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Stocks Beginner: Types of Stock

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1.
Which of the following stocks performs well during a market downturn?
Choose wisely. There is only one correct answer.
Defensive. During downturns, some companies do well because their services are needed at all phases of the business cycle.
2.
Investors buy value stocks because they believe the stocks will always be inexpensive.
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False. Investors buy them because they believe the stocks will rise in value soon. Value investors profit from these increases in value.
3.
Growth stocks pay little in the way of dividends because they earn very little income.
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False. The dividend scarcity is due to the practice of the issuing company reinvesting profits to finance future growth.
4.
Issuers of income stock have all of the following characteristics except _______.
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Rapid expansion. Growth does occur in such companies, but it is not rapid.
5.
Blue chip stocks are not likely to be _______.
Choose wisely. There is only one correct answer.
Volatile. Blue chip stocks are established and in demand.