11.3 Review Investing and Stock Market Basics

What are the two important organizations responsible for regulating the stock market?

• The Securities and Exchange Commission (SEC) and The Financial Industry Regulatory Authority (FINRA)

• The Federal Reserve and The Department of Treasury

• The International Monetary Fund (IMF) and The World Bank

• The Bank for International Settlements (BIS) and The Financial Stability Board (FSB)

What is a stock ticker?

• A tool that shows current stock prices.

• A type of stock investment strategy.

• A method for predicting stock market trends.

• A software for analyzing company performance.

Does the bond market have a centralized location for trading like the NYSE?

• Yes, it operates through a centralized exchange.

• No, it consists of a primary and secondary market.

• Yes, it is traded exclusively online.

• No, it is only available to institutional investors.

Why bonds receive a letter rating?

• To tell investors the level of risk a bond carries.

• To determine the interest rate of the bond.

• To indicate the maturity date of the bond.

• To assess the liquidity of the bond.

What types of investment income may be taxable?

• Rental income

• Dividends, interest, and capital gains.

• Gifts and inheritances

• Wages and salaries

How do interest rates affect the stock market?

• The stock market tends to move in the opposite direction of interest rates.

• Interest rates have no effect on the stock market.

• Higher interest rates always lead to higher stock prices.

• The stock market moves in the same direction as interest rates.

What happens after a company sells stock?

• It becomes a public company owned by shareholders.

• It goes bankrupt immediately.

• It is acquired by a larger company.

• It remains a private entity with no changes.

What are preferred stocks?

• Stocks that pay a fixed dividend and are less risky.

• Stocks that have no voting rights and are highly volatile.

• Stocks that are only available to institutional investors.

• Stocks that pay dividends based on company profits.

What are the 3 indexes used to measure the stock market’s performance?

• DOW, S&P 500, NASDAQ Composite

• FTSE 100, DAX, Nikkei 225

• CAC 40, BSE Sensex, ASX 200

• Russell 2000, Hang Seng, OMX Stockholm 30

What are speculative stocks?

• Stocks from companies with stable earnings and low risk.

• Stocks from companies with potential for high future earnings but higher risk.

• Stocks that are guaranteed to increase in value over time.

• Stocks from companies that pay high dividends regularly.