Stocks Beginner: Types of Stock

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1.
Issuers of income stock have all of the following characteristics except _______.
Choose wisely. There is only one correct answer.
Rapid expansion. Growth does occur in such companies, but it is not rapid.
2.
Investors buy value stocks because they believe the stocks will always be inexpensive.
Choose wisely. There is only one correct answer.
False. Investors buy them because they believe the stocks will rise in value soon. Value investors profit from these increases in value.
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 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.
5.
Why do growth stocks pay little by way of dividends?
Choose wisely. There is only one correct answer.
The issuing company reinvests profits to finance future growth. This is a common practice among rapidly growing companies.