#1
What does the term 'IPO' stand for in the stock market?
Initial Public Offering
ExplanationThe first sale of stock by a private company to the public, marking its transition to a publicly traded company.
#2
What is the role of a 'Bull' in the stock market?
Someone who buys stocks with the expectation of price increase
ExplanationA bullish investor anticipates upward market trends and aims to profit from rising stock prices.
#3
What does the term 'Dividend' represent in the context of stocks?
A portion of a company's earnings distributed to shareholders
ExplanationDividends are payments made by companies to shareholders as a distribution of profits.
#4
In stock market terminology, what does the acronym 'ETF' stand for?
Exchange-Traded Fund
ExplanationExchange-Traded Funds (ETFs) are investment funds traded on stock exchanges, holding assets like stocks or bonds and offering diversification.
#5
What is the primary function of a stockbroker in the stock market?
To facilitate the buying and selling of stocks on behalf of clients
ExplanationStockbrokers execute trades on behalf of clients, providing access to financial markets and offering investment advice.
#6
What is the 'Ticker Symbol' of a stock used for?
To uniquely identify a specific stock on an exchange
ExplanationA ticker symbol is a unique series of letters assigned to a stock for quick identification on stock exchanges.
#7
Which financial instrument represents ownership in a company?
Stock
ExplanationStocks represent ownership shares in a company, providing shareholders with a claim on its assets and earnings.
#8
What is the significance of the 'P/E ratio' in stock analysis?
It evaluates the stock's price relative to earnings per share
ExplanationThe Price-to-Earnings ratio assesses a stock's valuation by comparing its current market price to its earnings per share.
#9
What is the function of a 'Limit Order' in stock trading?
To buy or sell a stock at a specific price or better
ExplanationA limit order instructs the broker to execute a trade at a specific price or better, ensuring control over the purchase or sale price.
#10
What does 'Blue Chip' refer to in the stock market?
Stocks of well-established, financially stable, and reputable companies
ExplanationBlue chip stocks are shares of large, stable companies with a history of reliable performance and financial strength.
#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 in the U.S.
ExplanationThe DJIA is a stock market index measuring the performance of 30 major U.S. companies, providing insight into the overall market trends.
#12
What does the term 'Market Capitalization' refer to in stock analysis?
The total value of a company's outstanding shares of stock
ExplanationMarket capitalization is the total value of a company's outstanding shares, calculated by multiplying the stock price by the number of shares.
#13
What does the term 'Short Selling' refer to in the stock market?
Selling a stock with the intention to buy it back at a lower price
ExplanationShort selling involves selling borrowed stocks in anticipation of a price drop, allowing the investor to repurchase them at a lower cost.
#14
What is the primary purpose of the Securities and Exchange Commission (SEC) in the U.S.?
To protect investors and maintain fair and efficient markets
ExplanationThe SEC's mission is to ensure fair markets, protect investors, and facilitate capital formation by enforcing securities laws.
#15
What is the purpose of a 'Stop-Loss Order' in stock trading?
To limit losses by automatically selling a stock if its price falls below a specified level
ExplanationA stop-loss order is designed to minimize losses by automatically selling a stock if its price drops to a predetermined level.
#16
What is the purpose of the 'Federal Reserve' in relation to the stock market?
To set interest rates and implement monetary policy
ExplanationThe Federal Reserve, or the Fed, plays a crucial role in the economy and stock market by setting interest rates and implementing monetary policies to foster economic stability.
#17
What is the primary purpose of a 'Proxy Statement' in relation to shareholders?
To disclose information about executive compensation and corporate governance
ExplanationA proxy statement provides shareholders with information about executive compensation, corporate governance, and other matters, assisting them in making informed decisions.