Stocks Beginner: Types of Stock

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1.
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.
2.
Why do growth stocks pay little by way of dividends?
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The issuing company reinvests profits to finance future growth. This is a common practice among rapidly growing companies.
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.
The stock of which of the following companies probably does not qualify as income stock?
Choose wisely. There is only one correct answer.
An Internet company. Internet companies are too new for their stocks to qualify as income stock.
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.