Understanding Stock Market Concepts

A common stockholder is NOT entitled to

• receive guaranteed dividends

• given the right to vote on company policies

• receive an annual report

• participate in the ownership of the company

Profits that a company shares with its stockholders

• Interest payments
• Stock buybacks
• Capital gains
• Dividends

Which of the following do you pay the lowest taxes on?

• Capital gains
• Income from wages
• Dividends

An investor that anticipates an increase in the price of a stock is a

• bull trader

• speculative investor
• neutral investor
• bear trader

The DOW Jones Industrial Average is an average of 30 stocks in the industrial sector of the economy

• True

• False

An investor that anticipates a decrease in the price of a stock is a

• speculative trader

• bear trader

• neutral trader

• bull trader

Buying on margin means

• you sell everything at a low price

• you get stock without paying the full price upfront

• you buy high

• you win the stock market

Preferred stockholders are

• holders of common shares in a company
• employees of the company
• you are guaranteed to be paid a dividend but you can't vote

• investors in corporate bonds

What do we call the place where brokers buy and sell securities

• Bond market
• Commodity exchange
• Real estate market
• Stock exchange

An investor must consider what two things

• names

• risk

• reward

• location