#1
What is the meaning of the term 'bull market' in the stock market?
A market with increasing stock prices
ExplanationBull market signifies rising stock prices.
#2
Which of the following represents ownership in a company?
Stock
ExplanationStock represents ownership in a company.
#3
What does the term 'market capitalization' represent for a company?
The total market value of the company's outstanding shares
ExplanationMarket cap is the total value of outstanding shares.
#4
What is a 'bear market' in the context of the stock market?
A market with decreasing stock prices
ExplanationBear market sees declining stock prices.
#5
What is the concept of 'diversification' in investment?
Spreading investments across different assets to reduce risk
ExplanationDiversification reduces investment risk.
#6
What does the term 'market cap' stand for?
Market Capitalization
ExplanationMarket cap stands for Market Capitalization.
#7
What does the P/E ratio (Price-to-Earnings ratio) measure?
The company's profitability
ExplanationP/E ratio measures company profitability.
#8
What is the role of a stockbroker in the stock market?
To buy and sell stocks on behalf of clients
ExplanationStockbrokers execute trades for clients.
#9
What is the purpose of a stock split?
To increase the number of outstanding shares
ExplanationStock split increases outstanding shares.
#10
What does the term 'blue-chip stocks' refer to?
Stocks of well-established and financially stable companies
ExplanationBlue-chip stocks are from stable companies.
#11
What is the primary function of the Securities and Exchange Commission (SEC) in the United States?
To regulate and oversee the stock market
ExplanationSEC regulates the stock market.
#12
What is the significance of the Federal Reserve in the U.S. economy?
To set monetary policy and control the money supply
ExplanationFederal Reserve controls monetary policy.
#13
What is the role of a market index, such as the S&P 500, in the stock market?
To measure the performance of a specific group of stocks
ExplanationMarket indexes gauge group stock performance.
#14
What is the significance of the Dividend Yield when evaluating stocks?
It indicates the percentage return on investment through dividends
ExplanationDividend Yield reflects dividend returns.
#15
What is the significance of the Dow Jones Industrial Average (DJIA) in the stock market?
It measures the performance of 30 large, publicly-owned companies
ExplanationDJIA measures large company performance.
#16
What is a 'stop-loss order' in stock trading?
An order to sell a stock at a specific price to limit losses
ExplanationStop-loss order limits potential losses.
#17
What does the term 'liquidity' refer to in the stock market?
The ease of buying or selling an asset without affecting its price
ExplanationLiquidity is the ease of trading without price impact.
#18
What is the significance of the 52-week high and low for a stock?
It reflects the highest and lowest prices the stock has reached in the past year
Explanation52-week high and low show stock price range.
#19
What is the difference between a market order and a limit order in stock trading?
A market order executes immediately at the current market price, while a limit order sets a specific price for execution
ExplanationMarket order executes immediately; limit order sets price.
#20
What is the concept of 'beta' in relation to stock risk?
It assesses the stock's sensitivity to market movements
ExplanationBeta measures stock's market sensitivity.