Understand market rises, falls and recovery math: test your skills
Markets rise and fall in cycles. A plan made before the fall is the one that survives it. Answer each question to see the explanation; your score appears at the end.
This test checks that you can
- Define bull, bear and correction
- Understand why timing the market is hard
- Write a plan for the next decline
- Practice
1. A common definition of a bear market is a fall of…
- Practice
2. Why is timing the market hard?
- Practice
3. What protects you from selling in a downturn?
- Key idea
4. Which statement best explains "Falls are part of investing"?
- Key idea
5. Which statement best explains "Recovery days cluster near bad days"?
- Key idea
6. Which statement best explains "Cash prevents forced selling"?
- Action plan
7. In the action plan, which step comes first?
- Mistake to avoid
8. Which of these is a mistake this lesson warns against?
- Mistake to avoid
9. Which of these is a mistake this lesson warns against?
A portfolio falls 40%. What percentage gain is needed to get back to where it started?
Show the answer
About 66.7%
$100 → $60. $60 × (1 + x) = $100, so x = 40 ÷ 60 ≈ 0.667.
Write one sentence describing what you will do the next time markets fall 20%.
More tests in this bootcamp
- What is a stock? Understand ownership and risk
- Compare common and preferred shares
- Follow a stock trade from quote to exchange
- Measure company size with market capitalization
- Read dividend yield without mistaking it for a promise
- Decode the P/E ratio: price compared with profit
- Understand growth and value investing styles
- Follow an IPO from offer price to public trading
- Tell a stock split from share dilution
- Understand market rises, falls and recovery math
- Final exam: Stocks and the market