#1
What does the term 'bull market' refer to in the stock market context?
A market with increasing prices
ExplanationPeriod of rising stock prices, often accompanied by investor optimism and economic growth.
#2
What is the purpose of a limit order in stock trading?
To buy or sell a stock at a specific price or better
ExplanationInstruction to buy or sell a security at a specified price or better, ensuring execution at desired terms.
#3
In the context of stock trading, what is a 'blue-chip stock'?
A highly valued stock with a history of stable performance
ExplanationStock of a large, well-established company with a history of stable earnings and dividends.
#4
What does the term 'book value' of a company represent?
The value of a company's assets minus its liabilities
ExplanationNet worth of a company, calculated as total assets minus total liabilities, providing insight into its intrinsic value.
#5
In stock market terminology, what does the term 'long position' mean?
Buying a security with the expectation that its price will rise
ExplanationInvestment strategy involving buying a security with the anticipation of selling it later at a higher price.
#6
What is the formula for calculating the price-to-earnings ratio (P/E ratio) of a stock?
Market Price / Earnings per Share
ExplanationRatio of market price of a share to its earnings per share, indicating the value investors place on each dollar of earnings.
#7
What is the role of a stockbroker in stock market operations?
To buy and sell stocks on behalf of clients
ExplanationIntermediary facilitating the purchase and sale of securities for investors.
#8
What is the purpose of a stock split in the stock market?
To decrease the number of outstanding shares and increase their value
ExplanationDividing existing shares into multiple shares, adjusting price per share to make them more affordable.
#9
What does the term 'market capitalization' (market cap) represent in the stock market?
Total outstanding shares multiplied by the stock price
ExplanationIndicator of a company's size and value, calculated by multiplying its share price by the number of outstanding shares.
#10
What is the significance of the S&P 500 index in the stock market?
It tracks the performance of 500 large-cap U.S. companies
ExplanationBenchmark index measuring the performance of a broad segment of the U.S. stock market.
#11
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
ExplanationBenchmark index reflecting the performance of major companies, providing insight into overall market trends.
#12
In options trading, what does the term 'strike price' refer to?
The price at which an option can be exercised
ExplanationPredetermined price at which the holder of an option can buy or sell the underlying asset.
#13
In technical analysis, what does the term 'moving average' indicate?
The average price of a stock over a specific time period
ExplanationTool used to smooth out price data by creating a constantly updated average price.
#14
What is the role of the Securities and Exchange Commission (SEC) in the stock market?
To regulate and oversee securities markets and protect investors
ExplanationGovernment agency responsible for enforcing securities laws, promoting transparency, and protecting investors.
#15
What is the significance of the term 'beta' in stock market analysis?
It measures the sensitivity of a stock's returns to market movements
ExplanationStatistical measure indicating a stock's volatility relative to the market, aiding investors in assessing risk.