How the Market Works - Stock Market Challenge
How many companies are in the Dow-Jones Industrial Average?
30
What does a stock represent
A percentage of ownership of a company including assets and profits
New York Stock Exchange (NYSE)
A stock exchange based in New York City, which is considered the largest equities-based exchange in the world.
With an investment amount of $10,000 and an interest rate of 5% over 15 years, how much profit will you make if it is compounded quarterly?
Between $10,500 and $12,000
General Electric (GE) is the only original component still in the DJIA. Use the "Historical" tab of the Quotes tool to find GE's opening stock price on December 31st, 2014
Between $25 and $26.99
With an investment amount of $10,000 and an interest rate of 5% over 15 years, what is the difference in profit between the daily compounding and yearly compounding?
Between $300 and $500
What is the most common winning investment strategies for new beginners?
Buy what you know
What should you look for when buying stock of a company you know?
If their stores always seem busy
What is a danger of over-diversification?
If your investments are spread thin, it is hard to beat the market
Why would you want to diversify between sectors?
In case a sector-wide event causes all stocks to drop
What does it mean when payroll employment and unemployment both increase?
More people entered the labor force than jobs were created
With an investment amount of $10,000 and an interest rate of 5% over 15 years, what is your final value if it is compounded daily?
More than $20,000
What is a good way to stay diversified?
Re-balance your portfolio every 3 months
What is Preferred Stock?
Stock that gets paid dividends first
Over the last 30 years or so, which investment produced the highest percentage returns?
Stocks
What tools does HowTheMarketWorks have to help you choose stocks?
Suggested Stocks lists Current market news Research tools with company information and quotes
How can you tell what professional stock analysts recommend?
The Chaikin Analytics tool on the trading page The Analysts page of the Quotes tool Searching for stock symbols on business websites
How can you find stock news about any company?
The Quotes page on HowTheMarketWorks
Which of these items can you find in a stock quote?
The stock's current daily volume
What is "Net Change"?
The total amount a stock's price has changed since the previous trading day
What GDP
The total value of all finished goods and services produced by a country
How do researchers calculate the Consumer Price Index?
They watch the prices of a large group of consumer goods around the country
What is Capital Preservation?
To make sure you don't lose your initial investment
What is an IPO?
When a company first sells shares of stock to the public -initial public offering
If you had invested $100 in 1965 in the 500 stocks of the S&P500 Index, how much would you have had in 2011?
$6,072
Which should you choose and why? Option 1: $1,000 with an interest rate of 20% over 10 years or Option 2: $1,000 with an interest rate of 8% over 25 years. (With daily compounding)
1 because the total return is the same for a shorter period of time
The company Apple has how many shares outstanding as of 1/15/2021?
25.39 billion shares
What are stock market sectors?
An area of the economy in which businesses share the same or a related product or service.
S&P 500 Index
An index of 500 stocks chosen for market size, liquidity and industry grouping, among other factors; designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.
Who is the DJIA named after?
Charles Dow and his statistician Mr. Jones
Which compounding should you choose given the choice of yearly, and daily and why?
Daily because my return will be higher
Where did traders in New York originally meet?
Outside near a buttonwood tree
Over the last 90 years, which investment produced the most volatile returns?
Stocks
What was the biggest event leading to stocks being the most frequently traded security type on the exchange?
The Industrial Revolution
What does a Stock Quote represent?
The last price a seller and buyer agreed to to make a trade
In the late 1800s, what factors led to the growth of the NYSE?
The need for funds to finance new companies and build railroads
What does it mean to "Diversify" your portfolio?
to hold more than 1 stock For your stocks to not be all in the same area of the economy To have a mix between stocks, mutual funds, or other securities
