Stock

Question 1

OTC

Answer 1

場外交易市場（Over the counter market）的參加者主要是證券商和投資者，交易的證券很多，例如債券（包括國債、政府債券、公司債等各類債券）、新發行的各類證券主要在場外市場承銷和代銷。

Question 2

Stock exchange

Answer 2

A stock exchange is like a supermarket for shares. Think of the NASDAQ and New York Stock Exchange as Sam’s Club and Costco. They sell similar things and they have to compete for customers. The more trades they process, the more money they make.

Question 3

S&P 500

Answer 3

The S&P 500

• The Standard & Poor’s 500 is a selection of 500 stocks that represent the entire stock market.
• When people talk about “beating the market,” the market is The S&P 500.
• If the S&P 500 goes up 10% and your portfolio goes up 13%, you beat the market by 3%.

Question 4

Market Cap

Answer 4

= Number of shares outstanding multiplied by share price.

Question 5

Level of Market Capitalization

Answer 5

Mega Cap (least risk/slowest growth): $200 billion and greater
• Large Cap: $10-$200 billion
• Mid Cap: $2 billion to $10 billion
• Small Cap: $300 million to $2 billion
• Micro Cap: $50 million to $300 million
• Nano Cap (most risk/fastest growth): Under $50 million

Question 6

A pump and dump

Answer 6

A pump and dump involves one investor buying up a large quantity of penny stocks. They then spread hype about the company (claiming to have inside information) through newsletters, message boards, cold calling, etc.

Investors start buying (pumping) up the stock, making the price rise and pushing more and more investors to invest. The original investor then sells or ‘dumps’ his large amount of stock and the price plummets.

Question 7

When a company reaches the point that they are regularly profitable and have paid off all their debt, they have four choices for what to do with the money:

Answer 7

1. Reinvest in the company and try to expand either through new markets or new products.
2. Sit on the cash so as to build up reserves.
3. Payout a dividend to the shareholders.
4. Buy back shares in the company.

Question 8

Reason for dividend

Answer 8

When a company chooses not to reinvest, they’re essentially saying that they’ve reached the point where substantial growth is no longer possible. So they pay out a regular dividend to keep the shareholders happy.