Alpha Academy Final Exam · Alpha Academy

You made it to the end of Alpha Academy. This exam covers the whole Level 1 school — the market, stocks, charts, analysis, options, futures, risk, rules, and safety — in 50 multiple-choice questions.

How it works:

Closed book. Put the modules away. This checks what is actually in your head.
50 questions, each with four choices (A, B, C, D) and exactly one correct answer.
You need 40 out of 50 (80%) to pass.
Retakes are allowed. If you miss the mark, re-read the modules your wrong answers point to, then take it again. Passing on the second try after real review is worth more than guessing your way through on the first.
There are no answers in this document. The answer key is a separate file, so this exam stays honest.

Part 1 — Foundations (Questions 1–8)

One share of stock is best described as:
- A) A loan you made to a company
- B) A small ownership piece of a company
- C) A promise that the company will repay you with interest
- D) A ticket that guarantees the stock will rise
A company's market capitalization (market cap) is calculated as:
- A) Share price × shares outstanding
- B) Share price + total company debt
- C) Yearly profit × 10
- D) The cash in the company's bank account
The S&P 500 is:
- A) A single stock you can buy directly
- B) A company that sells investments
- C) An index — a scoreboard that tracks 500 large US companies
- D) A savings bond issued by the government
On a stock quote, the bid price is:
- A) The highest price a buyer is willing to pay right now
- B) The lowest price a seller will accept
- C) The price of the very last trade yesterday
- D) The fee your broker charges per trade
A limit order to buy a stock means:
- A) Buy immediately, at whatever price the market gives you
- B) Buy only after the market closes
- C) Buy the maximum shares your account allows
- D) Buy at your set price or better — never worse than your limit
The main way an ETF (exchange-traded fund) differs from a mutual fund is:
- A) ETFs never hold stocks
- B) An ETF trades all day like a stock, while a mutual fund prices once after the close
- C) Mutual funds are always free to own
- D) ETFs are only available to professionals
A dividend is:
- A) A cash payment a company may choose to send its shareholders — it is never guaranteed
- B) A yearly payment every stock is required to make
- C) A fee the exchange charges for holding shares
- D) The tax you owe when a trade wins
Regular US stock market hours are:
- A) 8:00 AM to 8:00 PM Eastern Time
- B) 6:00 AM to noon Eastern Time
- C) 9:30 AM to 4:00 PM Eastern Time
- D) 24 hours a day, 7 days a week

Part 2 — Reading Charts & Analysis (Questions 9–16)

A green (up) candle on a chart means the price:
- A) Will rise again tomorrow
- B) Had no sellers during that period
- C) Opened at the highest price of the day
- D) Closed higher than it opened
The bars along the bottom of a price chart — the volume bars — show:
- A) How much money the company earned
- B) How many shares changed hands during that period
- C) How many employees the company has
- D) The size of the next dividend
Support is a price level where:
- A) Price has repeatedly stopped falling and bounced back up
- B) The company releases its earnings report
- C) Every buyer is forced to sell
- D) The stock is guaranteed to reverse direction
A moving average is used to:
- A) Predict tomorrow's exact closing price
- B) Replace the need for a stop loss
- C) Smooth out price movement so the trend is easier to see
- D) Guarantee a profit when price crosses it
The RSI (Relative Strength Index) reads 75. The textbook reading is:
- A) The stock must fall today
- B) The stock is a sure buy
- C) The indicator is broken
- D) The stock is "overbought" by convention — stretched, but not guaranteed to reverse
VWAP is best described as:
- A) The highest price traded this year
- B) The average price paid so far today, weighted by volume — the day's fair-price line
- C) A fee charged by market makers
- D) The opening price of the first candle only
A stock trades at $30 and earned $1.50 per share (EPS) over the last year. Its P/E ratio is:
- A) 45
- B) 31.5
- C) 20
- D) 0.05
The VIX is:
- A) A stock inside the S&P 500
- B) A bond issued by the US Treasury
- C) A "fear gauge" — an index built from options prices that shows how much volatility the market expects
- D) A cryptocurrency

Part 3 — Options (Questions 17–28)

A call option gives its buyer:
- A) The right to buy 100 shares at the strike price
- B) The right to sell 100 shares at the strike price
- C) Immediate ownership of 100 shares
- D) A monthly dividend payment
An option is quoted with a premium of $2.50. The cost of one contract is:
- A) $2.50
- B) $25
- C) $250
- D) $2,500
The most you can lose on an option you bought is:
- A) Unlimited — there is no cap
- B) The full strike price
- C) Twice the premium
- D) The premium you paid, and nothing more
A stock trades at $95. A call with a $100 strike price is:
- A) In the money
- B) Out of the money
- C) At the money
- D) Already expired
A covered call means you:
- A) Buy a call using borrowed money
- B) Sell a call with no shares and no cash set aside
- C) Own 100 shares of a stock and sell a call against those shares
- D) Buy two calls with different strike prices
You buy a call with a $50 strike for a $2.50 premium. Your breakeven price at expiration is:
- A) $52.50
- B) $50.00
- C) $47.50
- D) $55.00
You own a put with a $60 strike. At expiration, the stock finishes at $52. One contract is worth:
- A) $200
- B) $600
- C) $60
- D) $800
An option's premium is $3.20 and its intrinsic value is $2.00. Its extrinsic value is:
- A) $5.20 per share
- B) $1.20 per share
- C) $3.20 per share
- D) $0 — options have no extrinsic value
A protective put is used to:
- A) Guarantee a profit on shares you own
- B) Borrow shares so you can sell them
- C) Insure shares you own against a big drop, the way insurance protects a house
- D) Avoid paying taxes on a winning stock
A company's earnings report is good and the stock rises — but the call you bought still loses money. The most likely cause is:
- A) IV crush — implied volatility collapsed once the event passed, draining the premium
- B) Your broker made an error
- C) Calls can never profit when news is good
- D) Theta only works against put buyers
A call has a delta of 0.60. The stock rises $2. The option's price rises by roughly:
- A) $0.60 per share
- B) $2.00 per share
- C) $1.20 per share — about $120 per contract
- D) $120 per share
You buy a bull call spread: buy the $100 call, sell the $110 call, and pay a $1.80 debit. Your maximum profit at expiration is:
- A) $180
- B) Unlimited
- C) $1,000
- D) $820

Part 4 — Futures & Other Markets (Questions 29–36)

A futures contract is:
- A) A share of a mining company
- B) An agreement to buy or sell something at a set price on a future date
- C) A savings account held at an exchange
- D) A bet that never expires
In futures trading, margin is:
- A) A good-faith deposit you post to hold the position — it is not a loan
- B) A loan from the broker that charges interest, exactly like stock margin
- C) A fee that the exchange keeps forever
- D) The profit target on the trade
You are long 1 MES (Micro E-mini S&P 500) contract and price rises 10 points. Your gain before costs is:
- A) $10
- B) $500
- C) $50
- D) $5,000
You are long 1 NQ (Nasdaq-100) contract and price rises 10 points. Your gain before costs is:
- A) $20
- B) $100
- C) $1,000
- D) $200
You are long 1 ES (E-mini S&P 500) contract and price falls 8 points. Your loss before costs is:
- A) $80
- B) $400
- C) $200
- D) $4,000
You are long 1 CL (crude oil) contract and price rises 2 points. Your gain before costs is:
- A) $2,000
- B) $20
- C) $200
- D) $100
A headline says "bond yields rose today." That means bond prices:
- A) Rose as well
- B) Did not change
- C) Fell — prices and yields move in opposite directions, like a seesaw
- D) Were not traded that day
The EUR/USD forex pair moves from 1.1000 to 1.1050. That is a move of:
- A) 5 pips
- B) 500 pips
- C) Half a pip
- D) 50 pips

Part 5 — Risk & Psychology (Questions 37–44)

A stop loss is best described as:
- A) A pre-set exit that closes your trade when price reaches your planned loss level
- B) A way to guarantee you can never lose money
- C) An order type only professionals are allowed to use
- D) A tip you get from an experienced trader
Revenge trading means:
- A) Trading against a rival trader on purpose
- B) Selling a stock because you dislike the company
- C) Trading bigger and angrier right after a loss, trying to win the money back immediately
- D) Reporting a scam to the regulators
You follow the 1% rule with a $10,000 account. The most you should risk on a single trade is:
- A) $10
- B) $100
- C) $1,000
- D) Whatever feels right that day
Your total risk on a trade is $100. You buy a stock at $40 and place your stop at $38. How many shares should you buy?
- A) 25 shares
- B) 40 shares
- C) 100 shares
- D) 50 shares
You risked $100 on a trade and made $250. Measured in R-multiples, your result is:
- A) +2.5R
- B) +0.4R
- C) +1.5R
- D) +25R
Your account drops 50%. What percentage gain do you now need just to get back to even?
- A) 50%
- B) 25%
- C) 100%
- D) 75%
FOMO in trading means:
- A) A type of futures contract
- B) The fear of missing out — jumping into a move late because everyone else seems to be making money
- C) A formula for position sizing
- D) The sound of the exchange's closing bell
By 10:15 AM you have already hit your daily loss limit. Then you spot a setup that looks perfect. Your written plan says:
- A) Take it — a perfect setup always beats the limit
- B) Take it at double size to recover the day
- C) Take it at half size, just this once
- D) Stop trading for the day — the limit exists to protect you from trading while emotional

Part 6 — Rules & Safety (Questions 45–50)

The biggest practical difference between a cash account and a margin account is:
- A) A cash account trades only your own settled money, while a margin account lets you borrow from the broker
- B) Margin accounts charge no fees of any kind
- C) Cash accounts are not allowed to buy stocks
- D) There is no real difference
Stock settlement of T+1 means:
- A) Your trade takes one hour to place
- B) You must hold every stock for at least one day
- C) The money and shares officially settle one business day after the trade
- D) Your taxes are due one day after the trade
A margin call is:
- A) A friendly phone call from your broker with a stock tip
- B) The broker's demand that you restore your account equity — if you do not act, the broker may sell your positions without your permission
- C) A call option that was bought on margin
- D) A call that must happen before every trade
The CLASSIC pattern day trader (PDT) rule said that a pattern day trader in a margin account needed:
- A) At least $2,000 in the account
- B) A college degree in finance
- C) No day trades at all, ever
- D) At least $25,000 in account equity — and because regulators have been replacing this rule with intraday-margin standards, you should check your own broker's current rule
You sell a stock at a $400 loss on June 10, then buy the same stock again on June 25. Under the wash sale rule:
- A) The $400 loss is disallowed for now, because you rebought a substantially identical security within 30 days after the sale
- B) The $400 loss counts in full, immediately
- C) The exchange fines you $400
- D) Nothing changes — there is no such rule
In a group chat, a stranger urges everyone to buy a tiny, unknown stock "before it doubles this week," while quietly planning to sell his own shares into the rush of buying. This scam is called:
- A) Dollar-cost averaging
- B) A covered call
- C) A pump-and-dump
- D) Hedging