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.
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.
3.
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.
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.
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.