#1
What is a stock?
A share in the ownership of a company
ExplanationRepresents ownership in a company.
#2
What does IPO stand for in the context of the stock market?
Initial Public Offering
ExplanationThe first sale of stock by a company to the public.
#3
What is the purpose of dividends in stock market investing?
To distribute profits to shareholders
ExplanationShare of profits paid to shareholders.
#4
What is the term used to describe the practice of buying and selling securities rapidly within the same trading day?
Day trading
ExplanationRapid buying and selling within a day.
#5
What is the role of a stockbroker in stock market transactions?
To facilitate buying and selling of stocks on behalf of investors
ExplanationExecutes stock transactions for investors.
#6
What is the significance of the stock market index?
It measures the overall performance of the stock market
ExplanationIndicates overall market performance.
#7
What is the term used to describe a sudden and significant decline in the stock market?
Crash
ExplanationA rapid and severe drop in market value.
#8
What is the P/E ratio used for in stock market analysis?
To measure a company's profitability
ExplanationEvaluates a company's earnings relative to its stock price.
#9
What does the Dow Jones Industrial Average (DJIA) measure?
The performance of 30 large publicly-owned companies
ExplanationTracks the performance of major companies.
#10
What is a blue-chip stock?
A stock from a well-established and financially stable company
ExplanationStock from a reliable, stable company.
#11
What is a limit order in stock trading?
An order to buy or sell a security at a specified price or better
ExplanationSpecifies buying/selling at a set price or better.
#12
What does the term 'market capitalization' refer to in the context of stocks?
The total value of a company's outstanding shares
ExplanationSum of a company's outstanding shares' value.
#13
What is the term used to describe a strategy of investing in a diverse range of assets to spread risk?
Diversification
ExplanationSpreading investments to minimize risk.
#14
What is the primary function of a stock exchange?
To facilitate the trading of stocks and other securities
ExplanationEnables buying and selling of securities.
#15
What are the two main types of stock analysis?
Technical and fundamental analysis
ExplanationEvaluation methods: technical and fundamental.
#16
What is the role of a custodian in the stock market?
To hold and safeguard securities on behalf of clients
ExplanationSafeguards securities for clients.
#17
What is the role of a clearinghouse in stock trading?
To hold securities and ensure transactions are settled properly
ExplanationSecures and settles stock transactions.