57 Stock Market Basics TEST

What do investors receive in exchange for purchasing stocks from a company?

• Ownership in the company

• A loan from the company

• A fixed interest rate

• A guaranteed profit

How can stockholders earn money from their investments?

• By trading stocks and earning dividends

• By receiving a salary from the company

• By selling company products

• By increasing company debt

What is the primary role of a stock exchange in the stock market?

• To facilitate the buying and selling of stocks

• To provide loans to companies

• To manage company operations

• To set company policies

When a company lists its stock on an exchange, what does it mean for investors?

• Investors can buy the company's stock.

• The company is going bankrupt.

• The company is closing down.

• Investors cannot buy the company's stock.

How does listing stock on an exchange benefit a company?

• It increases the company's debt.

• It allows the company to raise capital.

• It decreases the company's value.

• It limits the company's growth.

As an investor, what is a risk involved with buying one company's stock?

• Guaranteed profits.

• Loss of investment if the company performs poorly.

• No risk at all.

• Fixed returns.

Which of the following statements BEST describes the stock market?

• Businesses listing their entire company for sale

• Businesses selling partial ownership of their companies to raise capital

• Investors buying stock in hopes of being hired by companies

• People making donations to companies that need funding

During a BULL market, which of the following is true?

• Investors are pessimistic about how the stock market will perform

• The economy is not doing as well

• More investors are buying stocks, which causes stock values to increase

• The unemployment rate in the country increases

Over time, the stock market has...

• Experienced highs and lows but increased in overall value

• Had slight ups and downs but stayed about the same in value

• Rarely experienced changes and has maintained the exact same value

• Gone through severe ups and downs with an overall decrease in value

What might be one reason why a stock becomes more valuable over time?

• The industry is growing

• The company is poorly managed

• There is little demand for the product

• The industry is getting smaller