11 Questions
What type of stock earns profits above the average profits of all firms in the economy?
Growth stocks
Which stock pays higher than average dividends from a steady source of income?
Income stock
Which type of stock follows the business cycle of advances and declines in the economy?
Cyclical stock
Which stock remains stable during declines in the economy and has a history of stable earnings?
Defensive stock
What financial activity involves transactions in property such as stocks, bonds, commodities, and currency?
Investment
What is the market in which outstanding securities are bought and sold by owners other than the issuers?
Secondary market
Which measure of variability is equal to the square root of the variance?
Standard deviation
What is the estimation of future security price movements based on past price and volume movements called?
Technical analysis
What is the professional management of various securities and assets in order to meet specified investment goals called?
Portfolio management
What is the probability of not achieving the forecast return often referred to as?
Risk
Which type of stock generally attracts conservative investors?
Blue chip stock
Study Notes
Stock Types
- Superior stock: earns profits above the average profits of all firms in the economy
- Income stock: pays higher than average dividends from a steady source of income
Market and Economy
- Cyclical stock: follows the business cycle of advances and declines in the economy
- Defensive stock: remains stable during declines in the economy and has a history of stable earnings
Financial Activities
- Investing: involves transactions in property such as stocks, bonds, commodities, and currency
- Secondary market: the market in which outstanding securities are bought and sold by owners other than the issuers
Measures and Analysis
- Standard deviation: a measure of variability equal to the square root of the variance
- Technical analysis: the estimation of future security price movements based on past price and volume movements
Investment Management
- Portfolio management: the professional management of various securities and assets in order to meet specified investment goals
- Risk: the probability of not achieving the forecast return
Investor Profiles
- Conservative investors: generally attracted to defensive stocks
Test your knowledge on different types of stocks by identifying blue chip, income, growth, and cyclical stocks based on their characteristics and behaviours in the economy.
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