Evaluating Stocks Quiz

What does buying a stock represent?

• A loan to the company

• Part ownership of a company

• A subscription to company updates

• A donation to the company

Which document provides a quarterly unaudited financial report?

• S-1

• 10-Q

• 8-K

• 10-K

What is the purpose of the price-to-earnings (P/E) ratio?

• To measure a company's debt

• To evaluate a company's sales

• To calculate a company's total assets

• To determine how much investors are paying for a dollar of earnings

Which ratio helps evaluate a company's leverage?

• Earnings per share (EPS)

• Price-to-sales ratio (P/S)

• Price-to-earnings ratio (P/E)

• Debt-to-equity ratio (D/E)

What is the significance of the earnings per share (EPS)?

• It shows a company's total liabilities

• It evaluates a company's sales growth

• It indicates a company's current financial strength

• It measures a company's market capitalization

Where can you find detailed market data and company profiles?

• Company's official website

• Social media platforms

• Local newspapers

• FINRA's Market Data Center

What should you consider when evaluating a stock as part of your portfolio?

• Its fit with your overall investment strategy

• Its popularity on social media

• Its color and logo design

• Its advertising campaigns

What is a key question to ask about a company's management?

• Do managers work in a large office?

• Are the managers famous?

• Are talented, experienced managers in charge?

• Do managers have a large social media following?

What is the purpose of the 10-K report?

• To summarize weekly market trends

• To announce new product launches

• To provide a daily update on stock prices

• To offer an annual audited financial report

What does the price-to-sales (P/S) ratio evaluate?

• A company's profit

• A company's revenue

• A company's debt

• A company's expenses