Investment Market Analysis and Valuation 2

Question 1

What is a bear market?

Accepted Answer

A market experiencing a prolonged decline of 20% or more in asset prices from recent highs

Answer

A bear market is typically defined as a decline of 20% or more in a major stock index from its most recent high, often accompanied by pessimism and expectations of further decline.

Question 2

What is the dividend yield of a stock?

Accepted Answer

The annual dividend per share divided by the stock's current price, expressed as a percentage

Answer

Dividend yield measures the annual dividend payment as a percentage of the stock's current price, allowing investors to compare income generated by different dividend-paying stocks.

Question 3

What does 'market capitalization' mean?

Accepted Answer

The total market value of a company's outstanding shares, calculated as share price multiplied by shares outstanding

Answer

Market capitalization is the total dollar value of a company's outstanding shares, found by multiplying the current share price by the total number of shares outstanding.

Question 4

What is a moving average in technical analysis?

Accepted Answer

The average price of a security over a specific time period, updated continuously as new prices are added

Answer

A moving average smooths out price data over a set period (such as 50 or 200 days) to help identify the direction of a trend by filtering out short-term price fluctuations.

Question 5

What is intrinsic value in stock analysis?

Accepted Answer

The perceived true or fundamental value of a stock based on analysis of financial data, independent of market price

Answer

Intrinsic value is an estimate of a stock's true worth based on fundamentals like earnings, assets, and growth prospects, which may differ significantly from its current market price.

Investment Practice Test

Investment Practice Test

Investment Market Analysis and Valuation 2