Basics of Stock Market Investing Quiz
Explore basics of stock market investing with questions on ROI, blue-chip stocks, P/E ratio, diversification & more. Test your investing savvy now!
#1
What does ROI stand for in the context of stock market investing?
Rate of Investment
Return on Investment
Risk of Investment
Revenue of Investment
#2
Which of the following is considered a blue-chip stock?
A newly established company with high growth potential
A highly speculative and volatile stock
A well-established, financially stable company
A small-cap stock with low market capitalization
#3
What does the term 'market capitalization' refer to in stock market investing?
The total value of assets owned by a company
The total number of shares outstanding multiplied by the stock's price
The amount of money invested in the stock market
The profit generated by a company's operations
#4
Which of the following is NOT a major stock exchange?
NYSE (New York Stock Exchange)
NASDAQ
LSE (London Stock Exchange)
CME (Chicago Mercantile Exchange)
#5
What is the significance of the Dow Jones Industrial Average (DJIA) in the stock market?
It measures the performance of small-cap stocks
It tracks the performance of 30 large, publicly-owned companies in the United States
It calculates the average earnings per share of all listed companies
It indicates the total market capitalization of all listed companies
#6
What is the meaning of P/E ratio in stock market analysis?
Profit/Earnings ratio
Price/Earnings ratio
Profit/Equity ratio
Price/Equity ratio
#7
Which of the following statements best describes diversification in stock market investing?
Investing in a single stock to maximize returns
Spreading investments across different asset classes
Investing only in high-risk, high-reward stocks
Investing in stocks from the same industry sector
#8
What is the role of a stockbroker in stock market transactions?
To buy and sell stocks on behalf of clients
To analyze financial statements of companies
To provide loans to companies for expansion
To regulate stock market activities
#9
What is the significance of the Dividend Yield ratio for investors?
It indicates the percentage return on investment from dividends
It measures the company's overall profitability
It assesses the company's ability to pay off its debts
It evaluates the growth potential of the company
#10
What is the primary function of a stock exchange?
To provide loans to companies for expansion
To regulate the buying and selling of stocks and other securities
To analyze financial statements of companies
To issue new shares of stock to raise capital
#11
What is meant by the term 'stock split'?
When a company distributes a portion of its earnings to shareholders
When a company issues additional shares to existing shareholders
When a company divides its existing shares into multiple shares
When a company merges with another company
#12
What is meant by the term 'stock buyback'?
When shareholders buy stocks from the open market
When a company repurchases its own shares from the market
When a company issues new shares to raise capital
When a company sells its shares to institutional investors
#13
What is a 'stock exchange index'?
A measure of the total value of all stocks listed on a stock exchange
A benchmark that tracks the performance of a specific group of stocks
A ratio used to calculate a company's return on investment
A financial instrument that allows investors to buy and sell stocks
#14
What is the concept of 'market liquidity' in stock market investing?
The ability to quickly convert investments into cash without significant price impact
The total value of assets owned by a company
The ratio of debt to equity in a company's capital structure
The percentage return on investment from dividends
#15
What is the concept of 'alpha' in stock market performance evaluation?
The measure of a stock's price relative to its earnings per share
The risk-adjusted return of a stock compared to a benchmark index
The ratio of a company's debt to its equity
The percentage of investors who hold a particular stock
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