How Well Do You Know Stock Market Basics?

Prices, supply, and demand, oh my! The stock market spins unknowledgeable heads faster than prices and ticker symbols race through the bottom of investment television stations. Keeping in tune with trading requires an abundance of knowledge on individual stocks and the stock market as a whole. Many obtain college degrees to solidify their knowledge base, but it takes more than four or five years to master the monetary madness.

When the stock market opens, are you ready to go?

This quiz evaluates your degree of mastery over stock market basics. You will be tested on stock market forces, parts of stock quotes, price guidelines, stock types, and basic stock market terminology.

We spare you the painstaking details of profit equations, mutual funds listings, names of obscure institutional investors that average investors don’t know, or anything beyond the scope of stock market basics. In fact, you don’t have to invest in the stock market at all to play. The good news is, unlike stock trading, this quiz always yields a higher return than the risk of taking it.

Stock Market Basics

The stock market is the collective place/term for buyers and sellers of stock securities. Common stocks provide the owner a proportionate interest in a company's assets, profits, and dividends. Preferred stocks offer the perk of a constant dividend. The stock type gets its attractive name from the increased value preferred stockholders get when bankruptcy happens. Sharing is caring in a company. Owning a stake in a company is called a share. Shares are what ownership is measured in.

Those investing in stocks need to know the relationship between risk and return. All stocks carry the risk to lose money. The lower the number, the lower the risk (above one is considered risky, below one is considered relatively safe). The greater the risk, the greater the expected return. A well-diversified portfolio mitigates risk. Savy players of the stock game attempt to "time the market," meaning they predict future stock market behaviors and attempt to buy before their company's price rises and sell before it falls, whether for company or industrial reasons.

The New York Stock Exchange dominates the lucrative landscape of stock trading. Investors buying and selling trade approximately 1.46 billion daily shares of publicly traded companies. Those investing in stocks do so short-term (less than a year) and long-term. Exchange-traded funds are funds that can also be traded on exchanges like a stock.