Stock Market Review

What is the stock market?

• A type of farmers market where people buy and sell food.
• A place where parts of businesses are bought and sold.
• A special type of grocery store that sells stocks.
• A type of bank that gives out loans to new businesses.

Why would a company need to issue stock?  

• To increase its customer base.
• To raise money.
• To stop the government from regulating it.
• To show customers that it's successful.

The stock market is a physical place.

• Yes, it's located in most major cities around the world.
• No, trading is all done online.
• Yes and no, there are physical places where stocks are sold, but they are also sold virtually.

You can buy stock in any company in the world.

• True, all companies are required to offer stock.
• False, a company is only listed on the stock exchange if it wants to be.

The DOW Jones Industrial Average is an index of 30 American companies.  Why is the DOW Jones Industrial Average important?

• It tells Americans how much debt the country is in.
• It helps economists predict when a stock market crash will happen.
• It tells Americans how many jobs are out there.
• It provides a snapshot of how the stock market and the US economy is doing.

When you buy a corporate bond, you are doing all of the following EXCEPT:

• loaning money to that corporation, to be paid back at a fixed rate in a certain period of time
• making a low-risk investment,  which cannot immediately contribute to your income 
• virtually guaranteeing that you will receive money even if the company fails
• taking a risk by putting your money in a highly unstable source of income

When stock prices are generally rising over a period of time, it is referred to as a..

• bear market
• badger market
• bull market
• barracuda market

All of the following are differences between common stock and preferred stock EXCEPT:

• Common stock is more expensive and preferred stock is cheaper
• Preferred stock is more expensive and common stock is cheaper
• Ownership of common stock allows you to vote for the board of directors for the corporation 
• Ownership of preferred stock allows you to receive dividends, which can be paid out even if the company fails

Apple is releasing a new iPhone that is predicted to change the cell phone world.  Millions of people have pre-ordered it.  What do you think will happen to their stock?

• It is likely to go up.
• It is likely to go down.

You decide that you want to invest a little bit of money in Apple stock.  But in order to do that you need to figure out their stock symbol.  What is the symbol that Apple uses on the stock market?  Use the image to help you figure it out.

• AAPL
• APPLE
• IPHONE
• STEVEJOBS