Choose wisely. There is only one correct answer to each question.
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1.
If a news event leads to a drop in a stock's price, what should you as an investor do in response?
See whether the event is relevant to your stocks. Sometimes the markets' reactions to the headlines are warranted, and sometimes they are not. But are they relevant to your stocks?
2.
Which of the following stock indexes is price-weighted?
Dow Jones Industrial Average. The Dow is price-weighted. The Nasdaq Composite Index and the SP 500 Index are market-cap-weighted.
3.
When astute investors see a particular news event influencing a stock's price to drop even though the company's fundamentals are still sound, what are they likely to consider doing?
Buying the stock. In this case, if the fundamentals are strong, this is a classic buying opportunity.
4.
What is one reason to be wary of a lawsuit against a company whose stock you are considering buying?
Lawsuits tend to attract other lawsuits. This ultimately suggests not only monetary losses but perhaps also a waning interest in the product.
5.
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.
