#1
What is the primary function of a stock exchange?
To facilitate the trading of stocks and other securities
ExplanationFacilitates trading of securities.
#2
What is the term for a shareholder's portion of a company's profit?
Dividend
ExplanationShare of company profits.
#3
What does the term 'blue chip stocks' refer to?
Stocks of well-established, financially stable companies
ExplanationStocks of stable companies.
#4
What does the term 'market capitalization' (market cap) represent?
The total value of a company's outstanding shares
ExplanationTotal value of outstanding shares.
#5
What does the term 'diversification' mean in investment?
Investing in multiple assets to reduce risk
ExplanationSpreading investments to reduce risk.
#6
What does the P/E ratio measure in finance?
Price and Earnings
ExplanationMeasures price relative to earnings.
#7
What does the term 'bear market' refer to in stock trading?
A market where prices are generally falling
ExplanationMarket with falling prices.
#8
What is the role of an investment banker in the stock market?
To facilitate the issuance of securities and assist with mergers and acquisitions
ExplanationAssists in security issuance and M&A.
#9
What is the purpose of a stock split?
To increase the number of outstanding shares
ExplanationIncreases outstanding shares.
#10
What is the formula to calculate Return on Investment (ROI)?
ROI = (Net Profit / Investment) x 100%
ExplanationNet profit relative to investment.
#11
What does the Modigliani-Miller theorem propose?
The value of a company is not affected by its capital structure
ExplanationCapital structure doesn't affect value.
#12
What is the significance of the Efficient Market Hypothesis (EMH) in finance?
It states that it's impossible to beat the market consistently
ExplanationSays beating market is impossible.
#13
What is the significance of the Gordon Growth Model (GGM) in finance?
It calculates the intrinsic value of a stock based on its dividends
ExplanationCalculates stock's intrinsic value.