Understanding Stock Market Basics

What represents a partial ownership in a company?

• Bonds

• Stocks

• Mutual funds

• Savings accounts

What happens to a stock's price if the demand exceeds supply?

• It decreases

• It becomes volatile

• It remains the same

• It increases

What is the main goal of investors buying stocks?

• To receive regular dividends

• To influence company decisions

• To increase their wealth over time

• To sell them immediately for a quick profit

Which type of investor aims to beat the market by selecting specific stocks?

• Conservative

• Passive

• Active

• Speculative

What does the S&P 500 index primarily measure?

• The total market value of all stocks

• The average performance of 500 of the largest U.S. companies

• The performance of 500 small companies

• The inflation rate

Which statement best describes the stock market's behavior in the short term?

• It acts like a weighing machine

• It remains stable

• It reflects only the most profitable companies

• It behaves like a voting machine

What do active investors seek to exploit?

• Global economic crises

• Government regulations

• Market inefficiencies

• Long-term growth trends

What is a common strategy of passive investors?

• Day trading

• Futures trading

• Investing in index funds

• Short selling

What is the ultimate goal of all index funds?

• To outperform active investment strategies

• To hold stocks for the long term

• To predict short-term market movements

• To focus on a single sector

Why is investing not considered an exact science?

• Because it is based on luck

• Because it requires mathematical skills

• Because it is regulated by governments

• Because there is no single foolproof method