personal finance ch 12
Stockholders can lose all of their investment if the company fails or goes out of business.
true
When interest rates are low, people tend to buy fewer stocks.
false
With a margin purchase, you are betting that a stock will decrease in value.
false
_ stocks are stocks in corporations that reinvest their profits into the business so it can grow.
growth
With this type of stock, companies reinvest their profits, or do not pay dividends, so the business can grow and expand.
growth stocks
Stocks that pay regular dividends to investors.
income stocks
A stock _ is a benchmark that investors use to judge the performance of their investments.
index
The price for which a stock is bought and sold in the marketplace is called the
market value
This type of stock trade is not made through a stock exchange (computerized market).
over the counter
The _ value of a stock is an assigned dollar value given to each share of stock.
par
A type of stock that pays a fixed dividend but has no voting rights is _ stock.
preferred
The type of stock with fixed dividends.
preferred
A(n) _ is a stockholder's written authorization to transfer his or her voting rights to someone else.
proxy
Assigning your voting right to someone else is known as a ____.
proxy
Someone who buys and sells stock within a short period of time is called a speculator.
true
Growth stocks typically pay the most certain and predictable dividends.
false
An increase in the value of a stock over time is called a(n)
capital gain
Current Profit on Stock ÷ Purchase Price + Commission =
return on investment
A common stock
allows stockholders to influence corporate policy.
Stocks of large, well-established businesses.
blue chip
People who are licenced to buy and sell stocks on a stock exchange.
brokers
A(n) _ market is a prolonged period of rising stock prices and a general feeling of investor optimism.
bull
Which of the following investment techniques would more likely be used by a day trader?
buying on margin
The type of stock that has a voting right.
common stock
Person who buys and sells stock within a short period of time.
day trader
A stock that remains stable during declines in the economy.
defensive stocks
Using dividends previously earned on a stock to buy more shares is called
dividend reinvestment
_ are money paid to stockholders from the corporation's earnings.
dividends
Stocks in young, often small corporations that have higher overall risk are called
emerging stock
Bull markets are usually short and savage, and stock prices may fall as much as 20 percent.
false
_ selling is selling stock borrowed from a broker that must be replaced at a later time.
short
Which of the following is not an example of a long-term investing technique?
short selling
A stock _ is an increase in the number of outstanding shares of a company's stock.
split
In an organized market, buyers and sellers meet in one place, where stocks and bonds are traded.
stock exchange
A capital gain becomes profit only when you sell the stock.
true
A stock split lowers the selling price of a stock, making the shares more affordable and encouraging investors to buy more.
true
By using direct investment, you may be able to buy shares at prices lower than on open exchanges.
true
