5/12 Stock Market Basics Quiz

What do investors receive in exchange for purchasing stocks from a company?

• Ownership in the company

• A fixed interest rate

• A guaranteed profit

• A loan from the company

How can stockholders earn money from their investments?

• By selling stocks at a higher price

• By receiving dividends from profits

• By getting a salary from the company

• By receiving a fixed interest rate

What is the primary role of a stock exchange in the stock market?

• To provide loans to companies

• To facilitate the buying and selling of stocks

• To set the prices of stocks

• To manage company profits

What benefit does a company receive when investors purchase its stocks?

• Increased debt

• More capital

• Reduced taxes

• Guaranteed profits

When a company lists its stock on an exchange, it means investors can buy its stock. How does this benefit the company?

• Increases company debt

• Provides capital for growth

• Reduces company size

• Limits investor interest

As an investor, what are the risks involved with buying one company’s stock?

• Guaranteed returns

• Loss of investment

• Fixed interest rates

• No market fluctuations

What is the main challenge in predicting trends in the stock market as mentioned in the text?

• The stock market is always increasing.

• Trends are easy to predict.

• It is difficult to predict trends.

• Trends are irrelevant to investing.

Which of the following statements BEST describes the stock market?

• Businesses listing their entire company for sale

• Businesses selling partial ownership of their companies to raise capital

• Investors buying stock in hopes of being hired by companies

• People making donations to companies that need funding

During a BULL market...

• Investors are pessimistic about how the stock market will perform

• The economy is not doing as well

• More investors are buying stocks, which causes stock values to increase

• The unemployment rate in the country increases

Over time, the stock market has...

• Experienced highs and lows but increased in overall value

• Had slight ups and downs but stayed about the same in value

• Rarely experienced changes and has maintained the exact same value

• Gone through severe ups and downs with an overall decrease in value