Special Sub-Topic: The Stock Market Revealed (U.S.)
|Which agency in Washington, D.C. regulates the securities industry?|
The Securities and Exchange Commission. The SEC requires all public companies to disclose their financial information to the public. This protects investors from any fraudulent acts and makes the information readily available to the public.
|What is it called when a person trades a security while in possession of non-public information?|
Insider trading. People working in many industries including law offices, banks, brokerages and financial printers often have access to information before it's shared with the general public. But as tempting as it may seem, most insider trading schemes result in large fines and jail sentences.
|The Securities Act of 1933 was a direct result of which of the following?|
The Great Depression. Before the Great Depression of 1929, there was little regulation in the stock market. People were unable to access information about stocks and many invested their money based on emotions rather than performance. The Securities Act of 1933 was instituted to protect the public against misrepresentation, fraud and deceit, and to provide information to the public regarding performance history.
|What is the system of electronic filing with the SEC called?|
EDGAR. All public documents must be filed with the SEC using the Electronic Data Gathering Analysis and Retrieval system (EDGAR). Anyone can now access the SEC website at www.SEC.gov and retrieve all filings submitted by any public company.
|What is a professionally managed collection of stocks, bonds and other financial instruments that pools money from many investors?|
A mutual fund. Mutual funds are the safest way for the average investor to invest in the stock market. Because professional portfolio managers are hired to manage and re-balance the fund's investments, it limits the investor's exposure to a market meltdown.
|What was the Sarbanes-Oxley Act named after?|
Two U.S. Congressmen. Named after Senator Paul Sarbanes and Representative Michael Oxley, the act was legislated in 2002. It was instituted to protect the investor by assuring that all EDGAR filings with the SEC have been reviewed and approved by all signing officers and that the documents do not contain any untrue or misleading information.
|What is an ETF?|
An Exchange Traded Fund. According to Forbes' Investopedia, "an ETF is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange, thus experiencing price changes throughout the day as it is bought and sold". They usually have lower management costs than other mutual funds.
|What is an Index Fund?|
A mutual fund with a portfolio that matches a particular market index. An index Fund is a type of mutual fund with a portfolio that strives to match a particular market index such as the S&P 500 Index. It provides broad market exposure with low operating expenses.
|What do you call a person who rapidly buys and sells stocks throughout the day?|
A day trader. Day trading is a highly risky form of investing where investors buy and sell stocks daily, hoping to lock in quick profits.
|The oldest U.S. stock market index tracks the performance of 30 of the largest and most widely owned stocks. What is it called?|
Dow Jones Industrial Average. First created in 1896, the DJIA, or the Dow, tracked the performance of the 12 largest publicly held companies in the United States. As the country became more technology oriented, the index changed drastically. General Electric is the only company remaining of the original twelve. The Dow now tracks 30 stocks.
Did you find these entries particularly interesting, or do you have comments / corrections to make? Let the author know!
Send the author a thank you or
Submit a correction