Podcast
Questions and Answers
What is the primary goal when buying a stock?
What is the primary goal when buying a stock?
- To receive a dividend payment immediately
- To own shares with the expectation of price appreciation (correct)
- To sell borrowed shares at a loss
- To ensure a fixed return on investment
Which situation typically prompts a trader to sell a stock?
Which situation typically prompts a trader to sell a stock?
- When the trader believes the stock is undervalued
- To increase market volatility
- To gain more shares of the same stock
- When the stock has reached a perceived peak (correct)
What does engaging in a short sale involve?
What does engaging in a short sale involve?
- Investing only in dividend-paying stocks
- Selling borrowed shares with the intention of repurchasing later (correct)
- Holding shares until they double in price
- Buying shares instead of selling them
What factors should be monitored to make better trading decisions?
What factors should be monitored to make better trading decisions?
What does selling a stock signify in trading?
What does selling a stock signify in trading?
Flashcards
Buying Stock
Buying Stock
Purchasing shares of a company with the hope of selling them later at a higher price for profit.
Selling Stock
Selling Stock
Selling shares of a company to either realize gains or minimize losses, or potentially short-selling with the intention of rebuying at a lower price.
Short-selling
Short-selling
The act of selling borrowed shares of a company, with the intention of buying them back at a lower price later.
Selling Short
Selling Short
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When to Buy?
When to Buy?
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Study Notes
Stock Trading Basics
- Buying stocks involves purchasing company shares, anticipating price increase for later profit.
- Selling stocks involves either closing a position (realizing gains or cutting losses) or short selling (selling borrowed shares to buy back later at a lower price).
- Buying signifies entering ownership, selling signifies exiting ownership or speculating against the stock.
Stock Timing Decisions
- Buying is often considered when a stock is undervalued or expected to grow.
- Selling occurs when a stock is deemed peaked or to limit potential losses.
- Researching market trends, company performance, and economic indicators improves decision making.
- Stock trading carries inherent risk.
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