WHAT DO YOU KNOW ABOUT STOCK MARKETS? When people are financially literate, they have the knowledge and information necessary to make sound financial decisions. The 2020 TIAA Institute-Global Financial Literacy Excellence Center Personal Finance Index reported that more than half of U.S. adults understood borrowing, saving, earning and consuming, while less than half had a clear understanding of investing and risk.
One common type of investment is stock. The stock market is where stock is issued, purchased and sold. Stockholders have an ownership interest in a company. Test your knowledge of stocks by taking this brief quiz.
1. What is a characteristic of a bull market?
a. Stock prices rise
b. Stock prices fall
c. Investors are pessimistic
d. None of the above
2. A stockholder is ______ who/that owns at least one share of a corporation’s stock.
a. A person
b. A company
c. An institution
d. All of the above
3. A person may be able to invest in a company by purchasing:
a. Common stock
b. Preferred stock
c. Corporate bonds
d. All of the above
4. What term is used to describe a stock market decline of 10 percent?
a. A dip
b. A correction
c. A haircut
d. A bath
5. List the following from highest risk to lowest risk:
a. Emerging market stock
b. 10-year Treasury bond
c. 30-year investment-grade bond
d. Savings account
e. U.S. blue chip stock
6. Which of the following is a reason that a company might issue stock?
a. Raise capital
b. Transfer ownership
c. Reduce debt
d. All of the above
If you have any questions about the answers, let us know.
Weekly Focus – Think About It
“Keep your face always toward the sunshine - and shadows will fall behind you.”
— Walt Whitman, poet
Answers: (1) A; (2) D; (3) D; (4) B; (5) A, E, C, B, D; (6) D
Best regards,
Lee Barczak
President
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate. *Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features. * The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index. * The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. * The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index. * The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market. * Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce. * The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998. * The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones. * Yahoo! Finance is the source for any reference to the performance of an index between two specific periods. * Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. * Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. * Past performance does not guarantee future results. Investing involves risk, including loss of principal. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.