Stock Basics
What is a stock?
A small piece of ownership in a company.
What is the system where stocks are bought and sold called?
The stock market.
What does it mean to “buy” a stock?
To purchase ownership in a company.
If more people want to buy a stock than sell it, will the price usually go up or down?
Up
What is a “sector” in the stock market?
A group of companies that operate in the same part of the economy.
What is a share?
One unit of ownership in a company’s stock.
What’s the name of the building on Wall Street where many stocks are traded?
The New York Stock Exchange (NYSE).
What does it mean to “sell” a stock?
To give up ownership in exchange for money.
What’s one thing that can make a stock price go up?
Good company earnings, new product success, or positive news.
Give one example of a stock market sector.
Technology, healthcare, energy, finance, consumer goods, etc.
What is a person called who owns stock in a company?
A shareholder (or stockholder).
What do we call a list that tracks how a group of companies’ stocks are doing?
A stock index.
What’s one reason an investor might sell a stock?
To make a profit, cut losses, or use the money for something else.
What’s one thing that can make a stock price go down?
Poor earnings, bad news, or economic problems.
What sector might a company like Apple belong to?
Technology.
If a stock is like a pizza, what is a share like?
A slice of the pizza.
Give one example of a U.S. stock index.
The S&P 500, the Dow Jones Industrial Average, or the Nasdaq Composite.
What is the difference between a publicly traded and a private company?
Anyone can buy stock in a publicly traded company.
What is one way you can see a stock’s price history over time?
By looking at a stock chart or graph.
If oil prices rise, which sector might see its stocks go up?
Energy.
Why might a company sell stock to the public?
To raise money (capital) to grow or expand the business.
What’s one difference between a stock exchange and a stock index?
A stock exchange is a place where stocks are traded; a stock index is a list that measures the performance of certain stocks.
What’s the term for the very first time a company sells stock to the public?
An Initial Public Offering (IPO).
What does it mean if a stock is “volatile”?
Its price changes a lot in a short period of time.
What’s one reason it’s important to know which sector a company is in before investing?
Sectors can be affected differently by economic events; it helps manage risk and diversify investments.