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- Stock Market 101 Quiz For New Investors
Stock market 101: Quiz for new investors
1. What does it mean to “own equity” in a company?
Correct option is D - Whenever you purchase equity (also known as shares) in a company, you are essentially becoming a part-owner. It gives you a claim on its future assets and earnings in proportion to the shares you hold. Owning equity doesn’t mean you are running the company, but it means you can benefit when it performs well. This occurs in the form of increasing stock prices or dividends given out.
2. What is Sensex?
Correct option is C - Sensex, short for "Sensitive Index", is the benchmark stock market index often used as a barometer for investor sentiment and market direction. Sensex is calculated based on the free-float market capitalization of 30 of the largest and most actively traded stocks listed on the BSE across key sectors.
3. What is the purpose of a Demat account?
Correct option is B - A dematerialised or Demat account is used to store all your shares in a digital form. It offers an easy-to-access, safe, and secure storage option. Having a Demat account is a prerequisite for trading in the Indian stock markets. Without it, you cannot buy, sell, or hold shares. It essentially functions like a bank account but for financial securities.
4. From the options given below, what does market capitalisation mean?
Correct option is A - Market capitalisation or market cap refers to the total value of the company’s share in the market. To calculate it, multiply the total outstanding shares of a company with the price per share. This metric is used to help investors understand a company’s size (mid-cap, small-cap, or large-cap).
5. What does it mean when a stock price is said to be volatile?
Correct option is D - When a stock is said to be volatile, it means its price moves up or down quickly in short periods. Volatile stocks are often associated with higher returns, but they come with greater risks too. Therefore, it is always important for investors to consider their risk tolerance before investing in the stock market.
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This content is intended solely for informational purposes. The views expressed in this content are personal. Axis Bank and/or the author shall not be liable for any direct or indirect loss or liability incurred by the reader arising from reliance on the content herein. Readers are advised to consult a qualified financial advisor before making any financial decisions. Axis Bank does not endorse or guarantee the accuracy of any third-party content or links included in this content.
