1. Stock Market IQ Quiz

2. Question 1 Stocks are items found in the storeroom of a grocery store.
False: A Stock is a type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.
There are two main types of stock: common and preferred. Common stock usually entitles the owner to vote at shareholders' meetings and to receive dividends. Preferred stock generally does not have voting rights, but has a higher claim on assets and earnings than the common shares. For example, owners of preferred stock receive dividends before common shareholders and have priority in the event that a company goes bankrupt and is liquidated.

3. Question 2
Businesses that issue stock make money each time the stock is bought and/or sold.
False – Companies only make money on the initial offering of stocks. After that, the profit or loss is realized by the individuals involved in the stock transaction (buyer, seller, broker)

4. Question 3
Most stocks on the stock market are sold by the United States Government.
False. In order to buy stocks, you need the assistance of a stockbroker who is licensed to purchase securities on your behalf. However, before you go looking in telephone or online directories for your nearest broker-dealer, you need to figure out what type of stockbroker is right for you.

5. Question 4
If the stock market goes up 30 percent one year, it will fall by 30 percent in the next year.
False. Stocks go up and down based on the performance of the company

6. Question 5
Any stock that goes up in price must eventually come back down.
False. In theory, a stock can certainly continue to rise indefinitely. History has proven that all stocks fluctuate depending on the company’s popularity to the general public.

7. Question 6 Bears, Bulls, and Pigs are found in the stock market. True:
Bear Market: A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining. As investors anticipate losses in a bear market and selling continues, pessimism only grows. Although figures can vary, for many, a downturn of 20\% or more in multiple broad market indexes, such as the Dow Jones Industrial Average (DJIA) or Standard & Poor's 500 Index (S&P 500), over at least a two-month period, is considered an entry into a bear market.
Bull Market: A financial market of a group of securities in which prices are rising or are expected to rise. The term "bull market" is most often used to refer to the stock market, but can be applied to anything that is traded, such as bonds, currencies and commodities.
Pig: An investor who is often seen as greedy, having forgotten his or her original investment strategy to focus on securing unrealistic future gains. After experiencing a gain, these investors often have very high expectations about the future prospects of the investment and, therefore, do not sell their position to realize the gain. Like a pig in the farmyard that overindulges in feed, this type of investor will hold onto an investment even after a substantial movement in the hope that the investment will provide even greater gains.
For example, suppose Joe invests in XYZ Corp. because the stock is undervalued. After the stock doubles its price in two months, Joe holds on to the whole investment, hoping that it will double again in the next two months, instead of selling a portion of the investment to realize a gain. Joe is, therefore, a piggish investor because he is greedy for huge gains and he allows his greed to supersede his original value investment strategy.

8. Question 7
Stock prices are set by the Securities and Exchange Commission, a regulatory agency of the U.S. government.
False: In simple terms, the stock price of a company is calculated when a company goes public, an event called an initial public offering. This is when a company will pay an investment bank a lot of money to use very complex formulas and valuation techniques to derive a company's value by determining how many shares will be offered to the public and at what price. For example, a company whose value is estimated at $100 million may want to issue 10 million shares at $10 per share or they may want to issue 20 million at $5 a share.

9. Question 8
Stock markets are open on business days around the clock, around the world.
False: NYSE and NASDAQ both are open from 9:30am to 4:00pm, Eastern time.

10. Question 9
Sometimes companies buy their own stocks on the stock market.
True: This is called a Stock repurchase (or share buyback) is the reacquisition by a company of its own stock. In some countries, including the US and the UK, a corporation can repurchase its own stock by distributing cash to existing shareholders in exchange for a fraction of the company's outstanding equity; that is, cash is exchanged for a reduction in the number of shares outstanding.[1][2] The company either retires the repurchased shares or keeps them as treasury stock, available for re-issuance.

11. Question 10
It is hard to buy good stock today because all the good ones have already been purchased.
False: Stocks are constantly being bought and sold on the stock market. The Stocks are usually always available for a price, whether it is high or low depends on how much someone who owns it is willing to sell it for.

12. Question 11 Buying stocks is a sure way to make money.
False: Buying stocks often is a way that people LOSE money. Investing in the stock market is sometimes risky.

13. Question 12
Corporations sell new issues of stock on the New York Stock Exchange.
True: Both the NYSE and NASDAQ sell new issues.

14. Question 13
“Insider” stock trading means that trading stocks takes place inside a building.
False: The buying or selling of a security by someone who has access to material, nonpublic information about the security.
Insider trading can be illegal or legal depending on when the insider makes the trade: it is illegal when the material information is still nonpublic--trading while having special knowledge is unfair to other investors who don't have access to such knowledge. Illegal insider trading therefore includes tipping others when you have any sort of nonpublic information. Directors are not the only ones who have the potential to be convicted of insider trading. People such as brokers and even family members can be guilty.
Insider trading is legal once the material information has been made public, at which time the insider has no direct advantage over other investors. The SEC, however, still requires all insiders to report all their transactions. So, as insiders have an insight into the workings of their company, it may be wise for an investor to look at these reports to see how insiders are legally trading their stock.

15. Question 14 People can buy stocks on the Internet.
True: Technically, you need to have an account with an online stock brokerage firm, but yes, you can do much of your stock investing right on the internet.

16. Question 15
When the stock market goes up, it causes the economy to grow.
True and False: There is currently a huge debate as to what affects the other – like the chicken or the egg. There does appear to be a direct positive correlation between the two, but the debate is still open as to whether the market caused the economy to grow or the growing economy affects the stock market in the same way.