Stocks and Bonds

All of the following are ways to earn money as a stockholder EXCEPT:

• getting dividends

• selling the stock at a higher value

• stock splits

• selling the stock at a lower value

Conner wants to purchase stocks with the money he received from his tax return. Who would he contact to make the transaction?

• A brokerage firm

• The New York Stock Exchange

• A real estate agent

• The American Stock Exchange

Why does a corporation issue bonds to the public?

• it wants to borrow money and is willing to pay interest on the loan

• it wants to lend money and to collect interest on the loan

• it wants to decrease the price of its stock

• it wants to increase the price of its stock

What is the primary reason for a company to issue stock?

• The stocks help investors earn a higher rate of return

• To raise money to grow the company

• To distribute the risk of bankruptcy across more investors

• To increase greater awareness of the company

An investor bought 40 shares of ABC corporation's stock at $80 a share. Two weeks later, the investor receives notice that the corporation has approved a 2-for-1 stock split. Based on this information, the investor would own at the moment of the split

• 20 shares of the stock and the price of each share is $80

• 40 shares of the stock and the price of each share is $40

• 80 shares of the stock and the price of each share is $40

• 80 shares of the stock and the price of each share is $80

Stocks represent ownership in a corporation.

• TRUE

• FALSE

Why would someone buy a bond instead of a stock?

• It is a less risky investment

• It can yield a higher return on investment

• To have ownership in a company

• To receive dividend payments

What is the primary difference between stocks and bonds?

• Stocks represent ownership in a company, while bonds are a form of debt.

• Stocks are a form of debt, while bonds represent ownership in a company.

• Stocks and bonds both represent ownership in a company.

• Stocks and bonds are both forms of debt.

Which of the following is a characteristic of bonds?

• They provide voting rights in a company.

• They pay interest to the holder.

• They represent a share of ownership in a company.

• They are traded on the stock exchange.

Why might an investor choose to invest in bonds over stocks?

• Bonds typically offer higher returns than stocks.

• Bonds are generally considered safer than stocks.

• Bonds provide ownership in a company.

• Bonds are more volatile than stocks.