The Basics
What does it mean when you buy stock in a company?
You own a small part of the company
Why do investors need a brokerage firm?
To help them buy and sell stocks.
Stocks of well-established, financially stable companies with strong reputations
blue-chip stock
What number do you divide by the interest rate when using the rule of 72?
72
What is the stock market?
A place where stocks are bought and sold
What is a portfolio?
A collection of investments owned by an individual or institution
Which type of stock usually pays regular dividends?
A stock portfolio earns an average return of 12% per year. About how long until it doubles?
Saving is best defined as
Putting money into accounts or assests with the goal of long-term growth
Why might an investor want to own more than one stock in their portfolio?
To reduce risk by spreading investments across different companies
Stocks of companies that provide essential goods and services and remain stable in downturns
Defensive stocks
If an investment doubles in 9 years, about what interest rate is it earning?
72/9= 8%
Why do companies sell stock in the first place?
To raise money for growth, expansion, or operations
What is a limit order?
An order to buy or sell a stock at a specific price
Which type of stock would likely be MOST affected by an economic recession
Cyclical
Investment A: 4% return
Investment B: 8% return
Investment B: 72/8= 9 years vs. 72/4= 18 years