Finance - Fist Quiz - Multiple choice, written response, true and false
What is the S&P 500?
500 most widely held stocks, used as an indicator of stock market trends.
What is a portfolio?
A collection of diversified investments including stocks, bonds and mutual funds.
What is the SEC?
A federal agency that regulates the activities of stock traders. Its job is to safeguard investors against fraudulent practices and to make sure that the securities markets operate honestly and fairly.
What happened in 1792?
A group of men began trading stock under a buttonwood tree on Wall Street.
What is a stockbroker?
A licensed professional who advises individuals about investments.
What is a bear market?
A market where prices are falling.
What is a bull market?
A market where prices are rising.
What is Penny Stock?
A nickname for extremely low priced stock, usually only a few dollars a share. These stocks are considered highly risky. They are priced low because they have not yet proven themselves in the market.
What is a stock exchange?
A place where stocks are bought and sold.
What does diversified mean...
A portfolio strategy designed to reduce risk by investing in a variety of investments.
What are market indices?
A snapshot of how the market is doing in general.
What is Income Stock?
A stock that is purchased primarily for income, which is paid out in the form of dividends.
What is Defensive Stock?
A stock that tends to remain stable under difficult economic conditions. They include necessities like food, oil, and utilities.
What is Cyclical Stock?
A stock whose price is affected by the ups and downs of the economy.
What's a Dividend?
A sum of money from a company's profits paid regularly (typically quarterly) to its shareholders.
What type of companies to investors look for?
Best possibility for strong, long-lasting earnings.
What is the NYSE often referred to as?
Big Board
What was issued first - common stock or preferred stock?
Common stock
What happens in the event of bankruptcy?
Common stock investors receive any remaining funds after preferred stockholders have been paid.
What is the location of NASDAQ?
Computer, done through a network of dealers
What are the two most widely used indices?
Dow Jones Industrial Average (DJIA) and Standard and Poor's 500 Index (S&P 500)
What is compounding?
Earning interest off from interest.
What is FINRA?
FINRA also looks out for investors. It is the place consumers can take complaints. The FINRA has the ability to fine individuals and organizations for unethical behavior and can revoke licenses
What is Growth Stock?
Generally young companies with growth potential. These companies usually reinvest most of their profits back into the business to expand and strengthen it. As a result they do not pay dividends.
Why does the price of stock go up?
More investors want to buy than sell.
Why does the price of stock go down?
More investors want to sell than buy.
What is the DJIA?
Most widely followed market indicator in the world. Tracks the performance of 30 US blue chip stocks.
Can common stockholders be paid dividends?
No
Do preferred stockholders have voting rights?
Not normally
What is a stock split?
Once stock prices get to high and discouraging new investors, it can initiate one of these to lower the price and increase trading.
How often should you track your stocks?
Regularly
What should you always do before investing in a company?
Research
How is stock regulated?
Securities and Exchange Commission (SEC) / Financial Industry REgulatory Authority (FINRA)
What is the NYSE responsible for today?
Setting policy, supervising member activities, listing securities, overseeing the transfer of member seats, and evaluating applicants.`
When an individual, group, or company buys stock in a corporation they become a part-owner or an (another name for part-owner)
Stockholder
What type of stocks should you invest in?
Stocks that offer products that are in demand
What are the 2 major U.S. stock exchanges?
The New York Stock Exchange and NASDAQ.
What else beside not only your stock should you be informed on?
The economy in general.
What is the National Association of Security Dealers Automated Quotations?
The first electric stock market to use computers and telecommunications to trade shares rather than traditional trading floor.
What is a Initial Public Offering? (IPO)
The first time a company's stock is sold, the company is said to be going public. In other words, the owners of the company are selling part-ownership to the general public`.
What is the New York Stock Exchange?
The oldest, largest, and most well know stock exchange in the U.S.
How does the broker earn a commission?
Through a percentage of the transaction.
Where can you purchase stock?
Through a stockbroker.
How far back can the origins of the New York Stock Exchange be traced?
To 1792
What is Blue Chip Stock?
Very solid and reliable companies with long histories of consistent growth and stability. Examples are Coke, Disney and Nike.
What does common stock provide?
Voting Rights
Where is the NYSE located?
Wall Street in New York City.
Why does a company sell stock?
When it needs to raise cash.
Are there different categories of stock?
Yes
When does a company issue preferred stock?
after common stock has been issued.
What can a share of a corporation be held by?
an individual, group or another company.
What does common stock represent?
basic ownership of a corporation
What two types of stock do companies issue?
common Stock/Preferred Stock
What can a company do in exchange for cash.
give up some control of the company to its shareholders.
What is a alternate job for a stockbroker?
help investors buy and sell stocks, bonds, and mutual funds.
On average, do common shares outperform or underperform preferred shares over time?
out-perform
What is a Stock?
partial ownership of a corporation
What is one main benefit of owning preferred stock?
receive dividends before common stockholders.
Where does the "Blue Chip" term in Blue Chip Stock come from?
the blue chips used in poker-always the most valuable Choice.
What is common stock?
the most frequently issued class of stock.
When can common stockholder be paid dividends?
until all preferred stockholders have been paid.