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Wall Street Risk IQ Test
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Q1. What is the longest period that the U.S. stock market (DJIA) was flat (did not close above its previous high) since 1900?
2 Years
5 Years
10 Years
15 Years
25 Years
Q2. Which investment has yielded the highest returns historically (in US dollars) since 1980?
US stocks
Emerging Market Stocks
US Real Estate (Commercial or residential)
Corporate “junk” bonds
Gold
Q3. What was the longest period that bond investments outperformed stocks over the last 100 years?
5 Years
10 Years
15 Years
20 Years
25 Years
Q4. Most people feel more pain from losses than pleasure from gains. On average, when making risky decisions, how do people value (weigh) potential losses versus gains?
1:1 (losses : gains)
1.5:1
2:1
3:1
4:1
Q5. In 2006 Argentina had the 31st largest economy in the world, which was 1.5% percent the size of the United States economy. In 1900, where was Argentina ranked in worldwide economic strength?
2nd
6th
21st
32nd
54th
Q6. What is the average annual U.S. stock return over the past 200 years when inflation is factored out (i.e., real returns)? Approximately:
3%
7%
12%
20%
25%
Q7. What is the average annual U.S. long-term bond return over the past 200 years, when inflation is factored out (i.e., real returns)? Approximately:
3%
5%
10%
15%
20%
Q8. Approximately how much paper wealth was lost by shareholders in the US stock markets between March 2000 and March 2002?
$100 billion
$500 billion
$1 trillion
$4 trillion
$7 trillion
Q9. In what year was the all-time high of Japan’s Nikkei stock market?
1969
1980
1990
1996
2007
Q10. Which one of the following bear markets encompassed the greatest percentage decline in the Dow Jones Industrial Average?
The Bear market of 1929-1932
The 1970’s Oil Embargo 1973-1974
The Crash of 1987 (July to October)
The Technology Bear (2000-2002)
Q11. Which one of the following bear markets was the least percentage decline in the Dow Jones Industrial Average, from peak to trough?
The Bear market of 1929-1932
The 1970’s Oil Embargo 1973-1974
The Crash of 1987 (July to October)
The Technology Bear (2000-2002)
Q12. What was the percentage decline in the Nasdaq index (both Nasdaq 100 and Nasdaq Composite) from their high in 2000 to their low in 2002?
20%
40%
60%
80%
95%
Q13. An increase in bond prices is likely to depress residential real estate values.
True
False
Q14. Stock performance, over the long term, is most highly correlated with?
Earnings growth
Corporate debt
Bond prices
Currency fluctuations
Inflation
Q15. China’s stock market was the best performing world stock market of 2006. How much did the Shanghai A-share index gain for the year?
50%
90%
130%
170%
210%
Q16. Stocks comprise what percentage of Money Market funds?
0%
25%
50%
75%
100%
Q17. If daily stock market prices changed according to a statistical “normal distribution,” then the odds of a 5 standard deviation price decline (a one-day decline of more than 4.4%) are less than 0.00003% (3 in 100,000, or about one every 125 years). How many such price declines occurred in the United States from 1985 through 2005?
0
1
2
5
10
Q18. Since 1998, when a country has defaulted on its debt obligations (as Russia, Argentina, Dominican Republic, Ecuador, and others have), what have been investors' average recovery rates of the bonds' face value? That is, how much of the par value of the bonds is returned?
0%
15%
35%
65%
85%
Q19. Long Term Capital Management (LTCM) was said to endanger the global financial system when it neared collapse in October 1998. What was the total value of all LTCM's outstanding positions?
$1.3 trillion
$5.3 trillion
$9.3 trillion
$13.3 trillion
It was never known
Q20. From 1886-2006 (120 years), how many category 5 hurricanes made landfall in the United States? Category 5 hurricanes are the most destructive class of storms and are defined as having a maximum sustained wind speed over 155mph (249 kph).
1
4
7
10
13
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