19.2 stock investments Flashcards Preview

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Flashcards in 19.2 stock investments Deck (51):
1

What is an hostile takeover?

  • occurs when a company attempts to buy out another company whether they like it or not
  • is when a company goes out of business
  • helps both companies involved
  • is a meeting where IPO's are discussed

occurs when a company attempts to buy out another company whether they like it or not

2

What is the OTC market in the US called?

the NASDAQ

National Association of Security Dealers Automated Quotations

 

3

An index made up of 30 large American companies.  Usually what people are referring to when they ask, 'How did the market do today?'

  • s&p 500
  • the Dow
  • NASDAQ

the Dow

4

a person that buys shares of ownership in a corporation

stockholder

5

represents general ownership in a corporation and a right to share in its profits

common stock

6

What are 3 sources available to learn more about companies before purchasing their stock?

  1. Moody's Handbook of Common Stocks
  2. Value Line
  3. Standard and Poor's Encyclopedia of Stocks

7

Where are stocks of smaller companies traded?

the over-the-counter (OTC) market

NOT the stock exhange

8

broker that provides information about securities you may want to buy, work for brokerage houses with large research staffs

full service broker

9

What is the best known stock exchange?

the New York Stock Exchange

10

interested buyers tell ____ what they would be willing to pay for certain shares of stock

interested buyers tell brokers what they would be willing to pay for certain shares of stock

11

payments paid to stockholders if a business is profitable

dividends

12

The ____ value of a company can change rapidly.

the market value of a company can change rapidly

13

Who must a corporation pay before it can pay any dividends to stockholders?

  • has to pay bondholders first the rate of interest promised to them
  • sometimes there is not enough money left to pay dividends so no dividends are paid
  • if a corporation goes out of business then a stockholder may get very little or nothing back from their investment

14

What are 4 economic conditions that affect stock prices?

  1. inflation
  2. interest rates
  3. consumer spending
  4. employment

15

the relationship between a stock's selling price and its earnings per share

price-earnings (P/E) ratio

16

higher spending for recreation in the economy would most benefit the stock prices for companies in the ____ industry

  • electronics
  • health care
  • office equipment
  • financial services

electronics

17

fee that brokers charge for their services

commission

18

What are the 4 steps in the process for deciding stock purchases?

  1. observe and analyze economic and social trends
  2. determine industries that will be affected
  3. identify companies in those industries
  4. decide whether to buy, sell, or hold the stock of those companies

19

through ____, stockholders state the price at which they are willing to sell their shares of stocks

through brokers, stockholders state the price at which they are willing to sell their shares of stocks

20

What are two disadvantages of investing online?

  1. inexperience in investing can result in large financial loss
  2. many online investors sell or buy stocks too quickly since it can be done in just one click

21

_____ are payments of profits given to shareholders

dividends

22

a licensed specialist in the buying and selling of stocks and bonds

stockbroker

23

How do interest rates effect stock?

as the cost of money changes, company profits increase or decline

24

  • the price at which a share of stock can be bought and sold in the stock market
  • indicates the current value of a share of stock

market value

25

How does consumer spending effect stock?

the profits of companies that sell products and services to households are directly affected by buying habits, so if consumers buy less than profits will be less, if buy more than profits will be greater

26

If a business is doing well, the market value is likely to go ____

up

27

which of the following describes how a stock index works?

  • it is where securities are bought and sold
  • a computer based trading system to enhance the trading of stocks
  • a benchmark average to compare how the economy and market are doing
  • investment tools to 'predict' how the market will perform a year from now

a benchmark average to compare how the economy and market are doing

28

broker that just places orders and offers limited research and other services, charge lower commissions

discount broker

29

What are the 2 types of brokers?

full service broker

discount broker

30

What is the name of the organization that oversees the stock market?

  • Federal Reserve
  • FDIC
  • Securities and Exhange Commission

Securities and Exhange Commission

31

'McDonald's Discovers Healthy Alternative to Cooking French Fries.'  This would likely cause shares of MCD to :

  • decrease
  • increase
  • remain unchanged

increase

32

The ______ gives you an indication of whether the stock is priced high or low in relation to its earnings per share

the P/E ratio gives you an indication of whether the stock is priced high or low in relation to its earnings per share

33

What are some questions you should ask yourself if you are considering investing in a company?

  • has the company been profitable over a period of years?
  • have the company's managers made good business decisions?
  • does the company have growth potential in coming years?
  • does the company have an unusually large amounts of debt?
  • how does the company compare with others in its industry?
  • what is the yield of the stock?
  • what is the price of the stock?

34

What do online investing services offer?

  • brokers provide these online services
  • allow investors to access their account info and buy and sell securities
  • when investing online, you are acting as your own financial planner
  • transactiosn are less expensive and more convenient than using a financial planner or broker

35

a common stockholder is entitled to:

  • receive dividends before any other stockholders
  • everything the company owns and makes
  • vote to elect the corporations officers
  • lower taxes on dividends received

vote to elect the corporations officers

 

36

What time is the NYSE open every business day?

from 9:30am to 4:00pm

37

Which of these statements best describes preferred stock?

  • vote at the annual meeting of the company
  • first priority for receiving dividends
  • low priority for receiving dividends
  • no stated dividend rate

first priority for receiving dividends

38

Describe common stock.

  • represents general ownership in a corporation and a right to share in its profits
  • has no stated dividend rate
  • stockholders are invited to the annual meeting of the corporation and allowed to one vote per share of common stock owned
  • receive dividends only after preferred stockholders are paid their dividends
  • if company profits are large then common stockholders may receive higher dividends than preferred stockholders

39

a network where securities transactions occur using telephones and computers rather than on an exchange

over-the-counter (OTC) market

40

What does the US Securities and Exhange Commission (SEC) do?

  • oversee the financial markets
  • requires all companies that issue publicly traded securities to electronically file detailed reports

41

If a business has a poor record or is doing bad, the market value usually goes ____

down

42

What are the 2 most commonly reported stock indexes?

  1. the Dow Jones Industrial Average (DJIA)
  2. Standard & Poor's (S&P) 500

43

indicators of stock values that are commonly reported on websites, television, radio and in newspapers

stock index

44

Describe preferred stock.

  • has priority over common stock in payment of dividends (so gets paid before common stock)
  • dividends limited to a set rate
  • less risky than common stock
  • usually no voting rights

45

market value (or market price) can be described as:

  • yesterday's closing price
  • today's opening price
  • the dollar value of all shares of a company's stock
  • the current value of the stock

the current value of the stock

46

a business organization that accommodates the buying and selling of securities

stock exchange

47

what is an IPO?

  • the first time a company offers stock
  • a company that buys its own stock
  • a stock market index
  • Investment Per Order

the first time a company offers stock

48

How does inflation effect stock?

higher prices can result in lower spending by consumers which reduce company profits

49

has priority over common stock in the payment of dividends

preferred stock

50

What are the 2 main classes of stock issued by corporations?

  1. preferred stock
  2. common stock

51

Today, the NASDAQ includes many ____ companies

large