Investing Strand 2 Vocab Review

What does owning a share of stock represent?

• A guaranteed return on investment

• A fixed interest payment

• Ownership in a company

• A loan to the government

What is the main difference between common stock and preferred stock?

• Common stock has priority in dividends w/no voting rights

• Preferred stock usually has voting rights

• Preferred stock has priority in dividends w/no voting rights

• Common stock has fixed interest

Which of the following is an example of a capital gain?

• Receiving a quarterly dividend

• Selling a stock for more than you paid

• Paying interest on a loan

• Buying a stock at its lowest price

What are dividends?

• Company loans paid to banks

• Profits reinvested into a company

• Payments made to shareholders from profits

• Fees paid when you buy stock

What type of stock is issued by large, well-established companies and considered stable?

• Growth stock

• Penny stock

• Blue-chip stock

• Private stock

What does a stock ticker symbol represent?

• The company’s full legal name

• The stock's historical earnings

• A unique abbreviation for a stock

• A code for industry type

If a stock’s price is shown in red, what does it typically mean?

• The price has increased; stock is bullish

• The stock is not trading today

• The price has decreased; stock is bearish

• The company went bankrupt

What does EPS (Earnings Per Share) measure?

• How much profit a company earns per share

• The number of shares traded each day

• The company’s total profit for the year

• The price of a stock divided by volume

What does Market Capitalization (Market Cap) show?

• The number of company employees

• The total value of all outstanding shares

• The value of the company’s dividends

• The number of shares traded

What does a high P/E (Price-to-Earnings) ratio often suggest?

• The company is undervalued

• The company has no earnings

• Investors expect strong future growth

• Dividends will increase soon