Quiz on ” CFDs – An Introduction “

1. What is a contract for difference (CFD)?

a) A contract to purchase a share of ownership in a company.

b) A contract between an investor and a CFD provider to settle in cash the difference between the opening and closing price of an asset.

c) A contract to sell a stock that you don't own.

2. What is the main difference between trading stocks and trading CFDs?

a) When trading stocks, you own a share of the company, while when trading CFDs, you don't own the underlying asset.

b) When trading stocks, you can only profit from a rising price, while when trading CFDs, you can benefit from both rising and falling prices.

c) When trading stocks, you can leverage your capital, while when trading CFDs, you cannot.

3. What is the advantage of using CFDs for portfolio diversification?

a) CFDs can be used to trade on multiple asset types and classes, including international markets.

b) CFDs have a lower margin requirement than traditional stock purchases.

c) CFDs allow you to take advantage of alternative investment opportunities.

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