economics of the business firms - the stock market (quiz)

What does owning shares of stock mean?

You own a portion of a corporation and can vote with shareholders on company issues

What best describes a common stock?

• true ownership

• vote on company policies

• receive public dividends

What is an initial public offering?

First sale of stock to the public through investment banks

Why do corporations sell stock?

To raise money for business expansion or research and development

What is the main goal of most stock investors?

• Profit / Buy low and sell high

• Make dividend payments

What causes the price of a company’s stock to rise on the stock market?

Supply and demand

What is true about the NASDAQ?

Uses electronic network for over the counter trading

What does the Dow Jones Industrial Average (DJIA) measure?

Prices of the 30 major industrial companies in America

What is the main difference between the DJIA and the S&P 500?

S&P tracks more companies and a broader range of industries

What is speculation in the stock market?

Buying and selling of stocks to profit from short-term price changes

Why was the Securities and Exchange Commission (SEC) created in 1934?

To prevent future crashes