Megan Decided to Start Investing in Stocks

question 87

Multiple Choice

Megan decided to start investing in stocks. Which of the following should she do first?

• A) Base her investing decisions on hot tips she hears at work.
• B) Buy stocks based solely on her stockbroker's recommendation.
• C) Choose stocks based on recommendations from her family members.
• D) Pick stocks at random.
• E) Research the corporations she is interested in as well as their industries.

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Definitions:

Financial Markets

Marketplaces where buyers and sellers participate in the trade of assets such as equities, bonds, currencies, and derivatives.

Market Efficiency

A concept that describes the degree to which stock prices and other securities prices reflect all available, relevant information.

Market Value

The ongoing cost in the market for an asset or service to be sold or bought.

Investment Cost

The total expenses incurred in purchasing an asset, including the price of the asset plus any additional fees or charges.