Stocks Beginner: Types of Stock

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1.
Income stocks would be most popular with _______.
Choose wisely. There is only one correct answer.
Someone who wanted to meet current living expenses. The other two individuals would most likely choose a growth investment to meet their needs.
2.
A new company that habitually reinvests its dividends qualifies as a blue chip company.
Choose wisely. There is only one correct answer.
False. Blue chip companies are both established and able to pay dividends consistently.
3.
An investor who can withstand a stock whose value rises and falls with the economy may want to choose a _______ stock.
Choose wisely. There is only one correct answer.
Cyclical. Cyclical stocks move up or down with the business cycle.
4.
A value stock is a stock that ________.
Choose wisely. There is only one correct answer.
Is currently valued for less than it is really worth. In the case of value stocks, market prices do not reflect the earnings and growth potential of the issuing company.
5.
Growth stocks pay little in the way of dividends because they earn very little income.
Choose wisely. There is only one correct answer.
False. The dividend scarcity is due to the practice of the issuing company reinvesting profits to finance future growth.