The Stock Market Game

Stocks are items found in the storeroom of a grocery store

• True

• False

Answer explanation

Stocks are shares of ownership of companies. These shares are sold to the public in markets around the world. The three largest markets in the United States are the American Stock Exchange, the Nasdaq Stock Market, and the New York Stock Exchange.

Only rich people invest in the stock market

• True

• False

Answer explanation

Millions of people invest in the stock market through mutual funds, individual purchases of stock, and pension investments. Very wealthy people make up only a small portion of stock market investor population.

Most stocks on the stock market are sold by the United States Government

• True

• False

Answer explanation

The United States Government does not sell stocks of private companies. These private company stocks are sold in stock markets like the AMEX, Nasdaq, and NYSE.

If the stock market goes up 30% one year, it will fall by 30% in the next year

• True

• False

Answer explanation

The prices of stocks on the stock market changes the supply and demand for stocks change. They can change at any rate, or prices can stay the same for a longtime. How much they move up odes not forecast how far they may fall. Over the long term, stocks have appreciated by 9 percent.

Any stock that goes up in prices must eventually come back down

• True

• False

Answer explanation

Stock prices will usually not fall if the company remains successful and other investments do not become more attractive. Stock prices reflect the interest of investors. The law of gravity does not apply to stock prices.

Bears, Bulls, and Pigs are found in the stock market

• True

• False

Answer explanation

These names refer to people and their attitudes toward stock market performance. Bulls are people who think the market will continue to rise; Bears think stock prices are very likely to fall; Pigs are people who try to make a big killing on the market in a short time and tend to get 'slaughtered' - in other words, the lose all their money on high-risk investments.

Stock prices are set by the Securities and Exchange Commission, a regulatory agency of the U.S. government

• True

• False

Answer explanation

Stock prices are set by the supply and demand for stocks. The Securities and Exchange Commission regulates the stock markets to insure honest practices are followed and accurate information is provided to buyers and sellers of stocks.

Stock Markets are open on business days around the clock, around the world

• True

• False

Answer explanation

Stock markets exist in many different countries located in different time zones, so markets in Europe and Asia are open and in operation while we're sound asleep in our beds.

Sometimes companies buy their own stocks on the stock market

• True

• False

Answer explanation

A company for a variety of reasons may wish to have its stock prices increase in value. One way a company might be able to increase the prices of its stock is by buying its own stock.

It is hard to buy a good stock today because all the good ones have already been purchased.

• True

• False

Answer explanation

All 'good' stocks are available for sale in large quantities. Just because someone currently owns them does not prevent investors from buying the stocks. The new investor just must offer a prices attractive enough so current owners have incentive to sell their stocks.