Finance Strategies Quiz

A strategy used to exploit price differences between related securities, aiming to profit regardless of overall market direction.

An investment approach that seeks to capitalize on inefficiencies in the pricing of equity securities by creating long and short positions that cancel out market exposure.

A category of event-driven strategies that focuses on profiting from corporate events like mergers or acquisitions.

An event-driven strategy involving investing in companies facing financial distress or potential bankruptcy, aiming to gain from restructuring or reorganization.

Investment strategies focusing on anticipating and profiting from directional movements in various market sectors, such as equities, debt, currencies, and commodities.

The difference in price between a bond and an equivalent amount of stock. It represents the perceived relative value of these two assets.

Represents the starting point of a transaction in which a bond is exchanged for an equivalent amount of stock.

The opposite of trade initiation, where an initially exchanged bond is reversed back to its original state or a stock is exchanged for an equivalent bond.

A statistical measure that indicates the average price spread over a period.

A statistical measure that shows how spread out the price spreads are from the mean.

An acquiring firm's earnings per share decrease after a merger due to a lower earnings contribution from the acquired firm.

An acquiring firm's earnings per share increase after a merger due to a strong earnings contribution from the acquired firm.

Bonds rated below investment grade, typically BB or lower by Standard & Poor's and Ba or lower by Moody's, offering higher potential returns but also higher risk.

A strategy involving investments in below-investment grade debt securities, aiming to earn returns through interest income and capital appreciation.