Personal Finance Chapter 17 Test

Earnings per share

A corporations after tax earning divided by the number of common stock shares outstanding

Securities exchange

A marketplace where brokers buy and sell securities

Ticker Symbol

An abbreviated stock name used in stock listing

Par value

Assigned dollar value given to each share of stock

Stock index

Benchmark that stock investors use to judge investment performance

Leverage

Borrowing money to buy stock

Floor brokers

Buy and sell stocks on trading floor of the securities exchange

Day trader

Buys and sells stock within a short period of time

Bear market

Market characterized by falling stock prices and investor pessimism

Bull market

Market characterized by rising stock prices and investor optimism

preferred stock

Represents a type of stock that pays a fixed dividend but has no voting rights.

Growth stocks

Stocks in corporations that reinvest profits into business so that it can grow

Blue chip stocks

Stocks of large, well-established corporations

Income stocks

Stocks that have a history of consistently paying high dividends

Market value

The price for which the stock is bought and sold in the marketplace

False

True or false? Brokers in the over-the-counter market deal face to face with other brokers

False

True or false? Buying on margin is an illegal activity

False

True or false? Dollar-cost averaging is a short-term investment strategy

False

True or false? NASDAQ is a form of auction market

True

True or false? Short selling involves selling borrowing stock

True

True or false? The securities market is where you buy and sell stocks and bonds

False

True or false? Very few people in the US own stock

True

True or false? With preferred stock, dividends are fixed, regardless of how the company is doing

True

True or false? You can assign your stock voting rights to someone else by completing a proxy

True

True or false?The par value assigned to a stock has nothing to do with the stock's market value

dividend reinvestment

Use of dividends previously earned on stock to buy more shares

Dividends

When a corporation is profitable, the stockholders often receive a distribution of money from the corporation earnings

Public Coporation

a company whose stock is traded openly on stock markets

common stock

a type of stock that pays a variable dividend and gives the holder voting rights

stock split

an increase in the number of outstanding shares of a company's stock

Defensive stocks

stock that remains stable during an economic decline