Which central bank revised its inflation forecast upwards this week, signaling a potentially longer period of higher interest rates than previously anticipated?Federal Reserve (US)European Central Bank (ECB)Bank of Japan (BoJ) Bank of England (BoE)B) European Central Bank (ECB)On July 25, 2025, the European Central Bank raised its inflation projections for the Eurozone for both 2025 and 2026, indicating that it might need to maintain higher interest rates for an extended period to curb persistent price pressures.
What is the main characteristic of a "bond" as a financial instrument? It represents ownership in a company.It is a loan made by an investor to a borrower (typically corporate or governmental). It allows an investor to buy or sell an asset at a predetermined price.It provides immediate access to cash for short-term needs.B) It is a loan made by an investor to a borrower (typically corporate or governmental)A bond is a fixed-income instrument that represents a loan made by an investor to a borrower. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations.
Which of the following best describes "liquidity" in finance?The profitability of an investment.The ease with which an asset can be converted into cash without affecting its market price.The total value of a company's assets.The amount of debt a company holds.B) The ease with which an asset can be converted into cash without affecting its market price.Liquidity refers to the efficiency or ease with which an asset or security can be converted into ready cash without affecting its market price. Cash itself is the most liquid asset.
What is "APR" (Annual Percentage Rate) primarily used to represent? The annual return on an investment.The total cost of borrowing money on an annual basis, including interest and fees.The rate at which inflation is increasing annually.The percentage of profit a company makes each year. B) The total cost of borrowing money on an annual basis, including interest and fees.The Annual Percentage Rate (APR) is the annual rate charged for borrowing or earned by an investment. It is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan or income earned on an investment.
In stock market terminology, what does "IPO" stand for?International Price OfferingInitial Public OfferingInvestment Portfolio Optimization Interest Payment Obligation B) Initial Public OfferingAn Initial Public Offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance. It's how a company "goes public."
Which financial metric measures a company's ability to meet its short-term obligations?Debt-to-Equity RatioPrice-to-Earnings (P/E) RatioCurrent RatioReturn on Assets (ROA) C) Current RatioThe current ratio is a liquidity ratio that measures a company's ability to pay off its short-term liabilities with its current assets. A higher current ratio generally indicates better short-term financial health.
What does "EBITDA" stand for in financial accounting?Earnings Before Interest, Taxes, Depreciation, and AmortizationExpenses Before Income Tax Deductions and AdjustmentsEquity Bond Investment Trade AgreementEconomic Benefit Index for Debt AssetsA) Earnings Before Interest, Taxes, Depreciation, and Amortization EBITDA is a widely used financial metric that measures a company's financial performance before subtracting interest expenses, taxes, depreciation, and amortization. It's often used as a proxy for operating cash flow.
Which financial market allows companies to raise capital by issuing new stocks and bonds directly to investors?Secondary MarketPrimary Market Over-the-Counter (OTC) MarketFutures MarketB) Primary MarketThe primary market is where securities are created. It's where firms sell new stocks and bonds to the public for the first time through an IPO or bond issuance. The company directly receives the funds from these sales.
What is "inflation" in economic terms?A sustained decrease in the general price level of goods and services. A sustained increase in the general price level of goods and services.A period of economic recession.An increase in unemployment rates. B) A sustained increase in the general price level of goods and services.Inflation refers to the rate at which the general price level of goods and services is rising, and consequently, the purchasing power of currency is falling.
Which of the following is considered a "fixed asset" for a business? InventoryAccounts ReceivableMachineryCashC) MachineryFixed assets are long-term tangible assets that a company uses in its operations to generate income. They are not expected to be consumed or converted into cash within one year. Machinery, buildings, and land are examples.
What is the purpose of a "credit rating" for bonds or companies? To determine the interest rate offered on savings accounts.To assess the creditworthiness of the issuer and the likelihood of defaulting on debt obligations. To calculate the company's annual revenue.To measure the volatility of a stock.B) To assess the creditworthiness of the issuer and the likelihood of defaulting on debt obligations.A credit rating is an assessment of the creditworthiness of a borrower in general terms or with respect to a particular debt or financial obligation. It indicates the risk that the borrower will default on a debt.
What is the primary role of a "stock exchange" in the financial market?To provide loans to individuals.To facilitate the buying and selling of publicly traded securities. To regulate banks and financial institutions. To manage government debt.B) To facilitate the buying and selling of publicly traded securities.A stock exchange is a marketplace where securities, such as stocks and bonds, are bought and sold. It provides a regulated environment for investors to trade existing financial instruments.
Which type of investment typically carries the highest risk but also the potential for the highest returns? Certificates of Deposit (CDs) Blue-chip StocksPenny StocksMunicipal BondsC) Penny StocksPenny stocks are typically shares of small companies that trade at very low prices (under $5 per share). They are considered highly speculative and carry significant risk due to their volatility, lack of liquidity, and limited information available, but can also offer substantial returns if the company succeeds.
What does a "dividend" represent in the context of stock investments?The purchase price of a share.A portion of a company's profits distributed to its shareholders. The interest paid on a bond. The fees charged by a stockbroker.B) A portion of a company's profits distributed to its shareholders.A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to its shareholders. It can be paid as cash, stock, or other property.
If a country's exports exceed its imports, what is the resulting economic condition?Trade DeficitTrade Surplus Budget DeficitBalance of Payments CrisisB) Trade SurplusA trade surplus occurs when a country's value of exports (goods and services sold to other countries) is greater than the value of its imports (goods and services bought from other countries).
What is the "Rule of 72" commonly used for in finance? To calculate compound interest.To estimate the number of years required to double an investment at a given fixed annual rate of return.To determine the fair value of a stock.To predict stock market crashes.B) To estimate the number of years required to double an investment at a given fixed annual rate of return.The Rule of 72 is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself.
A company's "net income" is calculated by subtracting which of the following from its total revenue?Assets and liabilities Costs of goods sold, operating expenses, and taxesTotal cash flowTotal equityB) Costs of goods sold, operating expenses, and taxesNet income, also known as the "bottom line," is a company's total earnings (or profit) after all costs, expenses, and taxes have been deducted from total revenue.
What is "working capital"?The total amount of money a company has in its bank account.The difference between a company's current assets and current liabilities.The total amount of long-term debt a company has.The amount of money a company spends on salaries.B) The difference between a company's current assets and current liabilities.Working capital is a measure of a company's liquidity, efficiency, and short-term financial health.
What is the role of a "stock exchange"?To provide a physical place for people to buy and sell goods.To facilitate the trading of securities, such as stocks and bonds.o provide loans to individuals and businesses.To regulate interest rates.B) To facilitate the trading of securities, such as stocks and bonds.A stock exchange is a marketplace where securities, such as stocks and bonds, are bought and sold.
"Fiscal policy" refers to the government's use of:Interest rates to control the money supply.Taxation and spending to influence the economy.International trade agreements.Regulations on businesses.B) Taxation and spending to influence the economy. Fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy.
What is a stock split?The process of selling a portion of a company's stock.A decision by a company's board of directors to increase the number of shares outstanding by dividing each share into multiple shares. A reduction in a company's stock price.The merger of two companies.B) A decision by a company's board of directors to increase the number of shares outstanding by dividing each share into multiple shares.A stock split is a corporate action in which a company divides its existing shares into multiple shares, making them more affordable to a wider range of investors.
The term "bearish" in finance refers to:An optimistic market outlook.A pessimistic market outlook, with falling prices.A market with high trading volume.A market with low interest rates.B) A pessimistic market outlook, with falling prices.A "bear" market is one in which investors expect prices to fall, and they may sell their stocks in anticipation of further losses.
What is the main characteristic of a "zero-coupon bond"? It pays a high-interest rate.It pays no periodic interest payments.It has a very short maturity period.It is issued by the government.B) It pays no periodic interest payments.A zero-coupon bond is a bond that does not pay periodic interest. Instead, the investor buys the bond at a discount to its face value and receives the full face value at maturity.
The term "recession" is most accurately defined as:A period of high inflation. A period of economic growth.A significant decline in economic activity lasting more than a few months.A period of low unemployment.C) A significant decline in economic activity lasting more than a few months. A recession is a macroeconomic term that refers to a significant decline in general economic activity in a designated region.
What is a "proxy statement"?A financial report submitted to the government.A document containing information about a shareholder meeting, sent to shareholders.A document used to apply for a loan.A tax form.B) A document containing information about a shareholder meeting, sent to shareholders.A proxy statement is a document that a company is required to file with the SEC when soliciting shareholder votes.
What is a "junk bond"?A bond with a high credit rating. A bond with a low credit rating, carrying a higher risk of default. A bond issued by a government.A bond that pays no interest. B) A bond with a low credit rating, carrying a higher risk of default.Junk bonds, also known as high-yield bonds, are debt instruments with low credit ratings, indicating a higher risk of the issuer defaulting on their payments.
The term "equity" in finance refers to:The total debt of a company.The value of an ownership interest in a company.The total assets of a company.The total liabilities of a company.B) The value of an ownership interest in a company.Equity, in finance, is the value of an asset after all liabilities associated with it are paid. It represents the ownership stake in a company.
What is the main purpose of "compound interest"?To calculate a loan's principal amount.To calculate interest on the initial principal and also on the accumulated interest.To calculate interest only on the initial principal.To calculate a company's profit. B) To calculate interest on the initial principal and also on the accumulated interest.Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.
What is the "Efficient Market Hypothesis (EMH)"?The theory that all stocks are overvalued.The theory that it is impossible to "beat the market" because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information.The theory that it is easy to "beat the market" by trading frequently.The theory that markets are always in a state of recession. B) The theory that it is impossible to "beat the market" because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information.The EMH suggests that at any given time, security prices fully reflect all available information.
What is the "bid-ask spread" in trading? The profit a company makes on a product.The difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept.The total value of a stock market.The amount of money a company owes to its creditors.B) The difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept.The bid-ask spread is the difference between the bid price (what a buyer is willing to pay) and the ask price (what a seller is willing to accept) for a security.
What is a "mutual fund"?A type of government-backed savings account.A collection of stocks, bonds, or other securities managed by a professional.A loan given by a bank.A type of insurance policy. B) A collection of stocks, bonds, or other securities managed by a professional.A mutual fund is a type of investment vehicle consisting of a portfolio of stocks, bonds, and other securities, which is managed by a professional money manager.
The term "bear market" refers to: A period of rising stock prices.A market in which prices are declining.A market with a high volume of trading. A market with very little trading activity.B) A market in which prices are declining.A bear market is a market condition in which securities prices fall and widespread pessimism causes the negative sentiment to be self-sustaining.
What is the main purpose of a "bond"? To provide a form of ownership in a company.A debt instrument used by governments and companies to raise capital.A form of short-term lending between banks.An investment in real estate.B) A debt instrument used by governments and companies to raise capital. A bond is a fixed-income instrument that represents a loan made by an investor to a borrower.
The term "inflation" refers to:A general decrease in the prices of goods and services.A general increase in the prices of goods and services. A period of economic recession.A period of high unemployment.B) A general increase in the prices of goods and services. Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling.
What is a "dividend"? A portion of a company's earnings paid to its shareholders.The total amount of money a company owes.The price of a company's stock.The total sales of a company.A) A portion of a company's earnings paid to its shareholders.A dividend is a distribution of a portion of a company's earnings to a class of its shareholders.
The term "stock split" refers to:A company issuing new stock to raise money.A company's stock being divided into multiple shares.A company buying back its own stock.A company's stock price dropping. B) A company's stock being divided into multiple shares. A stock split is a corporate action in which a company's existing shares are divided into multiple new shares.
What is the main purpose of a "credit default swap"? A type of insurance against a company defaulting on its debt. A type of loan given by a bank.A type of stock. A type of savings account. A) A type of insurance against a company defaulting on its debt.A credit default swap (CDS) is a financial derivative or contract that allows an investor to swap or offset their credit risk with that of another investor.
The term "recession" refers to: A period of high economic growth. A significant decline in economic activity lasting for months.A period of high inflation.A period of low unemployment.B) A significant decline in economic activity lasting for months.A recession is a macroeconomic term that refers to a significant decline in general economic activity in a designated region.
What is the "Efficient Market Hypothesis (EMH)"? The theory that all stocks are a good investment. The theory that a company's stock price reflects all available information.The theory that a company's stock price is determined by its sales.The theory that a company's stock price is determined by its debt. B) The theory that a company's stock price reflects all available information.The EMH states that a company's stock price always incorporates and reflects all available information, making it impossible to consistently achieve higher returns than the market
What is a "letter of credit"?A letter from a customer to a company.A document issued by a bank guaranteeing payment to a seller on behalf of a buyer.A document used to transfer money between accounts.A letter from a company to its investors.B) A document issued by a bank guaranteeing payment to a seller on behalf of a buyer. A letter of credit is a financial instrument that provides security to both the buyer and the seller in an international trade transaction.
The term "bond yield" refers to:The total amount of money a company owes.The return an investor realizes on a bond. The price at which a bond is sold. The interest rate on a loan. B) The return an investor realizes on a bond.The bond yield is the measure of the return an investor gets on a bond, expressed as a percentage. It is typically calculated by dividing the coupon payment by the current price of the bond.
What is a "futures contract"?An agreement to buy or sell a product in the future at a predetermined price.An agreement to buy or sell a product at the current market price.An agreement to lend money to a company.An agreement to invest in a company's stock.A) An agreement to buy or sell a product in the future at a predetermined price.A futures contract is a standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future, between parties not known to each other.
The term "initial public offering (IPO)" refers to:The first time a company sells its stock to the public. The process of a company buying back its own stock.The process of a company merging with another company. The process of a company going bankrupt.A) The first time a company sells its stock to the public.An IPO is the process of a private company going public by issuing its shares to the general public for the first time.
What is the purpose of "diversification" in investing?To increase the risk of an investment.To reduce the risk of an investment by allocating funds to different assets.To increase the return on an investment.To invest in only one type of asset. B) To reduce the risk of an investment by allocating funds to different assets.Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio.
The term "put option" refers to: A financial contract that gives the holder the right to sell an asset at a specified price.A financial contract that gives the holder the right to buy an asset at a specified price. A type of loan from a bank.A type of bond.A) A financial contract that gives the holder the right to sell an asset at a specified price.A put option gives the buyer the right, but not the obligation, to sell an underlying asset at a specified price within a specified time frame.
What is a "bull market"? A market where prices are falling.A market where prices are rising.A market with high unemployment.A market with high inflation.B) A market where prices are rising.A bull market is a market condition in which securities prices rise and are expected to continue to rise.
The term "diversification" in investing refers to: Investing in a single company.Investing in a variety of assets to reduce risk. Investing only in stocks.Investing only in bonds.B) Investing in a variety of assets to reduce risk.Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio.
What is a "dividend"?A type of loan given by a bank.A share of a company's profits paid to its shareholders.A type of bond.A type of savings account.B) A share of a company's profits paid to its shareholders.A dividend is a distribution of profits by a corporation to its shareholders.
The term "equity" refers to:The amount of money a company owes to others. The value of a company's assets after all liabilities have been paid.The total revenue of a company.The total expenses of a company.B) The value of a company's assets after all liabilities have been paid. Equity, also known as owner's equity or shareholder's equity, represents the amount of money that would be returned to a company's shareholders if all assets were liquidated and all debts were paid off.
What is a "bond"? A share of ownership in a company.A debt security where the issuer owes the holder a debt.A type of savings account.A type of loan given by a bank.B) A debt security where the issuer owes the holder a debt.A bond is a fixed-income instrument that represents a loan made by an investor to a borrower.
The term "liquidity" in finance refers to:The profitability of an investment. The riskiness of an investment.The ease with which an asset can be converted into cash without a significant loss in value. The debt a company owes.C) The ease with which an asset can be converted into cash without a significant loss in value.Liquidity is a measure of an asset's convertibility into cash.
What is a "diversified portfolio"?A portfolio that contains only one type of asset.A portfolio that contains a variety of different investments.A portfolio that contains only stocks. A portfolio that contains only bonds.B) A portfolio that contains a variety of different investments. Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio to reduce risk.
A company's "income statement" reports its:Assets and liabilities.Revenues and expenses. Cash flows.Retained earnings. B) Revenues and expenses.An income statement, also known as a profit and loss statement, summarizes a company's financial performance over a specific period.
The term "inflation" refers to:A decrease in the general price level of goods and services.An increase in the general price level of goods and services.A decrease in the money supply. An increase in unemployment.B) An increase in the general price level of goods and services.Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.
A company's "balance sheet" shows its financial position at a specific: Period of time.Point in time. Day.Month. B) Point in time.A balance sheet is a snapshot of a company's financial position, showing its assets, liabilities, and equity at a particular moment.
The term "deflation" refers to:An increase in the general price level of goods and services.A decrease in the general price level of goods and services.An increase in the money supply. A decrease in unemployment.B) A decrease in the general price level of goods and services.Deflation is a decrease in the general price level of goods and services, which increases the purchasing power of money.
The term "compound interest" refers to interest calculated on:The original principal only. The original principal and the accumulated interest from previous periods.The principal only.The interest only. B) The original principal and the accumulated interest from previous periods. Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.
What is the main purpose of a "credit score"?To determine a person's income.To predict a person's ability to repay a loan.To determine a person's employment status.To predict a person's total wealth. B) To predict a person's ability to repay a loan.A credit score is a numerical expression based on a level analysis of a person's credit files, which represents their creditworthiness.
The term "liquidity" refers to the ease with which an asset can be converted into:A company's profit. Cash.Another asset. A liability.B) Cash.Liquidity refers to the degree to which a security or asset can be quickly bought or sold in the market without affecting the asset's price.