Understanding Asset Classes and Financial Instruments

Which of the following is NOT considered one of the big six asset classes?

• Equities

• Commodities

• Cryptocurrency

• Real Estate

What is the term used to describe the ability to invest in an asset class without directly buying the assets?

• Diversification

• Exposure

• Hedging

• Leverage

Which financial instrument allows you to invest in a group of stocks without buying each one individually?

• Index ETF

• Options

• Futures

• Bonds

What can cause a company's stock price to decrease despite strong revenue growth?

• Low unemployment rates

• New product launches

• Shrinking profit margins

• Positive public sentiment

How do rising interest rates generally affect stock prices?

• They make borrowing more expensive, potentially lowering stock prices.

• They make borrowing cheaper, boosting stock prices.

• They have no effect on stock prices.

• They increase consumer spending, raising stock prices.

What is the primary factor that influences bond prices?

• Company performance

• Interest rates

• Public sentiment

• Commodity prices

Why might a bond's price fall during a period of high inflation?

• The bond's future payments become more valuable.

• The bond's future payments buy less, reducing its value.

• Interest rates decrease, making the bond less attractive.

• The bond's credit risk decreases.

In the foreign exchange market, what is a 'peg'?

• A currency that is allowed to float freely.

• A type of financial instrument.

• A fixed exchange rate to a stronger currency.

• A currency that is traded in pairs.

What typically causes commodity prices to fluctuate?

• Company earnings

• Interest rates

• Supply and demand

• Public sentiment

Which factor is NOT a major influence on real estate prices?

• Foreign exchange rates

• Local demand

• Interest rates

• Zoning laws