stocks

Question 1

Securities

Answer 1

all investments that are purchased on the stock market

Question 2

Common Stock

Answer 2

A unit of ownership of a company entitling the stockholder to voting privileges

Question 3

Private Corporation

Answer 3

a company that issues stock to a small group of people.

Question 4

public corporation

Answer 4

a company that sells its shares openly in stock markets where anyone can buy them

Question 5

stock is…

Answer 5

equity in the company

Question 6

dividends

Answer 6

profits paid to stockholders to keep them happy

Question 7

appreciation

Answer 7

the value of the stock increases

Question 8

stock split

Answer 8

shares of stock owned by existing stockholders are divided into more shares
ATTRACTS MORE INVESTORS
BRINGS VALUE BACK

Question 9

preemptive right

Answer 9

Gives current stockholders the right to buy any new stock issued before it is offered to the public

Question 10

Preferred Stock

Answer 10

owner receives cash dividends before common stockholders receive cash dividends

attracts more conservative investors, “safer” investment

Question 11

Yield

Answer 11

the earnings generated and realized on an investment over a particular period of time
(%)

Question 12

Cumulative Preferred Stock

Answer 12

Stock whose unpaid dividends build up and must be paid before any cash dividend is paid to the common stockholders

Question 13

Convertible Preferred Stock

Answer 13

Stock that can be exchanged for shares of Common Stock

Question 14

Blue-Chip Stocks

Answer 14

Considered a safe investment that generally attracts conservative investors.

Issued by the strongest and most respected companies (AT&T, Kellog)

Question 15

Income Stocks

Answer 15

Pays higher than average, predictable dividends
(gas + electric companies)

Question 16

Growth Stocks

Answer 16

Issued by a corporation whose potential earnings may be higher than average earnings predicted (trying to grow their company)
Do not pay dividends, all money goes back into business

Question 17

Cyclical Stocks

Answer 17

Has a market value that tends to reflect the state of the economy.

Question 18

Defensive Stocks

Answer 18

remains stable during declines in the economy.
have steady earnings and can continue dividend payments even in periods of economic decline

Question 19

Large Cap Stocks

Answer 19

Stock from a corporation that has issued a large number of shares of stock (a lot of money)

Question 20

Small-Cap Stocks

Answer 20

A stock issued by a company with a capitalization of $500 million or less.
Higher risk stocks, because they are offered by smaller, less established companies

Question 21

Penny Stocks

Answer 21

Typically sells for less than $1 a share.
Can sell for as much as $10 a share.
Issued by new companies or companies with very unsteady sales.
Prices of these go up and down wildly.
Difficult to keep track of this stock

Question 22

Bull vs. Bear Market

Answer 22

when investors are optimistic vs pessimistic

Question 23

increase in yield

Answer 23

good sign for investment

Question 24

increase in earnings per share

Answer 24

good sign for investment

Question 25

Low PE

Answer 25

indicates that a stock might be a good investment, because the company has a lot of earnings when compared to the price of the stock.

Question 26

High PE

Answer 26

indicates it might be a bad investment

Question 27

Fundamental Theory

Answer 27

Assumes that a stock’s real value is determined by looking at the company’s future earnings

Question 28

Technical Theory

Answer 28

Based on the idea that a stock’s value is really determined by forces in the stock marke

Question 29

Efficient Market Theory (random walk theory)

Answer 29

Argue that stock price movements are purely random