Chapter 4: Stock Trading as an Investment

Stocks and securities are financial instruments that represent ownership in a company or a creditor relationship with a government or corporation. Which of the following best describes 'stocks'?

• Ownership in a company

• A type of bond

• A government-issued currency

• A form of real estate

Factors affecting stock prices include:

• Economic indicators, market sentiment, and company performance

• Weather conditions and time of day

• Astrological signs and phases of the moon

• Color of the stock certificates

Stock trading platforms are:

• Online services for buying and selling stocks

• Physical locations for trading stocks

• Government agencies regulating stock markets

• Educational institutions for learning about stocks

The Hang Seng Index is a stock market index in which city?

• New York

• London

• Hong Kong

• Tokyo

Four university students majoring in finance bought some stocks last month to earn a return. They are now discussing their investment results. What is the main topic of their discussion?

• Their investment strategies

• The stocks they bought

• Their investment results

• Their future investment plans

What did Alice say about the economy and stock prices?

• Alice said the economy is improving and stock prices are rising.

• Alice said the economy is declining and stock prices are falling.

• Alice said the economy is stable and stock prices are unchanged.

• Alice did not comment on the economy and stock prices.

Jack said something about the bank he invested in. What was it?

• He praised the bank's customer service.

• He criticized the bank's interest rates.

• He mentioned the bank's stability.

• He expressed concern about the bank's management.

What did Elise say about US stocks?

• Elise said US stocks are performing well.

• Elise mentioned US stocks are underperforming.

• Elise stated US stocks are stable.

• Elise commented on the volatility of US stocks.

What did Peter say about the smartphone company stock?

• Peter said the stock is rising.

• Peter said the stock is falling.

• Peter said the stock is stable.

• Peter said nothing about the stock.

Which of the following factors would cause the stock price of a company to rise or drop? Based on the above case and your own knowledge, put a ‘✓’ in the appropriate boxes.

• Economic conditions

• Political situations

• Company’s profitability

• News about the company

• Government policies