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How to invest in the stock market
Contributed by: Sadler
  • 1. What is a stock?
A) A type of bond
B) A share of ownership in a company
C) Currency
D) A government loan
  • 2. What does IPO stand for?
A) Important Property Overview
B) Investment Portfolio Option
C) Initial Public Offering
D) Individual Profit Objective
  • 3. What is a dividend?
A) A government tax
B) A distribution of a company's earnings to shareholders
C) A type of debt
D) A trading fee
  • 4. What is diversification?
A) Borrowing heavily to invest
B) Investing in a single high-risk stock
C) Spreading investments across different assets
D) Ignoring market news
  • 5. What is a stock market index?
A) A government regulation
B) A measure of the performance of a group of stocks
C) A list of all available stocks
D) A broker's commission rate
  • 6. What is a brokerage account?
A) A retirement account
B) An account used to buy and sell stocks
C) A savings account
D) A checking account
  • 7. What is a ticker symbol?
A) A brokerage fee
B) A unique abbreviation for a stock
C) A type of market analysis
D) A government regulation
  • 8. What does P/E ratio stand for?
A) Profit-to-Expense Ratio
B) Price-to-Earnings Ratio
C) Portfolio Efficiency Ratio
D) Principal-to-Equity Ratio
  • 9. What is a blue-chip stock?
A) Stock of a company in the energy sector
B) Stock of a new, unproven company
C) Stock of a company in the technology sector
D) Stock of a large, well-established company
  • 10. What is volatility?
A) The number of shares available
B) The degree of price fluctuation of an asset
C) The stability of an asset's price
D) The company's dividend yield
  • 11. What is a mutual fund?
A) A single stock purchase
B) A type of currency
C) A collection of stocks, bonds, or other assets
D) A government bond
  • 12. What is an ETF?
A) Expense Tracking Format
B) Early Termination Fee
C) Equity Transfer Form
D) Exchange Traded Fund
  • 13. What is dollar-cost averaging?
A) Investing a variable amount based on market trends
B) Investing a lump sum once
C) Investing a fixed amount regularly
D) Borrowing money to invest
  • 14. What is a limit order?
A) An order to buy or sell at a specific price
B) An order to hold onto a stock
C) An order to buy or sell immediately at the best available price
D) An order to cancel a previous order
  • 15. What is a stop-loss order?
A) An order to hold the stock indefinitely
B) An order to buy at any price
C) An order to sell if the price falls to a certain level
D) An order to buy if the price rises to a certain level
  • 16. What is risk tolerance?
A) An individual's capacity to handle potential losses
B) The time spent researching stocks
C) The amount of money invested
D) The guarantee of profit in the stock market
  • 17. What are capital gains?
A) Losses from selling an asset
B) Dividends paid out by a company
C) Brokerage fees
D) Profits from selling an asset for more than its purchase price
  • 18. What is a bull market?
A) A stable stock market
B) A period of falling stock prices
C) A market with high volatility
D) A period of rising stock prices
  • 19. What is a bear market?
A) A period of falling stock prices
B) A period of rising stock prices
C) A stable stock market
D) A market with low volatility
  • 20. What is inflation?
A) A stable price level
B) A general increase in prices
C) A decrease in prices
D) The value of a stock
  • 21. What is a growth stock?
A) Stock of a company expected to grow rapidly
B) Stock that pays high dividends
C) Stock of a company with slow growth
D) Stock of a bankrupt company
  • 22. What is a value stock?
A) Stock of a new company
B) Stock believed to be trading below its intrinsic value
C) Stock that's guaranteed to increase in price
D) Stock with a high P/E ratio
  • 23. What is fundamental analysis?
A) Predicting stock prices based on charts
B) Analyzing a company's financial statements
C) Randomly picking stocks
D) Following social media trends
  • 24. What is technical analysis?
A) Ignoring market data
B) Analyzing a company's financial statements
C) Analyzing stock price charts and patterns
D) Following gut feelings
  • 25. What is short selling?
A) Giving away stocks
B) Holding onto a stock for a long period
C) Borrowing and selling a stock, hoping to buy it back at a lower price
D) Buying a stock with the expectation it will rise in value
  • 26. What is a margin account?
A) An account where you borrow money from a broker to invest
B) A savings account specifically for stock market investments
C) An account that guarantees profits
D) A regular brokerage account using only your own funds
  • 27. What is insider trading?
A) Trading based on non-public, confidential information
B) Trading based on publicly available information
C) Trading with the company's permission
D) Trading using a registered broker
  • 28. What is a Roth IRA?
A) A standard brokerage account with no tax advantages
B) A savings account with a high interest rate
C) A retirement account where contributions are made after tax, and withdrawals in retirement are tax-free
D) A retirement account where contributions are made before tax, and withdrawals in retirement are taxed
  • 29. What is a 401(k)?
A) A government-sponsored investment program
B) A college savings account
C) A type of health insurance plan
D) A retirement savings plan offered by employers
  • 30. What does it mean to rebalance your portfolio?
A) Ignoring your portfolio performance
B) Investing all your money in a single stock
C) Selling all your stocks and buying bonds
D) Adjusting your asset allocation to maintain your desired risk level
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