Understanding the Stock Market

What is often misconceived as a sign of economic prosperity?

• The federal interest rate

• The unemployment rate

• The inflation rate

• The stock market performance

What does an IPO stand for?

• Initial Private Offering

• Internal Product Offering

• Initial Public Offering

• International Public Offering

Which index tracks 500 of the largest companies in the U.S.?

• The FTSE 100

• The S&P 500

• The NASDAQ

• The Dow Jones

Who is known for the investment strategy of value investing?

• Gordon Gekko

• John Maynard Keynes

• Warren Buffett

• Milton Friedman

What can cause a stock market bubble to burst?

• Stable economic growth

• Excessive hype and unrealistic expectations

• An increase in stock prices

• A decrease in interest rates

What philosophy did Milton Friedman advocate for corporations?

• Maximizing shareholder profits

• Long-term investment in innovation

• Employee welfare

• Environmental sustainability

What percentage of S&P 500 companies' earnings went to dividends between 2007 and 2016?

• 10%

• 25%

• 39%

• More than 50%

What is a consequence of corporations focusing on short-term profits?

• Reduced investment in long-term projects

• Increased innovation

• Higher employee satisfaction

• Economic growth

What did the Wausau Paper Company plan before a hedge fund intervened?

• To switch to making tissue paper

• To close the Brokaw Mill

• To cut costs

• To increase dividends

What does the stock market's growth relative to CEO paychecks indicate?

• Rising economic inequality

• Growing economic equality

• Increased employee wages

• Decreased corporate profits