1.
Dividend reinvestment plans (DRIPs) allow shareholders to:
c) Vote on a specific company issue
a) Sell their shares at a discount
b) Automatically reinvest their dividends in additional shares
d) Borrow money from the corporation
2. Which of the following is NOT a benefit of the corporate structure?
b) Easier access to capital
a) Limited liability for shareholders
d) Direct control by shareholders
c) Perpetual existence
3. Delisting refers to:
d) A significant increase in a stock's price
a) A company issuing new shares
c) A merger between two companies
b) A stock being removed from a stock exchange listing
4. Technical analysis focuses on:
c) Evaluating a company's long-term prospects
a) Studying a company's financial statements
b) Analyzing historical price charts and trading patterns
d) Ethical considerations of investment decisions
5. Early share markets involved trading of:
b) Government bonds
c) Real estate
d) Currency
a) Manufactured goods
6. Emerging markets are:
d) Markets focused solely on new technology companies
c) Countries with stagnant economic growth
a) Developed economies with established stock exchanges
b) Economies with developing financial systems and growing potential
7. Margin accounts allow investors to:
c) Guarantee a certain profit
d) Short sell stocks without any restrictions
a) Borrow money to buy more shares
b) Leverage their investment and potentially amplify returns (and losses)
8. Stock splits involve:
a) Combining shares into fewer, higher-priced units
c) Increasing the dividend payout
d) A company repurchasing its own shares
b) Dividing existing shares into a larger number of lower-priced units
9. Shareholders in a corporation:
d) All of the above
a) Have direct control over the company's operations
b) Own a portion of the company but don't manage it directly
c) Are responsible for the company's debts
10. The board of directors in a corporation is responsible for:
c) Direct communication with shareholders
a) Day-to-day operations
b) Overseeing management
d) All of the above
11. Diversification is an investment strategy that involves:
d) Following the advice of a single financial advisor
b) Spreading your investments across different asset classes
c) Focusing on high-risk, high-reward stocks
a) Putting all your eggs in one basket
12. Different classes of shares may offer:
d) Neither A nor B
a) Varying voting rights
c) Both A and B
b) Different dividend payouts
13. The over-the-counter (OTC) market allows trading of:
a) Only listed companies on major exchanges
b) Securities not listed on major exchanges
c) Government bonds exclusively
d) Only derivative instruments like options contracts
14. Globalization has led to:
d) A decline in the importance of stock exchanges
a) Isolated national stock exchanges
c) More government regulation of stock markets
b) Increased international investment opportunities
15. Corporate social responsibility (CSR) focuses on a company's:
c) Shareholder dividends
d) Short-term goals
a) Profit maximization
b) Ethical and social impact
16. Small businesses are more likely to be structured as:
c) Both A and B
b) Publicly traded corporations
a) Sole proprietorships or partnerships
d) Neither A nor B
17. Understanding the risks and rewards of investing in the stock market is crucial for:
a) Making informed investment decisions
d) Following market trends blindly
b) Short-term profits
c) Avoiding all risks
18. Stakeholders in a corporation include:
b) Shareholders, employees, customers, and the community
a) Only shareholders
c) Only the board of directors
d) Only the CEO
19. A corporation is a:
a) Sole proprietorship
b) Partnership
c) Legal entity separate from its owners
d) Non-profit organization
20. Shares in a corporation represent:
a) Ownership stake in the company
b) Guarantee of a job
c) Right to manage the company
d) All of the above
21. Short selling involves:
d) A method for guaranteed profits
c) Investing for long-term growth
b) Betting on a stock price decline
a) Borrowing and selling shares with the hope of buying back later at a lower price
22. Common types of stock exchanges include:
c) International exchanges
a) Regional exchanges
b) National exchanges
d) All of the above
23. Brokers and dealers are:
c) Employees of the stock exchange
d) Government regulators
a) Investors who buy and hold stocks
b) Intermediaries who facilitate stock trading
24. Insider trading refers to:
c) Investing in a company you work for
a) Openly available information used for investment decisions
b) Using non-public information about a company for personal gain in the stock market
25. Share markets can be volatile, meaning:
b) Prices can fluctuate significantly
c) There is a guaranteed return on investment
d) The government controls stock prices
a) Prices always trend upwards
26. Financial literacy is important for:
d) Following popular investment trends
b) Relying solely on professional financial advisors
c) Focusing only on short-term gains
a) Making informed financial decisions
27. The development of share markets contributed to:
a) Increased government control of businesses
c) Decline of small businesses
b) Growth of capitalism and investment
d) A decrease in risk for investors
28. Initial Public Offering (IPO) refers to:
c) A government program for stock investment
b) A type of stock analysis
d) A trading strategy
a) The first time a company's shares are offered to the public
29. Fundamental analysis involves:
b) Evaluating a company's financial health, management, and future prospects
a) Short-term trading strategies
c) Following market trends blindly
d) Focusing on technical indicators only
30. The term "articles of incorporation" refers to:
b) A type of stock market listing
d) A contract between a corporation and its employees
c) A financial report for shareholders
a) The legal document establishing a corporation
31. Order types in the stock market can include:
b) Market orders, limit orders, and stop orders
d) A single, fixed order type
a) Market orders only
c) Limit orders only
32. The primary function of a stock exchange is to:
b) Facilitate trading of securities
a) Set stock prices
d) Recommend investments
c) Issue new shares
33. A stock exchange is a:
c) Marketplace for buying and selling shares
a) Government agency regulating corporations
d) Department within a corporation
b) Financial institution managing individual investments
34. Market capitalization (market cap) refers to:
a) The number of outstanding shares a company has
c) The company's annual revenue
d) The company's debt level
b) The total value of a company's outstanding shares
35. Stock prices on an exchange are determined by:
c) Government intervention
d) A fixed formula
b) Supply and demand
a) Company size alone
36. Corporations are typically characterized by:
a) Limited liability
d) All of the above
c) None of above
b) Transferable ownership
37. Stock market indices like the S&P 500 track the performance of:
b) Individual companies
a) A basket of selected stocks
c) Government bonds
d) International currencies
38. The Amsterdam Stock Exchange, established in the 17th century, is known for:
c) Focusing on technology stocks
b) Being one of the first permanent stock exchanges
d) Introducing electronic trading
a) Trading stocks of the Dutch East India Company
39. A proxy vote allows a shareholder to:
a) Sell their shares directly to another investor
d) Challenge the board of directors' decisions
c) Delegate voting rights to another shareholder or board member
b) Cast a vote on company matters without attending a meeting
40. Technological advancements have impacted stock markets by:
c) Reducing the role of brokers
d) Increasing barriers to entry for investors
a) Making trading more complex
b) Facilitating electronic trading and faster transactions
