Stock and Bond Review

What is a stock?

• Certificate that represents ownership in a corporation

• A type of bond issued by the government

• A loan given to a company by an investor

• A savings account with a bank

What is the major advantage of owning common stock?

• Guaranteed dividend payments

• Priority in bankruptcy claims

• You get to vote on major company issues

• Fixed interest rate

What is an advantage to owning a preferred stock?

• You are guaranteed a dividend

• You can vote on company issues

• You have priority in bankruptcy claims

• You receive tax benefits

What is a dividend?

• A fee paid to brokers for trading stocks

• Share of profits paid to stockholders on a per share basis

• A penalty for selling stocks early

• A type of bond interest

What are capital gains?

• Profits made on an increase in the value of a stock

• Losses incurred from selling stocks

• Interest earned on savings accounts

• Fees paid for stock trading

How are capital gains taxed?

• At the highest rate

• At the lowest rate

• At a flat rate

• They are not taxed

What are the minimum qualifications to be traded on the NYSE?

• Earning over $2.5 million pre-taxed revenue

• Assets- must hold at least $18 million

• Earning over $1 million pre-taxed revenue

• Assets- must hold at least $10 million

Why is the NASDAQ considered the most volatile exchange?

• It features many hi-tech, insurance and medical stocks

• It only trades government bonds

• It has the highest number of listed companies

• It is the oldest stock exchange

What is the Dow Jones Industrial Average?

• An average of 30 stocks in the industrial sector of the economy

• An index of all stocks traded in the US

• A measure of the total market capitalization

• A list of the top 100 companies worldwide

What is a Bull trader?

• Anticipates an increase in the price of stock

• Anticipates a decrease in the price of stock

• Trades only in bonds

• Avoids high-risk investments