All Courses > Stocks > 100
Stocks 104: Stocks: What Matters and What Doesn't

Find out what you learned

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
As a stock investor, what should you pay the most attention to?
Choose wisely. There is only one correct answer.
A company's competitive positioning. You should pay the most attention to a company's competitive positioning, which in turn will determine future profits.
2.
Investors who trade frequently will, on the average, end up with higher tax burdens to pay, as opposed to not trading often.
Choose wisely. There is only one correct answer.
True. Generally, the more you trade, the more gains you make, and the more likely they will be of the short-term variety, which are taxed at higher rates than long-term gains.
3.
The stock market tends to _______.
Choose wisely. There is only one correct answer.
Be temperamental, over-reacting to near-term news. "Mr. Market" tends to be temperamental, over-reacting to near-term news. If the market were perfectly efficient and correctly valued future cash flows at all times, stock prices would not be so volatile.
4.
What will drive the price of a company's stock the most over the long term?
Choose wisely. There is only one correct answer.
The future profits and cash flow a company can generate. The future profits a company can generate will drive the price of its stock over the long term. Over the short term, any number of factors may influence a company's stock price.
5.
In general, the more frequently you trade, _______.
Choose wisely. There is only one correct answer.
The higher your tax bill. The more frequently you trade, the higher your tax bill. This is because capital gains will be realized more often. Trading activity is actually inversely correlated to returns. The more you trade, the more commissions you will incur.
DONE