Understanding the Stock Market Basics

What is the stock market?

• A place where groceries are sold

• A marketplace where shares of companies are bought and sold

• A type of government agency

• A bank for saving money

What does IPO stand for?

• Initial Price Offering

• International Public Organization

• Initial Public Offering

• Investment Portfolio Option

Which term describes a period when stock prices are generally rising?

• Bear market

• Bull market

• IPO

• Dividend

Why do companies participate in the stock market?

• To buy groceries

• To raise money by selling shares to investors

• To avoid paying taxes

• To store their products

How do investors typically make money from the stock market?

• By buying products at a discount

• By selling shares at a higher price than they bought them and/or receiving dividends

• By working for a company

• By saving money in a bank

What does the phrase "Buy low, sell high" mean in the context of investing?

• Buy expensive stocks and sell them for less

• Buy stocks when prices are low and sell them when prices are high to make a profit

• Only buy stocks that are always high in price

• Sell stocks before buying them

What is a dividend?

• A fee paid to the stock market

• A portion of a company's profits paid to shareholders

• The price of a stock

• A type of stock

Which of the following best describes a bear market?

• A market where prices are generally rising

• A market where prices are generally falling

• A market with no changes in prices

• A market only for new companies

Why is it difficult to match investing strategies to market trends?

• Because trends are always predictable

• Because trends can only be identified after they have begun

• Because there is only one investing strategy

• Because the stock market never changes

Suppose you notice a trend where technology stocks are increasing in value. What should you consider before deciding to invest based on this trend?

• Only the current price of the stocks

• Whether the trend is likely to continue and what factors might cause it to change

• The color of the company’s logo

• How many friends have invested