Stock Market Basics: Making Money and Dividends

Play an AI-generated podcast conversation about this lesson

What is a common way to make money in the stock market?

Only investing in companies that pay dividends

Not investing in the stock market at all

Stock price goes down and you sell

Stock price goes up and you sell (correct)

What is the purpose of dividends in the stock market?

To discourage people from investing

To provide a steady income for shareholders (correct)

To increase the stock price

To decrease the company's profits

What does it mean when it is said 'not all companies pay dividends'?

Companies that pay dividends do not care about investors

Companies that don't pay dividends are more profitable

Companies have different strategies regarding distributing profits (correct)

Companies that pay dividends are less successful

How does diversifying your investment portfolio help manage risk?

By spreading investments across different assets Signup and view all the answers

Which type of investment involves buying a small piece of ownership in a company?

Stocks Signup and view all the answers

What is the primary purpose of short quiz and pop quiz mentioned in the text?

To evaluate students' knowledge on market trends Signup and view all the answers

What does a Bull Market represent?

Stock prices are rising and the economy is doing well Signup and view all the answers

In a Bear Market, what is the general sentiment about the economy?

The economy is bad and a recession is looming Signup and view all the answers

What does '52-Week Hi and Low' refer to in a stock table?

The highest and lowest prices at which a stock has traded over the past year Signup and view all the answers

What does 'Price/Earnings Ratio' indicate in finance?

The current stock price divided by earnings per share for the last four quarters Signup and view all the answers

What does 'Net Change' represent in a stock table?

The net change from the previous day's closing price Signup and view all the answers

What aspect of a stock does 'Dividend Per Share' highlight?

The annual dividend payment per share Signup and view all the answers

What is the main difference between Common Stock and Preferred Stock?

Common Stock offers one vote per share, while Preferred Stock may not include voting rights. Signup and view all the answers

What is the advantage of holding Blue Chip Stocks in a portfolio?

They are less volatile and generally considered stable investments. Signup and view all the answers

In the context of stocks, what does it mean to be a 'residual owner'?

The owner has the last claim on the company's assets and earnings. Signup and view all the answers

What distinguishes Primary Markets from Secondary Markets in the context of the stock market?

Primary Markets involve creating new stocks, while Secondary Markets involve trading existing stocks. Signup and view all the answers

What is the main distinction between Short-term and Long-term investments in the stock market?

Short-term investments last up to 2 months, while Long-term investments last more than 9 months. Signup and view all the answers

Why do companies not directly participate in the buying and selling of their own stock?

To prevent market manipulation and ensure fair trading practices. Signup and view all the answers