Quantitative Finance Quiz

What is the primary tool used by quants to make predictions in the market?

• Intuition

• Math, data, and AI

• Stock tips

• Market rumors

In finance, what does the term 'return' refer to?

• The initial investment amount

• The total value of a stock

• The number of shares owned

• The percent change in price

What shape does the histogram of stock returns often resemble?

• A straight line

• A bell curve

• A zigzag pattern

• A triangle

What two numbers are essential to understanding a normal distribution?

• Median and mode

• Variance and range

• Mean and standard deviation

• Mean and median

What does correlation measure in the context of stocks?

• The total value of stocks

• The risk associated with stocks

• The degree to which two stocks move together

• The average return of stocks

What is the main challenge faced by quants when modeling a large portfolio?

• Lack of data

• High transaction costs

• Regulatory restrictions

• Too much data

In a pair trade, what is the goal when comparing two stocks?

• To ensure both stocks fall

• To buy and hold both stocks

• To ensure both stocks rise

• To predict which stock will perform better

What is the key factor that determines profit in a short selling strategy?

• The total market value

• The number of shares sold

• The percentage change in stock price

• The initial stock price

What mathematical technique is used to find the best balance between expected return and risk in a portfolio?

• Mean variance optimization

• Monte Carlo simulation

• Time series analysis

• Linear regression

What is High Frequency Trading (HFT) primarily focused on?

• Analyzing historical data

• Cutting microseconds off trades

• Long-term investments

• Predicting economic trends