1. Stock Market
Practice Problems

2. Vocabulary stock Definition
A stock is a certificate of ownership that can be purchased, sold, and traded.
dividend
A dividend is a portion of corporation’s earnings that is distributed to its shareholders.
broker
A broker is an individual that facilitates the purchase or sale of assets associated with investments.

3. Reading the Stock Quotations
Handout Number One
Review Worksheet and Answers

4. Question One
Say you own 5,715 shares of Sanden Research Labs, each of which pays a yearly dividend of $ How much do you receive in dividends every year? a.
$83,781.90 b.
$81,729.50 c.
$75,865.50 d.
$93,954.60
Answer: Letter A

5. Question Two
Geoffrey’s portfolio includes 4,462 shares of United Rotators, which earns him $43, annually. What is the yearly dividend on each share of United Rotators? a.
$9.61 b.
$8.95 c.
$10.19 d.
$9.81
Answer: Letter D

6. Question 3
Prince Waste Collection pays a yearly dividend of $14.94 per share of stock. If Prince Waste Collection pays Kathy $46, in dividends every year, how many shares does Kathy own? a.
2,978 b.
3,141 c.
3,443 d.
2,934
Answer Letter B

7. Question Four
June’s portfolio includes 177 shares of Parchar Special Effects, 213 shares of Giaco Household Goods, and 152 shares of Raxin Accounting. If Parchar Special Effects pays a yearly dividend of $8.21 per share, Giaco Household Goods pays $6.97 per share, and Raxin Accounting pays $11.44 per share, how much does June earn in dividends per year? a.
$4,449.82 b.
$4,676.66 c.
$3,777.74 d.
$6,200.48
Answer: Letter B

8. Question 5
Liz owns stock in Nar Heating/Cooling and Cilla Shipping. She owns 120 more shares of Cilla Shipping than she does of Nar Heating/Cooling. Nar Heating/Cooling pays a yearly dividend of $5.78 per share, and Cilla Shipping pays a yearly dividend of $4.15 per share. If Liz receives $ in dividends annually, how many shares of Nar Heating/Cooling does she own? a.
196 shares b.
114 shares c.
348 shares d.
282 shares
Answer: letter B

9. The short and the long of it…
Long Position- strategy to buy and hold to realize a gain over a period of time, price of stock increases and investor sells to “take a profit” (bull market)
Short Position- strategy used when expectations are that a stock price will decline. Investor is expecting the price of the stock to fall to realize a gain (bear market)

10. Example
Car – to 50
Stock

11. Closure What happens when you “short a stock” and the price goes up.
The owner of the stock will ask for the stock back and you are going to have to come up with the money to make up the difference.