Stock Market Quiz Terms

Question 1

Company

Answer 1

A business or association usually formed to manufacture or supply products or services for profit.

Question 2

Corporation

Answer 2

A company legally separate from stockholders who own it and the managers who run it.

Question 3

Entrepreneur

Answer 3

A person who organizes, operates, and assumes the risk for a business venture.

Question 4

Partnership

Answer 4

A company owned and managed by two or more people who share its profits or losses. A partnership is not separate from its owners, who are liable for the company’s debts.

Question 5

Private Corporation

Answer 5

A corporation that doesn’t sell shares to the public. You cannot buy shares of a private company in the stock market.

Question 6

Public Corporation

Answer 6

The stock of a public company is owned and traded by individuals and institutional investors. In contrast, the stock is held by company founders, employees, and sometimes venture capitalists.

Question 7

Sole Proprietorship

Answer 7

A company owned and run by one individual who receives its profits or bears its losses. A proprietorship is not separate from its owner, who is liable for the company debts.

Question 8

Limited Liability

Answer 8

A person’s financial liability (responsibility) is limited to a fixed amount, most commonly the value of a person’s investment in a company or partnership. If a company with limited liability is sued, then the claimants are suing the company, not its owners or investors.

Question 9

Common Stock

Answer 9

Shares of a company that do not guarantee a dividend and have more risks. Shareholders have the right to vote for board of directors

Question 10

Preferred Stock

Answer 10

Those who buy this are non-voting owners of the company

Receive dividends before common stock owners

Question 11

Stock Exchange

Answer 11

Secondary markets for buying and selling stocks

Question 12

Stock Split

Answer 12

a company does this when the price of a stock becomes so high it discourages potential investors from buying it

Question 13

Bull Market

Answer 13

a steady in the stock market over a period of time; investors expect an (increase) in profits and so buy stocks; 1980s and 1990s were the longest sustained bull markets

Question 14

Bear Market

Answer 14

a steady drop in the stock market over a period of time; investors sell in expectation of lower (profits) in 2000 a multi year bear market began

Question 15

Stock Broker

Answer 15

A person who links buyers and sellers to stock.

Question 16

Initial Public Offering (IPO)

Answer 16

The first time a company makes it stock open to the public.

Question 17

Dividend

Answer 17

part of the firm’s profits; paid 4 times a year; higher the profit, larger the dividend per share of stock

Question 18

Capital Gains

Answer 18

the difference between a higher selling price and a lower purchase price; results in a financial gain for the seller

Question 19

Capital Losses

Answer 19

the difference between a lower selling price and a higher purchase price, resulting in a financial loss to the seller

Question 20

P/E Ratio

Answer 20

A company’s closing price divided by its latest annual earnings per share