Flashcards Section 1 ,2 & 3

What is the main goal of this course?

The course aims to provide a comprehensive understanding of stocks and other financial topics, helping learners build a strong financial foundation.

Why is joining a financial education community beneficial?

Being part of a financial education community provides support, shared learning experiences, and access to valuable resources that enhance financial literacy and investment success.

What tools are available in this course to enhance learning?

The course includes engaging content, quizzes, infographics, and a chatbot to help learners understand and apply financial concepts effectively.

Why do stock prices fluctuate?

Stock prices fluctuate due to changes in supply and demand, company performance, economic conditions, and market speculation.

What is the importance of financial preparedness before investing?

Financial preparedness involves paying off debts, having an emergency fund, understanding basic financial principles, and setting clear investment goals before trading in the stock market.

What is the stock market?

The stock market is a platform where buyers and sellers trade shares of publicly traded companies. It allows businesses to raise capital and investors to gain ownership stakes in companies.

What role does the stock market play in the economy?

The stock market enables companies to raise capital for growth, while investors benefit from potential returns, contributing to economic development and wealth generation.

What are the benefits of investing in stocks?

Stocks offer potential for capital appreciation, dividend income, and portfolio diversification, helping investors grow their wealth over time.

What are the risks of investing in stocks?

Stock investments come with risks like market volatility, economic downturns, and company-specific challenges that may lead to financial losses.

Who are retail investors?

Retail investors are individuals who buy and sell stocks for personal investment. They have flexibility in decision-making but may lack access to institutional-level research and tools.

What are institutional investors?

Institutional investors manage large pools of money for organizations, pension funds, and mutual funds, using professional expertise and advanced financial tools to make investment decisions.

What is high-frequency trading (HFT)?

HFT involves using advanced algorithms to execute trades at extremely high speeds, taking advantage of market inefficiencies for quick profits.

What is the difference between stock exchanges and OTC markets?

Stock exchanges are formal platforms like NYSE and NASDAQ where companies must meet listing requirements, while OTC markets involve decentralized trading with fewer regulations.

What are the benefits of being listed on a stock exchange?

Listed companies gain visibility, access to more investors, and increased capital-raising opportunities, but they also face higher regulatory costs and compliance requirements.

What does buying a stock mean?

Buying a stock means purchasing fractional ownership in a company, entitling shareholders to a portion of its assets, earnings, and voting rights.

How do investors make money from stocks?

Investors make money through capital appreciation (increase in stock price) and dividends (company payouts to shareholders). Some stocks offer both.

What factors influence the price of a stock?

Stock prices are driven by supply and demand, financial performance, economic conditions, investor sentiment, and broader market trends.

What happens when demand for a stock increases?

When demand rises, stock prices tend to increase as more investors want to buy, leading to higher valuations.

Why do stock prices drop?

Stock prices drop when supply exceeds demand due to factors like poor financial performance, economic downturns, or negative news affecting investor confidence.

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