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1.
What is an "earnings surprise"?
When a company's actual earnings results differ from what Wall Street's analysts expect. The actual earnings may be higher or lower. As a result, the company's stock price may rise or fall.
2.
The divisor used to calculate the Dow Jones Industrial Average _______.
Has been shrinking steadily in recent years. The divisor used to calculate the Dow has been shrinking steadily in recent years to account for arbitrary events such as stock splits and changes in the composition of the roster.
3.
What response should a stock investor have regarding changes in regulation on a company?
An investor should pay attention to such changes. Sometimes, regulations greatly increase the costs of doing business or diminish a company's prospects.
4.
If a company's actual earnings results are different from what analysts expect, this is known as _______.
An earnings surprise. An "earnings surprise" happens when a company's actual earnings results are different from what Wall Street's analysts expect. A stock split is when a company issues more shares to its shareholders, and the stock price falls to account for the ownership dilution.
5.
Hearing a negative event about a company that drives its stock price down but does not affect its fundamentals can be a welcome thing to many investors.
True. If the fundamentals are strong, then this could be a buying opportunity.
