Question

Only the common stocks of strongest, most stable, and safe-return companies can be called:

A) Blue-chip stocks.
B) Growth companies.
C) Income stocks.
D) Defensive stocks.
E) Cyclical stocks.

Answer 1

The correct answer is A) Blue-chip stocks. Blue-chip stocks are shares of well-established, financially stable, and prestigious companies. They are considered a safe investment option.

Step-by-step explanation:

The correct answer is A) Blue-chip stocks. Blue-chip stocks refer to the shares of well-established, financially stable, and prestigious companies that have a long history of reliable performance. These companies typically have a high market capitalization, strong balance sheets, and consistent dividend payments.

An example of a blue-chip stock is Coca-Cola Company. It is a large multinational corporation that has been operating for many years and has a strong presence in the beverage industry. Investors often consider blue-chip stocks as a safer investment option due to their resilience in economic downturns.

In contrast, growth companies focus on expanding their market share and reinvesting their profits into research and development. Income stocks are known for providing a steady stream of dividends, while defensive stocks are less affected by economic fluctuations. Cyclical stocks tend to be sensitive to the overall economic cycle.