Econ Quiz 10/21

Question 1

A portion of a corporation you can buy

Answer 1

Stock

Question 2

Most prevalent stock type; represents true ownership of a firm

Answer 2

Common Stock

Question 3

Distribution of a portion of the corporation’s profit

Answer 3

Dividends

Question 4

Owners of this stock receive dividends before common shareholders and receive leftover revenue if the corporation fails

Answer 4

Preferred Stock

Question 5

The first sale of stock by a private company to the public

Answer 5

Initial Public Offering (IPO)

Question 6

person who generally works for a brokerage company and who specializes in buying and selling stocks for clients

Answer 6

Stockbroker

Question 7

Fee that stockbrokers work for

Answer 7

Commission

Question 8

Stock traders; physically present on trading floor toe execute requested trades

Answer 8

Floor traders

Question 9

Electronic message board that indicates a transaction in stock purchases

Answer 9

Tape

Question 10

Place where merchants trade stocks; bourses

Answer 10

Stock exchanges

Question 11

Most well-known and reputable stock market in the world

Answer 11

New York Stock Exchange

Question 12

Does “over-the-counter” stock trading, has no trading floor

Answer 12

NASDAQ

Question 13

Another American Stock Market (NOT NYSE)

Answer 13

American Stock Exchange (AMEX)

Question 14

Most well-known stock index by Charles Dow

Answer 14

Dow Jones Industrial Average (DJIA)

Question 15

Commonly reported investment index, gives a broad business perspective on stocks

Answer 15

Standard and Poor’s 500 (S & P 500)

Question 16

Privately managed stock portfolios

Answer 16

Mutual funds

Question 17

A collection of stocks from different individual corporations

Answer 17

Stock Portfolio

Question 18

Buying and selling stocks to take advantage of short-term price changes, very risky

Answer 18

Speculation

Question 19

When stock prices rise in industry o across the market because of expectations and in the excess of true value

Answer 19

Speculative Bubble

Question 20

Ensures Corporations provide accurate and current information to the public about finances and businesses dealings

Answer 20

Securities and Exchange Commission (SEC)

Question 21

group of stocks that analysts use to get information about stock prices

Answer 21

Stock index

Question 22

Common Stock Pros/Cons

Answer 22

Pros: Owners have voting rights to company, considered true ownership of a company, receive dividends,
Cons: last to be paid if firm fails, riskier than preferred stock

Question 23

Preferred Stock Pros/Cons

Answer 23

Pros: less risky that common stock, more regular dividends, receive money first if business fails
Cons: not true ownership to company, more like debt that ownership, fixed dividend amounts, no guarantee of dividends

Question 24

Compare/Contrast DJIA and S&P 500

Answer 24

The DJIA involves strictly industrial businesses while the S&P 500 is more broad and tracks other industries that have to do with things like service.

Question 25

What is the SEC and why is it important

Answer 25

It ensures that corporations provide accurate and current information to the public about stock prices. This is important because without it, prices of stocks may be inaccurate. If the SEC had have been a thing in the 1920s, the Great Depression may not have happened because people would’ve known actual stock value, not just speculative numbers.

Question 26

T/F Buy low, sell high

Answer 26

T, this is how you make money (the cheaper you buy and the more expensive you sell it for, the more you make)