WorksheetsWhat Is A Stock?
Total questions: 20
Worksheet time: 10mins
Which task specifically focuses on analyzing information over a period of time?
Explain what stocks are and how they can make money
Identify ways to minimize risk when investing in stocks
Read a stock quote and evaluate a stock’s performance over time
Understand what a stock split is and how it impacts investors who own that stock
Company A is raising $1 million at its initial public offering (IPO) by issuing 2,000 shares of stock. What is the value of each share?
$250
$500
$2,000
$5,000
Julia buys a share of stock through her brokerage firm. What are the two ways that Julia could make money from owning this stock?
Receiving dividends paid by the company
Earning interest guaranteed by the government
Selling the stock for more than she paid (capital gain)
Getting a refund of brokerage fees
Julia knows that investing in just one company is risky since there’s a chance that the stock’s value could decrease. Which actions would help her minimize this risk? Select all that apply.
Diversify by buying shares of different companies
Invest all her money in a single company she likes
Consider spreading purchases over time instead of all at once
Hold only cash and never invest
You need to know how to read a stock quote so you can evaluate a stock’s performance. Based on this, what is the primary purpose of learning to read a stock quote?
To memorize company slogans
To determine whether a particular stock is a good investment option for you
To predict the exact future price of a stock
To learn how to avoid paying taxes
Why is it more useful to look at the percent change of a stock price rather than the change in dollar amount?
Percent change allows for a fair comparison between stocks with different prices.
Dollar amount change always shows a bigger impact.
Percent change is only useful for expensive stocks.
Dollar amount change is more accurate than percent change.
Nike is classified as which type of company based on its market capitalization, and what does market capitalization represent?
A large cap company; Market capitalization represents the total value of a company's outstanding shares and is used to classify companies by size.
A small cap company; Market capitalization represents the company's annual revenue and is used to classify companies by industry.
A medium cap company; Market capitalization represents the company's profit margin and is used to classify companies by growth rate.
A micro cap company; Market capitalization represents the company's number of employees and is used to classify companies by workforce size.
When comparing stock movements across different companies with different share prices, investors often focus on _______ change instead of dollar change because it lets them make fair, apples-to-apples comparisons.
percent
absolute
nominal
fixed
Company B’s stock price is $500. You overhear a classmate say, “Based on the stock price, Company B’s value is clearly higher than Nike’s!” Why might your classmate be wrong? Comparing companies only by stock price can be misleading because:
Stock price does not account for the number of shares a company has.
Stock prices are always the same for all companies.
A higher stock price always means a bigger company.
Stock price is the only factor that determines company value.
Understanding stock quotes is important for making investment decisions because it allows investors to analyze a company's performance, such as Nike's, and make informed choices. What is one specific insight a student might gain from learning how to read a stock quote?
They can identify trends in stock prices over time.
They can predict the exact future price of a stock.
They can guarantee profits from every investment.
They can avoid all risks associated with investing.
A stock split changes the overall value of a company.
True
False
An investor owns 1 share priced at $2,400 before a 20-for-1 stock split. After the split, how many shares would the investor own, and what would be the approximate price per share if the overall value of the company does not change?
The investor would own 20 shares at approximately $120 per share.
The investor would own 40 shares at approximately $60 per share.
The investor would own 10 shares at approximately $240 per share.
The investor would own 2 shares at approximately $1,200 per share.
Understanding Stock Splits: An Investor's Perspective Which statement below is generally true about a company that announced a stock split?
The company is doing very poorly
The company only offers short term profits
The company is in good health
The company is not under good leadership
Understanding Stock Splits: A Young Investor's Perspective When it comes to stock splits, experts advise young investors to:
stop paying too much money for stocks after they split
ignore the stock split hype and focus on fundamentals
beware of marketing scam around stock splits
obsess over every piece of news about stock splits
Understanding Stock Splits: Good News? A stock split can be good news for investors because:
It can make shares more affordable per share while signaling the company is in good health.
It always guarantees a higher dividend payout.
It means the company is about to go bankrupt.
It reduces the total value of your investment.
What is a stock?
A measurement of a company’s profits
An investment option that allows you to own a small piece of a company
An annual report that includes details about a company’s leadership and earnings
A low-risk savings option that can help you build an emergency fund
When reading a stock quote, which metric gives the best idea of the total value of the company?
The stock ticker symbol
The price change of the stock, quoted as a percentage
The market cap
The stock’s opening and closing price for that day
Market cap is a better indicator of a company’s total value than the stock’s opening and closing price for that day because:
It reflects the total value of the company by multiplying share price by the number of shares outstanding.
It only shows the price at which the stock opened for the day.
It only shows the price at which the stock closed for the day.
It is based solely on the company’s daily trading volume.
Which of the following is TRUE about a stock split?
Stock splits impact the overall value of a company
Stock splits decrease the number of shares you own
Stock splits indicate that a company is doing poorly
Stock splits make a stock more accessible to a greater number of investors
Analyze the given statements about stock splits and select ALL that are NOT true.
Stock splits impact the overall value of a company
Stock splits decrease the number of shares you own
Stock splits indicate that a company is doing poorly
Stock splits make a stock more accessible to a greater number of investors
