E) of course it's B and C F) absolutely it's A and B

5) Foreign investors are not too keen on investing in the local stock market because it is an "illiquid market". This market is also called a thin market and is characterized by:

A) the lack of buyers and sellers
B) the lack of alternative investment avenues
C) the lack of stocks traded

6) Did you see the ticker tape? A trader says it's like stocks on roller blades. Why?

A) it shows you the latest information on stocks income and news developments
B) it is a moving electronic display that shows the stocks symbols and prices at which each buying or selling order is executed
C) it's called the consolidated tape
D) both A and B
E) both B and C

7) the breadth of the market shows

A) the volume of trades
B) the difference between buying and selling,
C) the number of stocks traded out of the ones listed

8) An "ask and bid" is

A) the buying and selling price
B) the lowest price to sell and the highest price to buy,
C) the offer price and the matching price

9) Investors sometimes use "arbitrage" in stocks like PLDT, Sun Life and Manulife. What do they exactly do?

A) Buy and sell a combination of these shares from different markets to take advantage of bargains
B) buying and selling of shares simultaneously from different markets to try to make a profit from short-term price differences depending on the foreign exchange
C) buying and selling of shares through foreign markets to take advantage of tax rules

10) Book value refers to

A) the value of the company excluding its tangible assets
B) the theoretical value of the company if all assets were liquidated or sold at the prices carried on the balance sheet and all liabilities are paid off,
C) the value of the company as done by an external appraiser

Answers :

1. C
2. B
3. D
4. E
5. A
6. E
7. C
8. B
9. B
10. B

Check your score:

1-2 points = Look out….a bear hug!
3-4 points = Not too late.
5-6 points = You didn't sleep through Stocks 101 that's for sure!
7-9 points = Right On! No need for a refresher course!
10 points = Outstanding! You can't be manipulated!

Tell us your score by posting in this quiz's discussion thread in the PMT Forum.

- From "A guide to common stock market jargon" published on http://money.inq7.net  

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