Future Business Leaders of America (FBLA) Securities and Investments Practice Test

What characterizes a bullish investor?

1. An investor expecting the market to decline

2. An investor that believes the market or security will rise

3. An investor focused on fixed-income securities

4. An investor that only sells short

The correct answer is: An investor that believes the market or security will rise

A bullish investor is characterized by the belief that the market or a specific security will experience an increase in value. This optimistic outlook leads bullish investors to buy stocks or other investments, hoping to profit from future price gains. The essence of being bullish is grounded in positive sentiment about economic growth or performance, which drives the investor's decisions. This perspective often influences their trading strategies, as they may hold investments for longer periods to capitalize on anticipated upward trends. Bullish sentiment can be fueled by various factors, including strong economic indicators, favorable company performance, or overall enhanced market conditions. Other options focus on different investor behaviors or strategies. For example, an investor expecting the market to decline would typically be considered bearish, indicating the opposite sentiment. An investor focused on fixed-income securities is generally seeking stability and consistent returns rather than capitalizing on price increases. Additionally, an investor who only sells short operates under the anticipation of price drops, which directly contrasts with the bullish approach. Thus, the definition of a bullish investor encapsulates their proactive and optimistic strategy in an upward-moving market.