Introduction to Stock Exchange MCQs

1. Which of the following is the primary function of a stock exchange?
(A) Providing loans to investors
(B) Facilitating buying and selling of securities
(C) Printing currency notes
(D) Regulating interest rates

2. Which is the oldest stock exchange in the world?
(A) London Stock Exchange
(B) New York Stock Exchange
(C) Amsterdam Stock Exchange
(D) Tokyo Stock Exchange

3. The New York Stock Exchange (NYSE) is located on which street?
(A) Broadway
(B) Wall Street
(C) Times Square
(D) Fifth Avenue

4. In Pakistan, which is the main stock exchange?
(A) Karachi Stock Exchange
(B) Lahore Stock Exchange
(C) Islamabad Stock Exchange
(D) Pakistan Stock Exchange

5. What does “IPO” stand for in stock markets?
(A) Initial Public Offering
(B) International Price Order
(C) Investment Portfolio Option
(D) Institutional Public Operation

6. The term “bull market” refers to:
(A) A market with falling prices
(B) A market with rising prices
(C) A stagnant market
(D) A blacklisted market

7. Which term refers to a market with declining prices?
(A) Bull market
(B) Bear market
(C) Primary market
(D) Secondary market

8. What is the role of SECP in Pakistan?
(A) Printing money
(B) Supervising stock exchange activities
(C) Collecting taxes
(D) Controlling inflation

9. Which of the following is an example of a primary market transaction?
(A) Buying shares from another investor
(B) Selling shares on the secondary market
(C) Purchasing newly issued IPO shares
(D) Trading bonds between investors

10. What does “dividend” mean in stock exchange?
(A) Company’s profit distributed to shareholders
(B) Interest on bonds
(C) Commission charged by brokers
(D) Government tax on shares

11. Which of the following is NOT a stock exchange index?
(A) Dow Jones Industrial Average
(B) FTSE 100
(C) S&P 500
(D) WTO Index

12. What is the “face value” of a share?
(A) Current market price
(B) Original value printed on the share
(C) Dividend per share
(D) Selling price decided by broker

13. Which of the following best defines “market capitalization”?
(A) Total assets of a company
(B) Total market value of all outstanding shares
(C) Net profits of a company
(D) Annual dividend distributed

14. A company listed on the stock exchange must:
(A) Be registered with SECP
(B) Publish annual financial reports
(C) Follow corporate governance rules
(D) All of the above

15. Which of the following is a short-term market instrument?
(A) Treasury bills
(B) Equity shares
(C) Preference shares
(D) Debentures

16. Who acts as an intermediary between buyers and sellers in stock exchange?
(A) Banker
(B) Broker
(C) Shareholder
(D) Investor

17. Which stock index represents Pakistan’s stock exchange performance?
(A) KSE-100 Index
(B) Sensex
(C) Dow Jones
(D) FTSE 250

18. The process of buying shares with borrowed money is called:
(A) Arbitrage
(B) Margin trading
(C) Hedging
(D) Diversification

19. What is the main objective of a stock exchange index?
(A) To measure changes in market performance
(B) To regulate stock brokers
(C) To collect taxes on shares
(D) To calculate dividends

20. What does “liquidity” mean in stock exchange terms?
(A) Ability to convert assets into cash quickly
(B) Company’s profit ratio
(C) Number of shareholders
(D) Amount of dividends declared

21. Which of the following is a global stock index?
(A) Nasdaq Composite
(B) WTO Index
(C) UNDP Index
(D) IMF Index

22. What does P/E ratio stand for?
(A) Price to Earnings ratio
(B) Profit to Equity ratio
(C) Performance Evaluation ratio
(D) Price to Expense ratio

23. Which of the following is NOT a function of stock exchange?
(A) Providing a secondary market
(B) Mobilizing savings
(C) Issuing currency notes
(D) Facilitating capital formation

24. The “secondary market” deals with:
(A) Sale of new securities
(B) Resale of existing securities
(C) Foreign exchange
(D) Commodity trade

25. Which organization regulates stock exchanges in the USA?
(A) SEC
(B) IMF
(C) World Bank
(D) WTO

26. What does “speculation” mean in stock trading?
(A) Buying shares only for dividends
(B) Buying shares for long-term investment
(C) Buying and selling shares to earn quick profit
(D) Buying government bonds

27. Which of the following best explains “blue-chip” stocks?
(A) Shares of newly listed companies
(B) Shares of established, financially strong companies
(C) Shares with very low prices
(D) Shares issued by government only

28. What is the main advantage of stock exchange to investors?
(A) Liquidity and easy transfer of securities
(B) Guaranteed profit
(C) Tax-free income
(D) Unlimited shares without risk

29. Which of the following is considered a stock exchange instrument?
(A) Shares
(B) Bonds
(C) Debentures
(D) All of the above

30. Which stock exchange is the largest in terms of market capitalization?
(A) Tokyo Stock Exchange
(B) London Stock Exchange
(C) New York Stock Exchange
(D) Shanghai Stock Exchange

31. What is the full form of “DEMAT”?
(A) Depository Material Account
(B) Dematerialized Account
(C) Debt Management Account
(D) Direct Market Access Trading

32. What does “portfolio” mean in stock exchange?
(A) Collection of securities held by an investor
(B) Single share owned by a person
(C) Company’s annual report
(D) Broker’s commission list

33. Which market deals in long-term securities?
(A) Money market
(B) Capital market
(C) Forex market
(D) Commodity market

34. What is the function of a clearing house in stock exchange?
(A) Printing securities
(B) Settling transactions between buyers and sellers
(C) Issuing IPOs
(D) Declaring dividends

35. Which stock index represents India’s Bombay Stock Exchange?
(A) KSE-100
(B) Sensex
(C) Nikkei 225
(D) FTSE 100

36. Which is a common risk in stock investment?
(A) Market risk
(B) Credit risk
(C) Liquidity risk
(D) All of the above

37. Which of the following is NOT a type of share?
(A) Equity share
(B) Preference share
(C) Treasury bill
(D) Ordinary share

38. What is meant by “stock broker”?
(A) Owner of stock exchange
(B) Licensed agent who buys and sells securities for clients
(C) Government tax collector
(D) Manager of listed companies

39. Which of the following is an over-the-counter (OTC) market in the USA?
(A) Nasdaq
(B) NYSE
(C) FTSE
(D) Nikkei

40. The stock exchange provides:
(A) Safety of investment
(B) Liquidity
(C) Price discovery mechanism
(D) All of the above

41. Which of the following is a derivative instrument traded in stock markets?
(A) Futures
(B) Options
(C) Swaps
(D) All of the above

42. What is “insider trading”?
(A) Buying shares in foreign countries
(B) Illegal trading using confidential company information
(C) Trading shares only within a family
(D) Government buying of shares

43. Which of the following is NOT a benefit of stock exchange to companies?
(A) Raising capital
(B) Enhancing corporate image
(C) Avoiding regulations
(D) Expanding ownership base

44. Which is the first electronic stock exchange in the world?
(A) NYSE
(B) Nasdaq
(C) FTSE
(D) KSE

45. Which of the following is NOT a function of a stock exchange?
(A) Providing liquidity
(B) Helping capital formation
(C) Ensuring risk-free investment
(D) Providing a secondary market

46. What is the purpose of listing a company on stock exchange?
(A) To sell its products
(B) To raise funds from the public
(C) To increase taxes
(D) To get free government aid

47. Which of the following is considered a short-term speculative strategy?
(A) Day trading
(B) Long-term investment
(C) Holding for dividends
(D) Buying government bonds

48. Which type of stock gives fixed dividends?
(A) Equity shares
(B) Preference shares
(C) Bonus shares
(D) Rights shares

49. What does “rights issue” mean in stock exchange?
(A) Shares offered to employees only
(B) Shares offered to existing shareholders at a discount
(C) Shares offered to government
(D) Shares offered to foreign investors only

50. The main objective of stock exchange regulation is to:
(A) Protect investors and ensure fair trading
(B) Maximize broker profits
(C) Print currency
(D) Control inflation