Stock Market

Question 1

Guidance

Answer 1

An estimate of future earnings

Question 2

What is a market bubble?

Answer 2

Market share price increases passed real value due to people buying stock based on popularity instead of the fundamentals of the business (hopping on the bandwagon)

Question 3

Why are bubbles a bad thing?

Answer 3

People panic sell the their shares of companies they bought based because of popularity

Question 4

What causes a stock market market crash?

Answer 4

a prolonged period of rising stock prices and excessive economic optimism

Question 5

Monetary Value

Answer 5

is value in currency that a person, business, or the market places on a resource, product, or service

Question 6

Stock Index

Answer 6

A measurement of the value of a section of the stock market. It is computed from the prices of selected stocks. It is a tool used by investors and financial managers to describe the market, and to compare the return on specific investments. EX: Dow Jones is 18,000

Question 7

Market Trend

Answer 7

Is a tendency of financial markets to move in a particular direction over time

Question 8

Bear Market

Answer 8

A bear market is a general decline in the stock market over a period of time

Question 9

Bull Market

Answer 9

A bull market is a period of generally rising prices

Question 10

Market Top

Answer 10

The market has simply reached the highest point that it will, for some time (usually a few years). Market participants are usually not aware of it as it happens

Question 11

Market Bottom

Answer 11

A market bottom is a trend reversal, the end of a market downturn, and the beginning of an upward moving trend (bull market).

Question 12

Economic bubble

Answer 12

An asset at a price or price range that strongly deviates from the asset’s intrinsic value

Question 13

Intrinsic Value

Answer 13

The actual value of a security, as opposed to its market price or book value. The intrinsic value includes other variables such as brand name, trademarks, and copyrights that are often dificult to calculate and sometimes not accurately reflected in the market price

Question 14

Stock Broker

Answer 14

A person who buys and sells stocks on behalf of their clients

Question 15

Common Stock

Answer 15

A form of equity ownership

Question 16

Preferred Stock

Answer 16

A type of stock which may have any combination of features not possessed by common stock. Have priority over common stock in terms of dividends (get paid before common stock holders) and/or liquidation

Question 18

Share Dilution

Answer 18

A persons ownership of a company is decreased because more shares have been issued of a companies stock

Question 19

Why is increasing the minimum wage a bad idea?

Answer 19

There will be lots of job loss due to more positions being replaced by robots so they don’t have to pay the higher minimum wage; also the extra cash is going to dumb people (people working at minimum wage) that are going to spend it on dumb things

Question 20

If a shareholder owns 50% of a company, do they get to use the equipment and building whenever they want?

Answer 20

No because the company is considered a legal person, thus it owns all its assets itself

Question 21

Sell off

Answer 21

The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the value of the security