Personal Finance Test ( Stock Market Basics)

New York Stock Exchange and National Association of Securities Dealers Automated Quotations

Define NYSE and NASDAQ

Price to Earning

Define P/E Ration

a broker who buys and sells securities on a stock exchange on behalf of clients.

Stockbroker

A market order is an order to buy or sell a security immediately. ... A limit order is an order to buy or sell a security at a specific price or better.

1. What is a limit order? market order?

company must have at least 400 shareholders who own more than 100 shares of stock, have at least 1.1 million shares of publicly traded stock and have a market value of public shares of at least $40 million

A trade on the NYSE requires?

end of a trading session in the financial markets when the markets close.

What does it mean when the market closes

you're also a company owner

What does owning a share of stock mean?

a stock market index that tracks the stocks of 500 large-cap U.S. companies

What does the S&P 500 mean

is commonly reported as the number of shares that changed hands during a given day.

What does volume mean?

is a condition in which securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment.

What is a bear market

s a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental).

What is a bond?

a market in which share prices are rising, encouraging buying.

What is a bull market

Dividends are a way that companies reward shareholders for owning the stock, usually in the form of a cash payment. Normally, companies pay cash dividends on a regular basis (often quarterly). Sometimes, they'll elect to pay a one-time dividend, as well.

What is a dividend and how are dividends paid out to investors

Initial Public Offering (IPO)

What is an IPO

is interest calculated on the initial principal, which also includes all of the accumulated interest of previous periods of a deposit or loan.

What is compounding interest?

Short selling is a fairly simple concept: an investor borrows a stock, sells the stock, and then buys the stock back to return it to the lender

What is short selling and when do you do this to make money

The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72

What is the Rule of 72 and the formula?

Through dividends paid based on the number of shares owned by the shareholder, and due to the corporation's profits. By selling their shares at a profit.

When does a company get money from its shareholders.

This is because when interest rates rise, investors can get a better rate of return elsewhere, so the price of original bonds adjust downward to yield at the current rate.

When interest rates rise what do bond prices do

Dell

computer began with Michael Dell selling computers out of his college dorm room.

Ticker Symbol

is a short group of letters that represents a particular stock

IPO

is short for Initial Public Offering. An IPO is when a company sells stock in itself for the first time.

Going Public

is slang for when a company is planning an IPO

earnings per share

is the amount of profit to which each share is entitled

Underwriter

is the financial institution or investment bank that is doing all of the paperwork and orchestrating a company's IPO.

Share

represents an investor's ownership in a "share" of the profits, losses, and assets of a company.

Stock

small companies raise __________ by selling stock themselves.

Wal-Mart

was originally a single-store business in Arkansas

Also called a stock trading fee, this is a brokerage fee that is charged when you buy or sell stocks.

what is stock comission