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Personal Finance: Investing in Stocks
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Avg score: 35% • Most missed: “Proctor and Gamble is an example of a blue-chip stock.”

What is a a stock?

A stock represents an ownership stake in a company as a common shareholder.

Common stocks allow shareholders to vote on company issues, with most companies granting one vote per share.

Some companies also offer stockholders dividend payouts, giving investors a stream of income on top of the market value of the stock.
 

Personal Finance: Investing in Stocks
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25 Questions

1. You cannot benefit from capital appreciation until you actually sell your stock.
2. During a 'bear market' stocks prices typically fall.
3. The P/E ratio approach is a type of fundamental analysis.
4. Jessica wanted to gauge stock performance in general- She found a useful tool that measured the stock prices of 30 large industrial firms, called the
5. A ________ is a measure of the performance of a group of stocks that represent the market or a sector of the market.
6. Which of the following statements is most correct regarding the general relationship between stocks and interest rates?
7. The P/E ratio of a stock is 20, and its earnings per share is $5.25- What is the current selling price of the stock?
8. A stock market index is a measure of the performance of a group of stocks that represent the market or a sector of the market.
9. Beta is the measure of how responsive a stock is to changes in the market portfolios, like the S&P 500.
10. Speculative stocks are often traded through the OTC Bulletin Board.
11. A proxy vote means
12. Returns on stocks can come in the form of capital appreciation.
13. The dividend yield is calculated by dividing the earnings per share by the market price of the stock.
14. Nathan noticed that a company that has great potential just declared a ________ because its stock price was getting too high for the small investor to buy the stock- The company will substitute more shares for the existing shares of stock without increasing the market value of the firm.
15. Capital appreciation refers to an increase in the selling price of your shares of stock.
16. When you compare the returns on various investments over the period 1951-2010- Which of the following is shown to exceed the inflation rate by the widest margin?
17. Berkshire Hathaway's 'A' stock has never split- As a result, in mid-2014 one share of the stock was selling at a price of more than $190,000 per share.
18. If you purchase stock of big companies like Proctor & Gamble, General Electric, and Texaco you would be buying shares of ________ stocks.
19. If your stock's beta was greater than 1.0 that indicates that your stock is more susceptible to movements in the market.
20. Publicly traded stocks listed on a major exchange are not very liquid investments.
21. Income stocks are stocks that have a very high capital appreciation potential.
22. For several years you have been using charts and computer programs to project trends in the stock market- You are engaging in what type of analysis?
23. Louise Rogers knows that several factors affect the price of a share of common stock- The one that says there is an inverse relationship between interest rates and the value of a share of common stock is the ________ factor.
24. Income stocks pay relatively low dividends, and offer a high potential for capital appreciation.
25. Returns from shares of stock come in the form of

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