01 Multiple choice — 12 questions
One attempt per option. A correct answer locks the question and explains itself; a wrong one only disables that option, so you can keep trying. The running score sits at the bottom of the page.
02 Written questions — 5 questions
Answer each in full before opening its model answer. The model answers are written at the length a full-mark response needs.
1. Define a security, break the definition into its four working parts, and explain the two types of security.
Show model answer
A security is a financial instrument that represents an ownership position or a credit, issued by companies or governments in the form of shares or bonds, and traded in the stock market (the bourse).
What it is: a financial instrument — a document with monetary value. What it represents: ownership or a credit (a debt owed to you). Who issues it: companies or governments. Where it trades: the bourse.
Title deeds (shares) represent equal parts of the company's capital; the holder is a part-owner with voting rights who receives dividends. Debt deeds (bonds) are a promise from a bank or company to pay a specific amount on a certain date in exchange for interest; the holder is a creditor, and bonds are usually issued because the company needs a loan to expand. Dividends belong to shares and interest to bonds — never swap them.
2. Explain the four differences between a regular market and a stock market.
Show model answer
1. Meeting: in a regular market the seller meets the buyer face to face; in a bourse deals are sometimes done through brokers and intermediaries.
2. Location: in a regular market the goods are in front of the dealers; in a bourse they are kept elsewhere, in warehouses or private banks.
3. Inspection: in a regular market delivery and pricing happen after the buyer checks the goods; in a bourse there is no inspection before the deal.
4. Reality: in a regular market buying and selling are real; in a bourse the deal can be speculation on price differences without paying the price or delivering the goods — “can be”, not always.
In one line: in a bourse, everything is one step further from the actual goods (M.L.I.R.).
3. Define the stock exchange, distinguish a broker from a dealer, and list what the exchange does and what trades on it.
Show model answer
A stock exchange is a marketplace where securities, such as stocks and bonds, are bought and sold by brokers and dealers. A broker buys and sells for a client; a dealer buys and sells for their own account.
The exchange gives investors a platform to trade, helps with price discovery and liquidity, and sets rules to keep trading fair — for example the NYSE and the LSE. Traders traditionally bought a “seat” to become members; this is less common now that trading is electronic, though some exchanges still lease memberships.
What trades (S.B.C.F.): stocks (ownership), bonds (debt securities), commodities such as gold or oil, traded through futures contracts, and foreign exchange, which usually happens in a separate market.
4. Trace the origin of the word “bourse”, with its two dates.
Show model answer
In 1285 in Bruges, Belgium, Robert van der Buerze founded the inn Huis Ter Beurze, a meeting place for European merchants and traders. Its managers gave financial advice to visiting traders, and that service became the “Beurze Purse” — the root of the word bourse, meaning an organised trading venue.
The building became a place used only for trading commodities, the model spread to other cities, and many exchanges adopted the name. In the 18th century the founding of the Paris Bourse shaped and sped up the growth of modern stock markets across Europe. Inn → Purse → Bourse; Bruges gives the name, Paris drives the growth.
5. Define a regular market and explain why its prices become uniform.
Show model answer
A regular market is a place or system where buyers and sellers interact to exchange goods, services or financial instruments.
Because buyers and sellers deal with each other freely, the prices of the same goods tend to become uniform across the whole market, easily and quickly: when everyone can see and reach everyone else, nobody can charge much more than the seller next door — “free contact → one price.”