Stock Market Quiz: How Much You Really Know?

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  • 1/25 Questions

    The person who links buyers and sellers is called a

    • Investor
    • Salesman
    • SEC Agent
    • Stockbroker
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About This Quiz

This 'Stock Market Quiz: How much you really know? ' assesses your understanding of key financial concepts including market conditions, types of stocks, and investment strategies. It's ideal for learners aiming to deepen their knowledge of stock market dynamics.

Stock Market Quiz: How Much You Really Know? - Quiz

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  • 2. 

    Investing is defined as using your savings in a way that earns income to create a return on that money. 

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Investing involves utilizing one's savings in a manner that generates income and produces a profit on the invested money. This can be achieved through various investment vehicles such as stocks, bonds, real estate, or mutual funds. By putting money into these assets, individuals aim to earn returns that exceed the initial investment, thereby growing their wealth over time. Hence, the statement "Investing is defined as using your savings in a way that earns income to create a return on that money" is accurate.

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  • 3. 

    In general, the higher the risk of an investment the more potential for a higher return on that same investment.   

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because higher risk investments typically involve more uncertainty and volatility, which can lead to higher potential returns. Investors who are willing to take on more risk may have the opportunity to earn higher profits if their investments perform well. However, it is important to note that higher risk also means a higher chance of losing money, so investors should carefully assess their risk tolerance before making investment decisions.

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  • 4. 

    Where may an investor obtain information on stocks?

    • Wall Street Journal

    • Internet

    • Television

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    Investors can obtain information on stocks from multiple sources, including the Wall Street Journal, the internet, and television. The Wall Street Journal is a renowned financial newspaper that provides comprehensive coverage of the stock market. The internet offers a wide range of websites, financial news platforms, and online brokerage accounts, where investors can access real-time stock quotes, financial statements, and expert analysis. Television channels like CNBC also provide market updates, interviews with industry experts, and analysis of stock performance. Therefore, all of the options mentioned - Wall Street Journal, internet, and television - are valid sources for investors to gather information on stocks.

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  • 5. 

    A major risk of internet day trading is that individuals may not have the necessary knowledge to be risking their investments in the stock market. 

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Internet day trading involves buying and selling stocks online within a short period of time. One major risk of this practice is that individuals may not possess the necessary knowledge and expertise to make informed investment decisions. Without proper understanding of the stock market, individuals may make impulsive decisions, leading to potential losses. Therefore, it is true that a major risk of internet day trading is the lack of necessary knowledge and experience.

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  • 6. 

    Describes a market condition in which investors are optimistic about the stock market and which results in an increase in stock prices.   

    • Stock Market

    • Bonds

    • Dividends

    • Growth Stock

    • Bull Market

    • Bear Market

    • Capital Gain

    • Portfolio

    • Diversification

    • Income stock

    Correct Answer
    A. Bull Market
    Explanation
    A bull market refers to a market condition where investors are optimistic about the stock market. In this condition, stock prices tend to increase. It is characterized by high investor confidence, strong economic indicators, and an overall positive sentiment in the market. During a bull market, investors expect that stock prices will continue to rise, leading to potential capital gains. This optimism often leads to increased buying activity and higher trading volumes.

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  • 7. 

    Which of the following describes when a company is going from a private company to a publicly held company?

    • IPO (Initial Public Offering)

    • DYI- Diversifying Your investments

    • ICB-Investing in Corporate Bonds

    • Taking it to the people

    Correct Answer
    A. IPO (Initial Public Offering)
    Explanation
    When a company is going from a private company to a publicly held company, it means that the company is offering its shares to the public for the first time. This process is known as an Initial Public Offering (IPO). During an IPO, the company issues shares to the public, allowing individuals and institutional investors to become shareholders in the company. This transition from private to public ownership provides the company with access to capital from a wider investor base and allows for increased liquidity in the company's shares.

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  • 8. 

    In general, stocks of companies carry more risk than bonds of those same companies.  

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Stocks of companies carry more risk than bonds because stocks represent ownership in a company, while bonds represent debt. As an owner, stockholders bear the risk of the company's performance and potential losses. On the other hand, bondholders are creditors who lend money to the company and have a higher claim on its assets in case of bankruptcy. Stocks are subject to market fluctuations, volatility, and the possibility of losing the entire investment, whereas bonds offer more stability and a fixed income stream. Therefore, it is true that stocks carry more risk than bonds.

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  • 9. 

    This refers to the collection of financial investments (stocks, bonds, etc) that an individual has

    • Stock Market

    • Bonds

    • Dividends

    • Growth Stock

    • Bull Market

    • Bear Market

    • Capital Gain

    • Portfolio

    • Diversification

    Correct Answer
    A. Portfolio
    Explanation
    A portfolio refers to the collection of financial investments that an individual has. It includes various types of investments such as stocks, bonds, and other financial instruments. A well-diversified portfolio is important for investors as it helps spread the risk and increases the chances of achieving consistent returns. By having a mix of different types of investments, individuals can potentially benefit from the growth of certain stocks or sectors while minimizing the impact of any downturns in others. A portfolio is a crucial tool for investors to manage and track their investments and make informed decisions based on their financial goals and risk tolerance.

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  • 10. 

    What is the stock symbol?

    • The logo a company uses on advertisements.

    • The description of the companies goods and services.

    • A spokeperson of the company to the public.

    • 3-4 letters that represent the companies name on the Stock market.

    Correct Answer
    A. 3-4 letters that represent the companies name on the Stock market.
    Explanation
    The stock symbol is a unique combination of 3-4 letters that represents a company's name on the stock market. It is used to identify and track the company's stocks and is essential for investors and traders to buy, sell, and monitor the company's shares in the stock market.

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  • 11. 

    Most financial planners would recommend that an individual invests most of their money in one company rather than separate that same investment into several companies.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    It is not recommended for an individual to invest most of their money in one company. Diversification is a key principle in investing, as it helps to spread risk and reduce the impact of any potential losses. By investing in multiple companies, an individual can minimize the risk of losing all their money if one company performs poorly. Therefore, it is advisable to separate investments into several companies rather than concentrating them in one.

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  • 12. 

    An advantage of internet trading is that it lowers the cost for investors.   

    • True

    • False

    Correct Answer
    A. True
    Explanation
    Internet trading allows investors to bypass traditional brokerage firms and trade directly on online platforms. This eliminates the need for middlemen and reduces transaction costs such as commissions and fees. Additionally, internet trading provides access to a wider range of investment options and real-time market information, allowing investors to make more informed decisions. Therefore, it can be concluded that internet trading indeed lowers the cost for investors, making the statement "True".

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  • 13. 

    Describes a market condition in which investors are not confident in purchasing stocks and which leads to a decrease in stock prices.   

    • Stock Market

    • Bonds

    • Dividends

    • Growth Stock

    • Bull Market

    • Bear Market

    • Capital Gain

    • Portfolio

    • Diversification

    • Income stock

    Correct Answer
    A. Bear Market
    Explanation
    A bear market refers to a market condition where investors lack confidence in purchasing stocks, resulting in a decline in stock prices. During a bear market, there is typically a pessimistic sentiment among investors, leading to a decrease in demand for stocks. This can be caused by various factors such as economic downturns, political instability, or negative news about the market. In a bear market, investors may choose to sell their stocks to minimize losses, which further contributes to the decrease in stock prices.

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  • 14. 

    A profit that occurs when an investor sells the stock for more than they paid for it.   

    • Stock Market

    • Bonds

    • Dividends

    • Growth Stock

    • Bull Market

    • Bear Market

    • Capital Gain

    • Portfolio

    • Diversification

    • Income stock

    Correct Answer
    A. Capital Gain
    Explanation
    A capital gain is a profit made by an investor when they sell a stock for a higher price than what they initially paid for it. This occurs when the value of the stock increases over time, allowing the investor to make a profit from their investment. Capital gains are an important aspect of investing and can contribute to the overall growth of an investor's portfolio.

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  • 15. 

    This describes an investment tool in which a group of indivdiuals give money to a company/person who in turns invests the money for them. 

    • Preferred stock

    • Common stock

    • Mutual Fund

    • Corporate bond

    Correct Answer
    A. Mutual Fund
    Explanation
    A mutual fund is an investment tool where a group of individuals pool their money together and entrust it to a company or person who then invests it on their behalf. This allows individuals to have a diversified portfolio without having to directly manage their investments. Mutual funds typically invest in a variety of assets such as stocks, bonds, and other securities, providing investors with a way to access a diversified investment portfolio with professional management.

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  • 16. 

    A preferred stock is a share of a company that does not give owners a vote but they do get a fixed dividend.   

    • True

    • False

    Correct Answer
    A. True
    Explanation
    A preferred stock is a type of stock that does not provide voting rights to its owners. Instead, owners of preferred stock receive a fixed dividend, which means they are entitled to a regular and predetermined payment from the company. This distinguishes preferred stock from common stock, where owners have voting rights but do not receive a guaranteed dividend. Therefore, the statement that a preferred stock does not give owners a vote but they do get a fixed dividend is true.

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  • 17. 

    An investment tool where investors lend money to a corporation for a fixed amount of time in return for payment with interest on that loan.   

    • Stock Market

    • Bonds

    • Dividends

    • Growth Stock

    • Bull Market

    • Bear Market

    • Capital Gain

    • Portfolio

    • Diversification

    • Income Stock

    Correct Answer
    A. Bonds
    Explanation
    Bonds are a type of investment tool where investors lend money to a corporation for a fixed amount of time. In return, the corporation pays interest on the loan. This makes bonds a form of debt investment, where investors are essentially lending money to the corporation and receiving regular interest payments in return. At the end of the fixed period, the corporation repays the original amount borrowed, known as the principal. Bonds are considered a relatively safer investment compared to stocks because they offer a fixed income stream and have a predetermined maturity date.

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  • 18. 

    The majority of Americans are invested in the stock market through their retirement accounts. 

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The majority of Americans are invested in the stock market through their retirement accounts because retirement accounts such as 401(k)s and IRAs often include stock market investments as part of their portfolio. These accounts are commonly used by individuals to save for their retirement, and they offer the opportunity to invest in various assets, including stocks. Therefore, it is likely that a significant number of Americans have exposure to the stock market through their retirement accounts.

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  • 19. 

    Describes when investors have a wide mix of stocks and other investments in an investment portfolio. 

    • Stock Market

    • Bonds

    • Dividends

    • Growth Stock

    • Bull Market

    • Bear Market

    • Capital Gain

    • Portfolio

    • Diversification

    • Income stock

    Correct Answer
    A. Diversification
    Explanation
    Diversification refers to the strategy of spreading investments across a wide mix of stocks and other investments in an investment portfolio. This approach helps to reduce risk by avoiding overexposure to any single investment. By diversifying, investors can potentially mitigate losses in one investment with gains in another, thus achieving a more balanced and stable portfolio.

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  • 20. 

    An individual is more likely to invest in a bear market than in a bull market.   

    • True

    • False

    Correct Answer
    A. False
    Explanation
    In a bear market, the overall market is experiencing a decline, and stock prices are falling. This creates opportunities for investors to buy stocks at lower prices, with the expectation that they will increase in value when the market eventually recovers. On the other hand, in a bull market, the overall market is experiencing growth, and stock prices are rising. This makes it less attractive for investors to enter the market as prices are already high, and there is less potential for significant gains. Therefore, the statement that an individual is more likely to invest in a bear market than in a bull market is false.

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  • 21. 

    The Dow Jones index measures the profits and losses of all U.S. companies

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The Dow Jones index does not measure the profits and losses of all U.S. companies. It is a stock market index that represents the performance of 30 large, publicly owned companies in the United States. It is used as an indicator of the overall health of the stock market and the economy.

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  • 22. 

    These are shares of companies that reinvest their profits rather than pay out a dividend.   

    • Stock Market

    • Bonds

    • Dividends

    • Growth Stock

    • Bull Market

    • Bear Market

    • Capital Gain

    • Portfolio

    • Diversification

    • Income stock

    Correct Answer
    A. Growth Stock
    Explanation
    A growth stock refers to shares of companies that choose to reinvest their profits instead of distributing them as dividends. These companies prioritize using their earnings to expand their operations, invest in research and development, or acquire other businesses. By reinvesting profits, growth stocks aim to increase their market share and overall value, which can potentially lead to higher stock prices in the future. This strategy appeals to investors who are seeking long-term capital appreciation rather than immediate income through dividends.

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  • 23. 

    A high interest investment in a company in risk of going bankrupt is called a:  

    • Blue chip

    • Junk bond

    • Futures

    • Fool's gold

    Correct Answer
    A. Junk bond
    Explanation
    A high interest investment in a company in risk of going bankrupt is called a junk bond. Junk bonds are issued by companies with low credit ratings, making them risky investments. These bonds offer higher interest rates to compensate for the increased risk. Investors who are willing to take on higher risk in exchange for potentially higher returns may choose to invest in junk bonds. However, it is important to note that there is a higher likelihood of default with junk bonds compared to other types of investments.

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  • 24. 

    On which of the following stock markets is Google most likely to be listed? 

    • NASDAQ

    • NYSE (New York Stock Exchange)

    • Chicago Mercantile Exchange

    • Tokyo Stock Exchange

    Correct Answer
    A. NASDAQ
    Explanation
    Google is most likely to be listed on the NASDAQ stock market because it is a technology company and the NASDAQ is known for listing technology companies. Additionally, many other major technology companies such as Apple and Microsoft are also listed on the NASDAQ. The NYSE primarily lists traditional industrial companies, while the Chicago Mercantile Exchange is a futures exchange and the Tokyo Stock Exchange is located in Japan.

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  • 25. 

    Matching: Shares of a company that pay out dividends on a regular basis.   

    • Stock Market

    • Bonds

    • Dividends

    • Growth Stock

    • Bull Market

    • Bear Market

    • Capital Gain

    • Portfolio

    • Diversification

    • Income stock

    Correct Answer
    A. Income stock
    Explanation
    Income stock refers to shares of a company that pay out dividends on a regular basis. This means that investors who own income stocks receive a portion of the company's profits in the form of dividend payments. These stocks are attractive to investors seeking a steady stream of income, as they provide a regular cash flow. Unlike growth stocks, which reinvest profits back into the company for expansion, income stocks prioritize distributing profits to shareholders. They are often considered a more conservative investment option and are commonly sought after by income-oriented investors.

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Quiz Review Timeline (Updated): Mar 22, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 22, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Sep 23, 2011
    Quiz Created by
    Ediazjr
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