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Question 1 of 10
1. Question
From the statements below regarding fill or kill order, which one seems to be the most appropriate to you?
Correct
Fill or kill order
Similar to a market order, a fill or kill order is an order that is immediately executable at a currently available market price. However, any part of the order that cannot be filled must be cancelled. In practice, exchanges establish rules to guide floor brokers in their attempt to fill an order in its entirety. For example, a broker might be required to bid the open amount of the order at least three times prior to cancelling it.
Incorrect
Fill or kill order
Similar to a market order, a fill or kill order is an order that is immediately executable at a currently available market price. However, any part of the order that cannot be filled must be cancelled. In practice, exchanges establish rules to guide floor brokers in their attempt to fill an order in its entirety. For example, a broker might be required to bid the open amount of the order at least three times prior to cancelling it.
Question 2 of 10
2. Question
Which of the following statements is true regarding MOC order?
Correct
MOC order
A market on close (MOC) order instructs a floor broker to execute an order only during the official closing period of the market. The execution price will be within the range of trading during the closing period. There is no guarantee that the execution price will be the price of the actual final sale. For example, an MOC order for corn futures traded on the CME would be executed shortly before 2 p.m. on the business day prior to the 15th calendar day of the contract month.
Incorrect
MOC order
A market on close (MOC) order instructs a floor broker to execute an order only during the official closing period of the market. The execution price will be within the range of trading during the closing period. There is no guarantee that the execution price will be the price of the actual final sale. For example, an MOC order for corn futures traded on the CME would be executed shortly before 2 p.m. on the business day prior to the 15th calendar day of the contract month.
Question 3 of 10
3. Question
Which of the following statements is false regarding CFO and OPG order?
Correct
CFO and OPG order
A cancel former order (CFO) is actually a combination of a cancellation of an existing order (a CXL or cancel order) and the subsequent entry of a new order. The purpose of using a single order rather than a separate cancellation order and a new order is to eliminate the possibility of the new order being executed before the cancellation order is received and executed. An opening only (OPG) order is valid for execution immediately upon the opening of an exchange trading session. The order is to be immediately cancelled if it cannot be filled. It is, in effect, a time- sensitive limit order in that the trade must be executed at a limit price or better; otherwise, it is cancelled.
Incorrect
CFO and OPG order
A cancel former order (CFO) is actually a combination of a cancellation of an existing order (a CXL or cancel order) and the subsequent entry of a new order. The purpose of using a single order rather than a separate cancellation order and a new order is to eliminate the possibility of the new order being executed before the cancellation order is received and executed. An opening only (OPG) order is valid for execution immediately upon the opening of an exchange trading session. The order is to be immediately cancelled if it cannot be filled. It is, in effect, a time- sensitive limit order in that the trade must be executed at a limit price or better; otherwise, it is cancelled.
Question 4 of 10
4. Question
Regarding electronic trading functionalities, which of the following statements is true?
Correct
Electronic trading functionalities
The Chicago Mercantile Exchange (CME) is the largest electronic trading system, and is available 24 hours per day, five days per week. Most, but not all, of the asset classes and products that are available for open outcry can be traded electronically. Available instrument types include outright contracts on futures and options; futures spreads; and various option strategies, such as calendar spreads, straddles, and strangles. The available order types are limited to market orders with various qualifiers (which become discretionary type orders); limit orders, and stop orders. Other order qualifiers include good ‘til cancelled (GTC), good ‘til date (GTD), fill or kill (FOK), and fill and kill (FAK).
Incorrect
Electronic trading functionalities
The Chicago Mercantile Exchange (CME) is the largest electronic trading system, and is available 24 hours per day, five days per week. Most, but not all, of the asset classes and products that are available for open outcry can be traded electronically. Available instrument types include outright contracts on futures and options; futures spreads; and various option strategies, such as calendar spreads, straddles, and strangles. The available order types are limited to market orders with various qualifiers (which become discretionary type orders); limit orders, and stop orders. Other order qualifiers include good ‘til cancelled (GTC), good ‘til date (GTD), fill or kill (FOK), and fill and kill (FAK).
Question 5 of 10
5. Question
From the statements below regarding valid bid, which one seems to be the most appropriate to you?
Correct
Valid bid
The majority of trading that is conducted in the U.S. involves open outcry in the pit of an exchange. Buyers offer bids representing the price they are willing to pay for a commodity. Sellers, in turn, offer asks (as in asking prices) representing the price they are willing to accept for a commodity. Only the highest price offered by a buyer and the lowest price offered by a seller become valid bids. It then becomes the responsibility of the floor broker to match buyers who will meet the ask price with sellers who will meet the bid price, and vice versa.
Incorrect
Valid bid
The majority of trading that is conducted in the U.S. involves open outcry in the pit of an exchange. Buyers offer bids representing the price they are willing to pay for a commodity. Sellers, in turn, offer asks (as in asking prices) representing the price they are willing to accept for a commodity. Only the highest price offered by a buyer and the lowest price offered by a seller become valid bids. It then becomes the responsibility of the floor broker to match buyers who will meet the ask price with sellers who will meet the bid price, and vice versa.
Question 6 of 10
6. Question
Which of the following statements is false regarding technical and fundamental market analysis processes?
Correct
Technical and fundamental market analysis processes
Technical analysis is based upon the study of statistical analysis, and involves looking at current and past numerical market data. A technical analyst uses statistical techniques to try to discern tendencies and trends in order to forecast future market behavior. This type of analyst often uses illustrative tools, such as charts and graphs. Fundamental analysis is based upon commodity specific information that is related to supply and demand, as well as any other factors that have an influence on the market availability of a product. A fundamental analyst would examine factors of production, such as supply and demand estimates, availability of raw materials, transportation, weather, economic events, etc. After examining these factors, the fundamental analyst would attempt to quantify a commodity’s current status and probable future direction.
Incorrect
Technical and fundamental market analysis processes
Technical analysis is based upon the study of statistical analysis, and involves looking at current and past numerical market data. A technical analyst uses statistical techniques to try to discern tendencies and trends in order to forecast future market behavior. This type of analyst often uses illustrative tools, such as charts and graphs. Fundamental analysis is based upon commodity specific information that is related to supply and demand, as well as any other factors that have an influence on the market availability of a product. A fundamental analyst would examine factors of production, such as supply and demand estimates, availability of raw materials, transportation, weather, economic events, etc. After examining these factors, the fundamental analyst would attempt to quantify a commodity’s current status and probable future direction.
Question 7 of 10
7. Question
Which of the following statements is true regarding random walk theory?
Correct
Random walk theory
The random walk theory holds that securities price changes move independently such that past results cannot be used to predict future performance. Technical analysis holds that market tendencies and trends can be discerned from past performance and used to predict future movements. However, if markets are a random walk, meaning the path of change is random and thus somewhat unpredictable, technical analysis would not yield any useful results.
Incorrect
Random walk theory
The random walk theory holds that securities price changes move independently such that past results cannot be used to predict future performance. Technical analysis holds that market tendencies and trends can be discerned from past performance and used to predict future movements. However, if markets are a random walk, meaning the path of change is random and thus somewhat unpredictable, technical analysis would not yield any useful results.
Question 8 of 10
8. Question
Regarding linear and polynomial functions, which of the following statements is true?
Correct
Linear and polynomial functions
Useful trends are those that can be used to discern future changes. A linear function produces a linear or straight line with a constant slope. A forecast based on a linear slope essentially continues the straight line, meaning the forecasted future direction will be exactly the same as the past. However, a polynomial function is graphically represented as curvilinear, meaning the slope of the line actually changes at a changing rate. A forecast based on the slope produced from a polynomial function would anticipate this change rather than extrapolate it from a linear line.
Incorrect
Linear and polynomial functions
Useful trends are those that can be used to discern future changes. A linear function produces a linear or straight line with a constant slope. A forecast based on a linear slope essentially continues the straight line, meaning the forecasted future direction will be exactly the same as the past. However, a polynomial function is graphically represented as curvilinear, meaning the slope of the line actually changes at a changing rate. A forecast based on the slope produced from a polynomial function would anticipate this change rather than extrapolate it from a linear line.
Question 9 of 10
9. Question
From the statements below regarding saucer bottom or saucer top, which one seems to be the most appropriate to you?
Correct
Saucer bottom or saucer top
The curvilinear pattern could appear concave and resemble a saucer that is right side up (saucer bottom), or it could appear convex and resemble a saucer that is upside down (saucer top). The saucer bottom is said to indicate the level of support when the pattern begins to turn positive. In contrast, the saucer top is said to indicate the level of resistance as the pattern begins to turn negative.
Incorrect
Saucer bottom or saucer top
The curvilinear pattern could appear concave and resemble a saucer that is right side up (saucer bottom), or it could appear convex and resemble a saucer that is upside down (saucer top). The saucer bottom is said to indicate the level of support when the pattern begins to turn positive. In contrast, the saucer top is said to indicate the level of resistance as the pattern begins to turn negative.
Question 10 of 10
10. Question
Which of the following statements is true regarding head and shoulders pattern and breakout?
Correct
Head and shoulders pattern and breakout
A head and shoulders pattern is indicative of a trend reversal, which may be either positive or negative. If this trend is bearish, the pattern is characterized by successive peaks that rise to a maximum, and then fall progressively lower. An inverted head and shoulders pattern indicates a bullish trend. A trend that crosses a support level (the saucer bottom) or a resistance level (the saucer top) is said to be experiencing a breakout. The latter is considered bullish, especially if the trend continues and volumes continue to rise.
Incorrect
Head and shoulders pattern and breakout
A head and shoulders pattern is indicative of a trend reversal, which may be either positive or negative. If this trend is bearish, the pattern is characterized by successive peaks that rise to a maximum, and then fall progressively lower. An inverted head and shoulders pattern indicates a bullish trend. A trend that crosses a support level (the saucer bottom) or a resistance level (the saucer top) is said to be experiencing a breakout. The latter is considered bullish, especially if the trend continues and volumes continue to rise.
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