So You Think You Understand Stocks? Quiz
1. Companies like their stocks to go up in value because:
(A) They make more money when the stock is at a higher price.
(B) Part of their profits comes from the value of their stock.
(C) The higher the price of their shares, the more likely they are to make higher profits that year.
(D) All of the above
(E) None of the above.
2. If you own a share of stock, you:
(A) Own part of the company that issued the stock
(B) Have the right to vote if another company wants to buy the company whose stock you own.
(C) Might receive a check every year that represents your share in the company’s profits.
(D) All of the above
(E) None of the above.
3. A stock is to a mutual fund as:
(A) A blind squirrel is to an acorn.
(B) One egg is to a dozen.
(C) A tree is to a forest.
(D) The pitcher is to a baseball team.
4. You are an enterprising high school student. You inherit $10,000 and want to use it to pay for your college
education starting in a little over two years. You can’t afford to lose money, but you need more for college.
Should you:
(A) Invest in the safest blue chip stocks since they will probably be worth a lot more in two years.
(B) Avoid the stock market since two years is too long of a time to invest.
(C) Avoid the stock market since two years is too short of a time to invest.
(D) Find a broker so good he promises to increase your investment by 50% in time for college.
5. Which of these has the most effect on the price of a stock:
(A) The opinion of investors about the future chances for the company.
(B) The general state of the economy.
(C) The performance of the stock market in general.
(D) How much the company earns in profits
6. You read that the Dow Jones Industrial average has gone down 500 points in the last two weeks. What
does this mean to you as an investor:
(A) It’s time to sell since prices are headed the wrong direction.
(B) Nothing, since you did not invest in Dow Jones.
(C) Stocks that are part of the average are now cheaper to buy.
(D) Such a major fall in the index indicates serious problems for the economy.
7. When you buy a share of stock, the money you pay for it is:
(A) Divided among the stock market, the broker, and the company who issued the stock.
(B) Sent directly to the company in which you invested (after subtracting brokerage fees) for whatever
business use it sees fit.
(C) Is sent to the company but how it is used is carefully regulated by the Securities and Exchange
Commission.
(D) Goes (after subtracting brokerage fees) to some other person who wants to sell the stock.
Please answer?
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