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Stock Market Test
40 Questions
1. What are the two general types of stocks? CHOOSE TWO
A Deferred B Common
C Preferred D Certificate of Deposit

2. An index that measures the average health of 30 large, publicly owned, US companies is called the...?
A Guess Again Index B The S&P 500
C Bob Johnson's Index D Dow Jones Industrial Average (DJIA)

3. Which of the following best describes diversification?
A putting all your investments in two
financial investments
B reducing risk by investing in different
types of securities
C investing in different types of bonds
D Avoiding risk by investing in blue-chip

4. Not all companies offer dividends.
A false B true

5. The two major stock exchanges are
A Dow Jones Industrial Average & S&P 500 B NASDAQ & DJIA

What is a stock market crash?
A when one or two stocks drop signifiicantly B rapid but anticipated drop in stock prices
C rapid and unanticipated drop in stock
D slow decrease in stock prices over a year

7. The DOW Jones Industrial Average is an index of 30 American companies. Why is the DOW Jones Industrial Average important?
A It provides a snapshot of how the stock
market and the US economy is doing.
B It tells Americans how many jobs are out
C It tells Americans how much debt the
country is in.
D It helps economists predict when a stock
market crash will happen.

8. What is the stock market?
A type of bank that gives out loans to new
A special type of grocery store that sells
A type of farmers market where people
buy and sell food.
A place where parts of businesses are
bought and sold.

9. The group of stocks that you own is called a
A portfolio B commission
C dividend

A sum of money paid to shareholders of a corporation out of its
A index B invest
C dividend D profit

11. If a business wants to raise capital but not create debt, it can
A float a bond issue B issue common stock
C borrow money from a commercial bank D borrow money from the government

12. IPO stands for
A Itemized Public Organization B Initial Public Offering
C Imminent Profitable Option D Initial Primary Offering

13. The Dow Jones Industrial Average is an example of
A A Stock Market Performance Index B a Stock Market Exchange
C a Brokerage Firm D a Mutual Fund

14. A time when stock prices are RISING is called
A bull market B transaction
C bear market

15. The NYSE and NASDAQ are forms of ________________ where people trade stocks.
A businesses B mutual funds
C stock exchanges D large shopping centers

A group of large companies that stockbrokers look at to gauge how
the market is doing as a whole.
A industry B shareholder
C portfolio D index

17. The current price of one share of stock is called
A Ask B Bid
C Last D Open

18. Which of the following is NOT a stock index?

19. When the market takes a downhill turn and prices are decreasing
A Bear B No such term
C Bull D Bronco

20. Can interest rates affect the stock market?

21. A corporation “goes public” when it ___________________.
A has a big party and invites all its investors. B gives out its first dividend.
C becomes an entity. D first issues stock to investors to buy.

22. As long as you are 18 years old and have some money, you can invest it in the stock market.
A True B False

23. The name for a part of a business that is bought and sold on the stock market is:
A Share B Part
C Stocker D Marker

24. Why would a company need to issue stock?
A To raise money. B To show customers that it's successful.
C To stop the government from regulating it. D To increase its' customer base.

25. How do you make money buying stocks?
You sell it for a higher price than you
bought it for.
If you hold on to it as long as possible it
will gain in value.
The DOW ratings determine which stocks
will pay out.

26. What does NASDAQ stand for?
National Application of Securities Dealers
Automatic Quotations
Nominal Association of Securities Dealers
Automatic Quotations
New Association of Securities Dealers
Automatic Quotations
National Association of Securities Dealers
Automatic Quotations

27. People who own stocks are guaranteed a return on the money they have invested in stocks.

28. What is the name of the most well know stock exchange?
A The Louvre B The New York Stock Exchange (NYSE)
C The Boston Stock Exchange D The Imperial Stock Exchange

The possibility of losing some or all of a particiular investment.
A profit B risk
C industry D index

A stock market crash can be brought on by
A economic crisis B major catastrophic event
C collapse of a stock bubble D all of these

31. What is a bond?
an investment that cannot be traded
lending money to a company for a fixed
interest payment
C a building on wall street D a share of ownership in a company

32. Do more or fewer people invest in the stock market when interest rates go up?

33. A company owned by families or a small number of investors and do not issue stock to the
A portfolio B industry
C private company D public company

34. Not having all your stocks in one industry (airlines, food, etc) is called
A Diversifying B Directing
C Trading D Portfolio

35. Explain what an IPO is.
It's when a company goes 'public' and
offers its stock for sale for the first time.
It's when a company buys back a lot of its
stock to gain control of the company.
It's when another company buys a lot of
stock in another company to take it over.

36. A Neon Oil Corporation tanker spilled oil in the ocean around Australia. As a result of this
accident, the share price of this stock is likely to
not be affected and remain about the
C fluctuate D decrease

37. How does a bear stock market impact the U.S. economy?
Consumers will purchase more vacation
Americans will invest more money in the
stock market.
Americans will invest less money in the
stock market.
Consumers will purchase more large

38. When you own stock in a company,
A you are part owner. B you are the CEO.
you are entitled to a dividend.
you are involved in day to day

39. The number of shares that have been traded in the current or most recent trading session is
A Previous Close B Dividend

40. The highest price the stock has traded over the past year is called
Market Cap
Market Cap
Day High
C 52 Week High D Beta

Answer Key
1. 2. d 3. b 4. b
5. c 6. c 7. a 8. d
9. a 10. c 11. b 12. b
13. a 14. a 15. c 16. d
17. c 18. a 19. a 20. a
21. d 22. a 23. a 24. a
25. a 26. d 27. b 28. b
29. b 30. d 31. b 32. a
33. c 34. a 35. a 36. d
37. c 38. a 39. d 40. c

Introduction to the Stock Market

48 Questions


1. EPS x (times) Shares Outstanding = a company's total ________
A Profits B Sales
C Dividends D Market Capitalization

2. In a 2-for-1 stock split, the price of the stock is
A doubles B falling
C cut in half D not affected

3. What is a bond?
A a building on wall street
B lending money to a company for a fixed interest payment
C an investment that cannot be traded
D a share of ownership in a company

4. A dividend is a portion of the company's profits paid to its shareholders.
A True B False

5. What is an IPO?
A when a company first sells stock to the public
B a new Apple product
C when the company's shareholders have a meeting
D when the government creates shares on the stock exchange

6. For a company to exist for the long term what must it continue to do?
A Provide for customers B Produce a product or a service
C Make a profit D Help the economy to grow

7. interest calculated at regular intervals solely on principal
A Simple Interest B Compound Interest
8. What is a mutual fund?
A a fund that follows an index like a stock B a type of high interest bank account
C a pool of securities you can buy as an investment
D a fund used by companies to raise capital

9. The last closing price of a stock divided by the last 12 months earning per share is
A Dividend Yield B Debt to Asset Ratio
C Earnings /Share D P/E

10. The price paid for the first share of stock in a trading session is
A Last B Bid
C Open D Change

11. Mutual funds are:
A usually less risky than investing in a money market
B an investment that holds a wide range of different investment instruments, providing diversification
C guaranteed to increase in value
D an investment portfolio managed by the investor

A $13.31 B $1.24
C $1.95 D $0.90

13. Which of the following is your right as a shareholder of common stock?
A the right to dividends if paid B the right to hire officers of the corporation

14. What are 2 ways you can make money in stock market
A Use all of your money to buy stocks
B Do research and invest in stocks that do well
C be aware somebody will make you do that D Buy what everyone else is buying

15. If a company issues dividends, preferred stock holders are paid the dividends first.
A True B False

16. Typically, stocks are a good invest for the average person over a long period of time.
A True B False

17. A _____ is a list of the securities, including stocks, mutual funds, and cash that you own.
A folder B notebook
C collection D Portfolio

18. What does EPS stand for?
A Earnings People's Share B Earnings Per Share
C Earnings Price Share D Earnings Profit Share

19. In short selling, you first ___ the stock.
A buy B split
C hold D sell

20. _____ stock is the name applied to the stock of large, well-known, well-established companies
with good reputations.
A Dip and chip B Paint chip
C Chocolate chip D Blue chip

21. What is a another word for earnings?
A Dividends B Profits
C Stocks D Shares

22. What is Capitol gain?
A The gain of money a Capitol city gets B Short selling
C The amount a company gets that year D The increase in the value of the stock

23. What is the goal of an investor?
A Buy low and sell high B Keep a stock for their entire life
C Open a new investment account D Help a company get bigger

24. What is the Bull market
A When the stock market trends downward B This is when the bull owns the market
C The place where you buy bulls for bull fights
D When the stock market trends upward

25. Publicly held corporations
A are listed first on the New York Stock Exchange
B guarantee a positive return to investors
C are not-for-profit organizations
D have shares of stock that are held by public (outside) investors

26. Why should an investor diversify?
A promises growth in your investments B lets customers spend more
C gives a company more options D spreads the risk taken by a shareholder

27. Dividends
A The money a company makes each year
B The part of the corporations profit paid to stockholders
C How much money the owner makes
D The answer could be any one of these have fun

28. What is the primary reason why companies issue stocks?
A To ensure a stable market B To raise extra money for the company
C To guarantee the success of a new product
D To provide for their employee's retirements

A $ 0.62 B $ 2.50
C $ 1.95 D $ 0.55

30. What is Leverage?
A The average growth of a stock each year B A rise in the general level of prices
C Prying open a door with a crowbar
D The use of borrowed money to buy securities

31. What is a Bear Market?
A when the stock market trends upward B answer the question see if you are correct
C When the stock market trends Downward D A place where you sell bears downtown

32. Yield of the stock based on last price. Figured by dividing the yearly dividend by the last price.
A Change B Dividend
C Dividend Yield D Previous Close

33. What is Common Stock
A Stock that the common people buy B leaves of corn that look alike
C variable dividend but no voting rights
D A type of stock that pays a variable dividend. Gives holder voting rights

34. What are preferred stocks
A Stocks that most people prefer
B A type of stock that pays a fixed dividend and carries no voting rights
C Stocks that make millions

35. People who invest in the stock market will automatically make money.
A False B True

36. What are stock shares?
A Certificate showing a company's income
B Certificate showing a company's retirement system
C Certificate showing a company's dividends
D Certificate showing partial ownership of a company

37. Shares Outstanding x Last Trade = _________
A Sales B Profits
C Market Capitalization D Earnings

38. Common stock is more prone to rapid changes; therefore, there is more risk associated.
A True B False

39. Publicly held corporations
A are not-for-profit organizations
B have shares of stock that are held by public (outside) investors
C are listed first on the New York Stock Exchange
D guarantee a positive return to investors

40. What does a stock represent?
A a contract for a company's goods and services
B a percentage of ownership of a company
C a loan you make to a company D stocks are just tools used to make money

41. What is NASDAQ?
A Certificates certifying you own a stock
B What stocks are called when they are bought and sold
C The biggest stock market in the world D An automated system for trading stocks

42. How do people make money investing in bonds?
A Selling a bond for more than you paid B Give them $100
C Take the money from the bond people D James Bond

43. The NYSE is an exchange where daily auctions (the biding of stocks) determine the price for thousands of different stocks.
A False B True

What is a stock?
A A person who buys things for you
B A document that represents ownership in a company
C A document that states you are worth a lot of money
D A part of a share of showing profit in a company

Does Home Depot pay a dividend? See quote behind the questions.
A Yes B No

46. If a bond is held to maturity, the investor will receive an amount stated on the bond known
as the _______.
A face value B maturation value
C printed value D ticket value

47. Stocks are a share of ownership in a company and a person who owns one or more shares of stock is called a ...
A Broker B Dividend
C Securities D Stock Holder

National Association of Securities Dealers Automated Quotations, or NASDAQ,
A uses stockbrokers in conjunction with the Dow to make trades
B uses a computer automated system for trading
C uses ebay to help make the trades D uses the same trading system as the NYSE.

Answer Key
1. a 2. c 3. b 4. a
5. a 6. c 7. a 8. c
9. d 10. c 11. b 12. d
13. a 14. b 15. a 16. a
17. d 18. b 19. d 20. d
21. b 22. d 23. a 24. d
25. d 26. d 27. b 28. b
29. b 30. d 31. c 32. c
33. d 34. b 35. a 36. d
37. c 38. a 39. b 40. b
41. d 42. a 43. b 44. b
45. a 46. a 47. d 48. b

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