Word bank: concentrated · expectations · outstanding · ownership · sometimes

1. Stock = in a company.
2. Returns come from price changes and () dividends.
3. Prices move on , not just results.
4. Market cap = share price × shares .
5. One company is a risk.

1. 1. What do you own when you buy a share of stock?

   • A. A loan to the company that pays fixed interest
   • B. A small piece of ownership in the company
   • C. A guarantee of future dividends
   • D. A coupon for the company's products

2. A company announces record sales, but its stock falls.

   2. What's the most likely explanation?

   • A. Investors expected even better results, so the price adjusts to the disappointment.
   • B. Record sales always lower stock prices.
   • C. The stock exchange made an error.
   • D. The company paid too many dividends.

3. 3. All companies pay dividends to their shareholders.

   True/False

1. 1. A company has 50 million shares that trade at $40 each. What's its market capitalization?

2. 2. You buy a share for $80. It pays a $2 dividend, and you sell it for $90. What's your total return in dollars and as a percent?

1. 1. Why might someone want to own a small part of a company they use every day?

2. 2. Should stock prices be driven by investor mood? What problems does that create?