ftse3

What does a bond rating primarily assess?

• A) The bond's price volatility
  

• B) The bond's liquidity
  

• C) The bond issuer's creditworthiness
  

• D) The bond's interest rate

How does a higher bond rating affect the interest rate?

• A) It increases the interest rate

• B) It decreases the interest rate

• C) It has no impact on the interest rate

• D) It makes the interest rate variable

Which of the following agencies is known for providing bond ratings?

• A) Federal Reserve
  

• B) Standard & Poor's (S&P)
  

• C) World Bank
  

• D) International Monetary Fund (IMF)

A bond rated 'AAA' is considered to be:

• A) Speculative
  

• B) Junk bond
  

• C) Investment grade
  

• D) High yield

hat does a bond rating downgrade typically indicate?

• A) An increase in the bond's coupon rate
  

• B) A reduction in the bond issuer's credit risk
  

• C) An improvement in the bond issuer's financial health
  

• D) A higher risk of default by the bond issuer

What is the primary goal of a speculator in financial markets?

• A) To minimize risk
  

• B) To hedge against price changes
  

• C) To profit from price fluctuations
  

• D) To provide liquidity

Speculators in the stock market are often criticized because:

• A) They contribute to market stability
  

• B) They help price discovery
  

• C) They are seen as causing excessive price volatility
  

• D) They provide long-term capital to companies

Which of the following is a key characteristic of arbitrage opportunities?

• A) High correlation between different markets
  

• B) Temporary price inefficiencies between different markets
  

• C) Long-term investment strategies
  

• D) Equal prices in all markets

Arbitrageurs are important to financial markets because they:

• A) Reduce market efficiency
  

• B) Increase transaction costs
  

• C) Help eliminate price discrepancies across markets
  

• D) Increase the overall market risk

A speculator who expects the price of a stock to fall will most likely:

• A) Buy the stock
  

• B) Sell the stock short
  

• C) Hold the stock
  

• D) Ignore the stock