Financial Markets
What is the primary role of financial markets?
To facilitate buying and selling of securities (stocks, bonds, forex).
What feature allows eToro users to copy trades of top investors?
CopyTrader.
What happens to market volatility when more retail investors join financial markets?
It increases.
What does "fintech" stand for?
Financial Technology.
What government agency regulates financial markets in the U.S.?
The SEC (Securities and Exchange Commission).
What is the main function of financial intermediaries?
They act as middlemen, allocating capital and managing risk.
What is the name of eToro’s program that pays experienced traders for gaining followers?
The Popular Investor (PI) Program.
What two companies became "Meme Stocks"
Gamestop and AMC
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Which country has the highest fintech adoption rate?
China.
Why do traditional financial advisors have to be licensed?
To ensure they act in their clients’ best interests.
What determines stock prices in financial markets?
Supply and demand.
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What is one key advantage eToro offers compared to traditional investment firms?
Copying others trades in near real time.
What type of investing strategy do mutual funds and index funds encourage?
Diversified, long-term investing.
What are some of the regulators that could oversee eToro in the U.S.?
SEC, FINRA, or OCC.
What financial crisis led to increased scrutiny of financial institutions and encouraged fintech growth?
2008 Financial crisis
Give an example of a financial institution that acts as an intermediary but doesn’t directly sell stocks.
A commercial bank.
What is a major risk of using eToro’s CopyTrader feature?
Herd mentality—if a top investor makes a bad trade, thousands could lose money.
How did Robinhood’s commission-free trading model change the industry?
It forced all major brokers to eliminate commissions.
Why do fintech firms like eToro and Robinhood pose a challenge to traditional banks?
They remove barriers and attract retail investors, forcing banks to adapt.
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What is the biggest ethical concern surrounding eToro’s Popular Investor Program?
Traders can profit from followers without being accountable for their advice.
Why might a company choose to raise capital through the bond market instead of issuing stock?
Bonds allow companies to borrow money without giving up ownership.
Why is eToro’s business model more vulnerable to regulation than Morgan Stanley’s?
eToro allows unlicensed individuals to influence investments, which could require stricter oversight.
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How does eToro affect the loanable funds market?
It increases the supply of capital
Name two fintech sectors that have grown due the most in value.
Digital Payments, Personal Finance.
Why might stricter fintech regulations be a double-edged sword?
They could protect investors but also limit innovation and access to financial markets.