Understanding Stocks and Investing Basics

What is a stock?

• A type of bond

• A share in the ownership of a company

• A type of loan

• A form of currency

Which of the following is a stock market index?

• NASDAQ

• Federal Reserve

• World Bank

• IMF

• $3

• $5

• $10

• $15

What does the term "dividend" refer to in investing?

• A type of stock

• A company's earnings distributed to shareholders

• A stock market crash

• A type of bond

Which of the following is a reason to invest in stocks?

• To guarantee a fixed income

• To potentially earn higher returns

• To avoid all risks

• To save money in a bank account

What is the primary purpose of a stock exchange?

• To print money

• To facilitate the buying and selling of stocks

• To regulate banks

• To provide loans to businesses

• 10%

• 20%

• 25%

• 50%

What is a "bull market"?

• A market where prices are falling

• A market where prices are rising

• A market with no changes

• A market with high inflation

Which of the following is a risk of investing in stocks?

• Guaranteed returns

• Loss of principal

• Fixed interest rates

• No market fluctuations

What is the term for the initial sale of stock by a private company to the public?

• Secondary Offering

• Initial Public Offering (IPO)

• Stock Split

• Dividend Reinvestment