Stock Advisor For Beginners 4

Question 1

What is an IPO?

Accepted Answer

A company's first sale of shares to the public

Answer

An Initial Public Offering is when a company first lists shares publicly.

Question 2

What does the P/E ratio compare?

Accepted Answer

A stock's price to its earnings per share

Answer

The price-to-earnings ratio relates share price to earnings per share.

Question 3

What is a capital gain?

Accepted Answer

Profit from selling a stock for more than you paid

Answer

A capital gain is the profit when an asset is sold above its purchase price.

Question 4

What is dollar-cost averaging?

Accepted Answer

Investing a fixed amount at regular intervals regardless of price

Answer

Dollar-cost averaging spreads purchases over time to reduce timing risk.

Question 5

What is volatility in the stock market?

Accepted Answer

The degree to which prices move up and down

Answer

Volatility measures the size and frequency of price fluctuations.

Stock Advisor Practice Test