WorksheetsLEI Lesson 3 - What is a Stock?
Total questions: 14
Worksheet time: 7mins
Shareholders can only make money by collecting dividends.
True
False
When people buy stock on a stock market,
the corporation loses money.
the people selling the stock receive the money from the sale of the stock.
the corporation receives the money from the sale of the stock.
the people buying the stock receive the money from the sale of the stock.
People who invest in the stock market will automatically make money.
True
False
A dividend is a portion of the company's profits paid to its shareholders.
True
False
Dividends represent partial ownership of a company.
True
False
Investment bankers buy shares of stock on the same market as the general public does.
True
False
The general public buys new issues of stock on the primary market.
True
False
What is a stock dividend?
A capital gain.
The price the stock is sold for.
Part of a company's profits that is paid to a shareholder.
The price paid when stock is sold to an investment bank.
People buy stocks because:
they expect to earn a return.
there is no chance of a loss.
the government encourages them to buy stock.
they are guaranteed interest payments each year.
One way people can earn money from stocks is by:
buying shares from an investment banker.
selling the stock for the same price they paid for the stock
selling the stock for more than the price they paid for it.
selling the stock for less than the price they paid for it.
Why do corporations issue stock?
To confuse the Securities & Exchange Commission (SEC).
To be able to write off losses the business has in order to pay less taxes.
To raise money to pay for equipment, buildings, and operating expenses.
So as not to have too much cash in the business.
What determines the price of a stock?
The price is set by the Securities & Exchange Commission (SEC).
The federal government determines prices of shares of stock.
The Board Of Directors of a corporation sets the price daily for shares of a company's stock.
A company's stock price depends on if stockholders want to keep or sell their shares and how much buyers willing to pay.
A corporation may decide to keep profits earned and reinvest them in the company instead of paying dividends to shareholders.
True
False
How can investors reduce their chance of a loss?
Buy shares in big company like Amazon.
Buy shares in a small company that is just starting out.
Buy the stock of a company that has seen the price of the stock decline.
By diversifying their portfolio.
