Understanding Stocks and Bonds

Front

What type of security does purchasing stocks provide?

Back

A share of ownership in a specific company

Front

Which of the following is NOT a benefit of owning stocks? Earning dividends, Potential capital appreciation, Guaranteed dividends, Voting rights at shareholder meetings

Back

Guaranteed dividends

Front

What is the main difference between common and preferred stocks?

Back

Preferred stockholders receive dividends before common stockholders.

Front

Where are stocks sold?

Back

On stock exchanges

Front

What characterizes bonds compared to stocks?

Back

A form of lending to the issuer

Front

Which type of bond is typically exempt from federal income taxes? Corporate bonds, International bonds, Municipal bonds, Treasury bonds

Back

Municipal bonds

Front

What is the average annual return historically provided by the stock market according to the SEC?

Back

About 10%

Front

Which investment option is considered safer? Options: Cryptocurrencies, Bonds, Stocks

Back

Bonds

Front

What is a key feature of preferred stocks?

Back

They receive dividends before common stocks

Front

Why might investors use bonds to balance their portfolio?

Back

To protect against market volatility