Chapter 12: Types of Stocks

Question 1

Publicly listed shares traded on the stock exchange.

Answer 1

Stock

Question 2

sometimes referred to as ordinary shares—represents partial ownership in a company.

Answer 2

Common stock

Question 3

This stock class entitles investors to generated profits, usually paid in dividends.

Answer 3

Common stock

Question 4

Holders of this stock class have rights to a company’s assets in a liquidation event, but only after preferred stock shareholders and other debt holders have been paid.

Answer 4

Common stock

Question 5

also known as preference shares, entitles the holder to regular dividend payments before dividends are issued to common shareholders.

Answer 5

preferred stock

Question 6

doesn’t carry voting rights and suits investors seeking reliable passive income

Answer 6

preferred stock

Question 7

refer to equities expected to grow at a faster rate compared to the broader market.

Answer 7

growth stocks

Question 8

True or False

preferred shareholders also get repaid first if the company dissolves or enters bankruptcy

Answer 8

True

Question 9

tend to outperform during times of economic expansion and when interest rates are low.

Answer 9

growth stocks

Question 10

trade at a discount to what a company’s performance might otherwise indicate, typically having more attractive valuations than the broader market.

Answer 10

value stocks

Question 11

such as financial, healthcare, and energy names—tend to outperform during periods of economic recovery, as they usually generate reliable income streams.

Answer 11

value stocks

Question 12

are equities that provide regular income by distributing a company’s profits, or excess cash, through dividends that are higher than the market average.

Answer 12

Income stocks

Question 13

these stocks—think utilities—have lower volatility and less capital appreciation than growth stocks, making them suitable for risk-averse investors who seek a regular income stream.

Answer 13

Income stocks

Question 14

Investors can access income stocks through the __________.

Answer 14

Amplify High Income ETF

Question 15

are well-established companies that have a large market capitalization.

Answer 15

Blue-chip stocks

Question 16

are directly affected by the economy’s performance and typically follow economic cycles of expansion, peak, recession, and recovery.

Answer 16

Cyclical stocks

Question 17

They usually display more volatility and outperform other stocks in times of economic strength when consumers have more discretionary income.

Answer 17

Cyclical stocks

Question 18

operate in “recession-proof” industries that tend to perform reasonably well irrespective of the economy.

Answer 18

Non-cyclical stocks

Question 19

usually outperform cyclical stocks in an economic slowdown or downturn as demand for core products and services remains relatively consistent.

Answer 19

Non-cyclical stocks

Question 20

generally provide consistent returns in most economic conditions and stock market environments.

Answer 20

Defensive stocks

Question 21

These companies typically sell essential products and services, such as consumer staples, healthcare, and utilities.

Answer 21

Defensive stocks

Question 22

may help protect a portfolio from steep losses during a sell-off or bear market.

Answer 22

defensive stock

Question 23

A ________________ may also be a value, income, non-cyclical, or blue-chip stock.

Answer 23

defensive stock

Question 24

When a company goes public, it issues stock through an

Answer 24

initial public offering (IPO)

Question 25

typically gets allocated at a discount before the company’s stock lists on the stock exchange.

Answer 25

initial public offering (IPO)

Question 26

It may also have a vesting schedule to prevent investors from selling all of their shares when the stock commences trading.

Answer 26

initial public offering (IPO)

Question 27

a middle-tier over-the-counter (OTC) market for U.S. stocks operated by OTC Markets Group.

Answer 27

OTCQB

Question 28

is equity valued at less than $5 and is considered highly speculative.

Answer 28

penny stock

Question 29

emphasize environmental protection, social justice, and ethical management practices.

Answer 29

Environmental, social, and corporate governance (ESG) stocks

Question 30

have gained popularity with millennials in recent years—a socially conscious generation who are more likely to invest in things they believe and support.

Answer 30

ESG stocks

Question 31

risk-averse investors who seek regular income through dividend payments.

Answer 31

Income stocks suit