Investment Instruments Part I

When an investor buys a company’s stock, what do they become?

• Part owner of the company

• A creditor to the company

• An employee of the company

• A customer of the company

What happens when you buy a company’s stock?

• You become a part owner of the company

• You lend money to the company

• You become an employee

• You receive a fixed interest payment

What is another term for stocks?

• Equity instruments

• Debt instruments

• Fixed income securities

• Derivatives

What does having equity in a company mean?

• Being a part owner of the company

• Being a creditor to the company

• Being a customer of the company

• Being an employee of the company

What is the relationship between stocks and equity?

• Stocks represent equity in a company

• Stocks are a form of debt

• Stocks are government bonds

• Stocks are insurance policies

What is the primary difference between common and preferred stocks?

• Voting rights and dividend priority

• Company size

• Industry sector

• Geographic location

Which type of stockholder receives dividends before the other?

• Preferred stockholder

• Common stockholder

• Majority stockholder

• Minority stockholder

If a company goes bankrupt, who gets paid first from the assets?

• Preferred shareholders

• Common shareholders

• Customers

• Suppliers

What happens to preferred shareholders in the event of company bankruptcy?

• They have a prior claim on assets

• They lose all rights

• They become company managers

• They receive voting rights

Which of the following is an example of a company that has been fast growing in recent decades?

• Google

• General Motors

• Sears

• Kodak