Understanding Stock Market Basics

What is a bull market?

• A market characterized by falling prices

• A market characterized by rising prices

• A market with stable prices

• A market with no trading activity

Which type of stock typically pays dividends?

• Growth stocks

• Income stocks

• Penny stocks

• Blue-chip stocks

What is a bear market?

• A market characterized by rising prices

• A market characterized by falling prices

• A market with stable prices

• A market with no trading activity

Which of the following is a common stock trading strategy?

• Buy and hold

• Buy high, sell low

• Avoid all stocks

• Invest in only one stock

What is the primary difference between common and preferred stocks?

• Common stocks have voting rights, preferred stocks do not

• Preferred stocks have voting rights, common stocks do not

• Both have equal voting rights

• Neither have voting rights

How are dividends typically paid out to shareholders?

• In the form of additional shares

• In cash or additional shares

• Only in cash

• Only in the form of bonds

What does the term "earnings per share" (EPS) refer to?

• The total earnings of a company

• The earnings allocated to each outstanding share of a company's stock

• The earnings before taxes

• The earnings after dividends are paid

Which of the following is a characteristic of a growth stock?

• High dividend yield

• High potential for capital appreciation

• Low market volatility

• High liquidity

What is the main goal of a "buy and hold" strategy?

• To make quick profits

• To benefit from long-term market growth

• To avoid market risks

• To minimize transaction costs

Which of the following best describes a dividend?

• A portion of a company's profits paid to shareholders

• A fee paid to stockbrokers

• A tax on stock transactions

• A penalty for selling stocks early