Which company is the largest by market cap? A) Company A: Share price $10, 1 billion shares B) Company B: Share price $200, 10 million shares C) Company C: Share price $50, 500 million shares
C
Why does a rising share price make it easier for companies to borrow money? A) Banks see rising prices as a sign of investor confidence B) The company receives cash every time shares are traded C) Dividends are automatically higher
A
T/F – If many investors sell shares at the same time, the price usually falls because supply rises.
T
Explain one way global crises (e.g., 2008 financial crash) influence share prices even for healthy companies.
Crises reduce overall investor confidence, leading to mass selling across sectors → prices fall even if individual companies are stable.
T/F – Political instability can influence share prices even if a company’s profits are stable
T
Use the pizza slice analogy to explain market capitalisation.
Each slice = one share. Share price = cost of each slice. Market cap = cost of buying the entire pizza (all shares).
If Coca-Cola has a share price of $60 and 4.3 billion shares, its market cap is… A) $258 million B) $258 billion C) $2.58 trillion
B – 60 × 4.3B = 258B.
T/F – Apple’s share price rising after strong iPhone sales is an example of company performance influencing share price.
T
Which factor is LEAST likely to cause a sudden change in share price? A) New competitor enters market B) Company’s CEO resigns unexpectedly C) Shareholders go on holiday
C
T/F – A rising share price means the company immediately has more money to spend.
F
Which statement about market capitalisation is correct? A) It is calculated as share price × number of shares issued B) It only changes when a company issues new shares C) It is unrelated to share price changes
A
If McDonald’s share price rises from $300 to $320, and it has 730M shares, how much does market cap increase? A) $21.9 billion B) $14.6 billion C) $2.3 billion
Which situation would most likely cause a falling share price? A) A new product that exceeds expectations B) A global crisis reducing investor confidence C) A takeover bid at a higher-than-market price
B
Explain why shareholders might prefer a rising share price even if dividends don’t change.
Their investment gains value; they can sell shares later at a profit. Rising prices signal confidence and may also attract higher dividends in the future.
Explain why a falling share price could increase the chance of a company being taken over.
A lower price makes the company cheaper to buy; potential buyers can acquire control by purchasing more shares
If Apple is listed on the Nasdaq, what happens when you buy Apple shares today? A) Apple receives the money directly B) The seller (another investor) receives the money C) The Nasdaq exchange keeps the money
B
Which statement is correct about IPOs? A) The company raises money by selling new shares directly to investors B) All money from IPO sales goes to previous shareholders C) IPOs happen every year for a listed company
A
Calculate: Apple has share price $200 and 16B shares. Market Cap = ?
200 × 16B = $3.2 trillion.
McDonald’s IPO in 1965 helped it… A) Raise money to expand worldwide B) Let shareholders trade between themselves without giving McDonald’s money C) Pay dividends directly to the stock exchange
A
T/F – A company with a higher share price is always worth more than one with a lower share price.
F
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