#1
What does ROI stand for in the context of stock market investing?
Return on Investment
ExplanationMeasurement of profitability relative to the investment's cost.
#2
Which of the following is considered a blue-chip stock?
A well-established, financially stable company
ExplanationStock of a large, stable company with a long history of reliable performance.
#3
What does the term 'market capitalization' refer to in stock market investing?
The total number of shares outstanding multiplied by the stock's price
ExplanationMeasure of a company's size based on the value of its outstanding shares.
#4
Which of the following is NOT a major stock exchange?
CME (Chicago Mercantile Exchange)
ExplanationFutures and options exchange, not primarily for stocks.
#5
What is the significance of the Dow Jones Industrial Average (DJIA) in the stock market?
It tracks the performance of 30 large, publicly-owned companies in the United States
ExplanationIndicator of U.S. stock market performance based on major companies.
#6
What is the meaning of P/E ratio in stock market analysis?
Price/Earnings ratio
ExplanationValuation metric indicating the price of a share relative to its earnings per share.
#7
Which of the following statements best describes diversification in stock market investing?
Spreading investments across different asset classes
ExplanationReducing risk by investing in various types of assets.
#8
What is the role of a stockbroker in stock market transactions?
To buy and sell stocks on behalf of clients
ExplanationIntermediary facilitating the buying and selling of stocks.
#9
What is the significance of the Dividend Yield ratio for investors?
It indicates the percentage return on investment from dividends
ExplanationMeasure of dividend return relative to stock price.
#10
What is the primary function of a stock exchange?
To regulate the buying and selling of stocks and other securities
ExplanationFacilitate trading of securities in a regulated environment.
#11
What is meant by the term 'stock split'?
When a company divides its existing shares into multiple shares
ExplanationIncreasing the number of shares outstanding without altering total market value.
#12
What is meant by the term 'stock buyback'?
When a company repurchases its own shares from the market
ExplanationCompany buying its own shares, reducing shares outstanding.
#13
What is a 'stock exchange index'?
A benchmark that tracks the performance of a specific group of stocks
ExplanationMeasurement of a group of stocks' performance relative to a base value.
#14
What is the concept of 'market liquidity' in stock market investing?
The ability to quickly convert investments into cash without significant price impact
ExplanationEase of buying or selling assets without affecting their price.
#15
What is the concept of 'alpha' in stock market performance evaluation?
The risk-adjusted return of a stock compared to a benchmark index
ExplanationMeasure of investment performance relative to market returns adjusted for risk.