What is a stock? Understand ownership and risk: test your skills
A share is a small piece of ownership in a company — with a claim on its future profits and its risks. Answer each question to see the explanation; your score appears at the end.
This test checks that you can
- Explain what owning a share means
- Name the two ways shareholders can benefit
- Understand single-company risk
- Practice
1. A share represents…
- Practice
2. Two ways shareholders can benefit are…
- Practice
3. If a company is wound up, shareholders are paid…
- Key idea
4. Which statement best explains "A share is ownership"?
- Key idea
5. Which statement best explains "Returns are not promised"?
- Key idea
6. Which statement best explains "Concentration is risk"?
- Action plan
7. In the action plan, which step comes first?
- Mistake to avoid
8. Which of these is a mistake this lesson warns against?
- Mistake to avoid
9. Which of these is a mistake this lesson warns against?
A company has 2,000,000 shares. You own 500. What percentage do you own?
Show the answer
0.025%
500 ÷ 2,000,000 = 0.00025 = 0.025%.
Check whether your workplace retirement plan already holds stocks through a fund.
More tests in this bootcamp
- What is a stock? Understand ownership and risk
- Compare common and preferred shares
- Follow a stock trade from quote to exchange
- Measure company size with market capitalization
- Read dividend yield without mistaking it for a promise
- Decode the P/E ratio: price compared with profit
- Understand growth and value investing styles
- Follow an IPO from offer price to public trading
- Tell a stock split from share dilution
- Understand market rises, falls and recovery math
- Final exam: Stocks and the market