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CPI Week 1 Flashcards | StudBud
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CPI Week 1
CPI Week 1
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1
What is compounding in stock investing?
Earning returns based on market rumors.
Earning returns on both your original money and the profits you reinvest.
Reinvesting dividends to earn loyalty rewards.
Continuously adding new funds to your account.
2
What is a blue-chip stock?
A stock that is considered risky but potentially high-reward.
A stock that guarantees fixed returns.
A large, reliable company with steady earnings and dividends.
A stock issued only by technology companies.
3
Why do stock prices go up and down?
Stock prices are influenced solely by quarterly earnings reports.
Prices change based on supply, demand, and news about the company or market
They change based on the number of shares a company has.
They are adjusted daily by the stock exchange.
4
What happens to the stock price in a stock split?
The price of each share goes down, but you own more shares.
The company issues new stock certificates to replace the old ones.
The price is reduced by half, but future dividends double.
Investors must choose which portion of their stock they want to keep.
5
What does the P/E ratio tell you?
The company’s performance compared to the industry average.
The percentage of earnings reinvested back into the business.
How much people are willing to pay for each dollar of a company’s earnings
How much a company pays its executives.
6
What is market capitalization?
The total value of all a company’s shares.
The maximum amount a company can raise in a stock offering.
The combined value of all shares plus debt obligations.
The number of investors a company is allowed to have.
7
What does dollar-cost averaging help with?
Ensuring investments are made only during periods of market growth.
Timing the market to get the best price for every purchase.
Reducing the impact of market fluctuations by investing regularly.
It reduces risk by investing the same amount regularly, regardless of price
8
What’s the difference between growth stocks and value stocks?
Growth stocks increase in size, while value stocks stay stable.
Growth stocks rise fast; value stocks are typically more mature
Growth stocks are for startups, value stocks are for older companies.
Growth stocks are bought for price gains, value stocks mainly for dividends
9
If you invested $15 a day for 40 years with the average return of the market, how much would your investment be worth?
513K
$894K
$1.25M
$3.87M
10
What does it mean when a company "goes public"?
A company offers its shares to the public for the first time.
The company distributes free shares to all citizens.
The company is required to publish its financials in newspapers.
The company changes its name to "Public Inc."
11
What is an index fund?
A fund that mimics investment strategies used by hedge funds.
A fund that invests in companies selected by financial analysts.
A fund that invests in the top 10 companies of the year.
A fund that matches the performance of a market index like the S&P 500.
