do now if you didn’t finish your study guide on friday, come up and get it. finish answering the...
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Do Now
If you didn’t finish your study guide on Friday, come up and get it. Finish answering the questions. We will correct them in a few minutes.
If you’re done with your study guide, get a laptop and print your spreadsheet. Make sure your name is TYPED at the top. Staple it (if necessary) and turn it in.
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Personal Finance & Economics
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1Billy bought ABC corporation stock at $27/share. Later he sold it at $31/share. This is an example of.
Capital gain
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2List ways that an investor can make money on stocks.
DividendsCapital gain
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3_______ are spaced at intervals around the trading floor of the NYSE.
Trading posts
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4The largest securities exchange in the USA.
NYSE
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5A name for owners of a corporation.
Shareholders or stockholders
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6The over-the-counter market.
NASDAQ
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7_______ buy and sell stocks on the exchange. They must be members of the exchange.
Floor brokers
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8Prolonged period of rising stock prices and a general feeling of investor optimism.
Bull market
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9______________ are the part of the corporations profits paid to stockholders.
Dividends
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10Borrowing money from a broker to buy stock.
Leverage or buying on margin
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11In order to purchase stock, you must know the ______ of the corporation.
Ticker symbol
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12Period of falling stock prices and a general feeling of investor pessimism.
Bear market
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13A _________ is a stockholder’s
written authorization to transfer his or her voting rights to someone else, usually a company manager.
Proxy
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14This is an increase in the value of the stock above the price initially paid for it.
Capital gain
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15The _______ is an assigned, arbitrary dollar value that is used to calculate dividends.
Par value
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16This type of stock pays a variable dividend and gives the holder voting rights.
Common stock
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17A marketplace where
brokers who are representing investors meet to buy and sell securities.
Stock exchange or security exchange
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18List a long term investing strategy.
Dollar-cost averagingBuy and holdReinvesting dividends Direct investment
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19This is when a shareholder sells stock for less than what they paid for it.
Capital loss
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20List an example of a cyclical stock. Explain.
Travel agency travel spending can easily be cut during times of recession
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21List a short term investing strategy.
Short sellingLeverage or buying on margin
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22This type of stock is a
bargain for investors, but is dangerous for businesses because it makes them vulnerable to takeovers.
Undervalued stock
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23Buying stock directly from a corporation.
Direct investment
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24Selling stock borrowed
from a broker that must be replaced at a later time.
Short selling
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25________ is the price investors are willing to pay for the stock.
Market value
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26List an advantage to owning stock as opposed to investing in a small business.
The investor can lose no more than their initial investment.
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27The systematic purchase of an equal dollar amount of the same stock at regular intervals.
Dollar-cost averaging
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28____________ have a consistent history of paying high dividends.
Income stocks
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29A _____ is an increase in the number of shares outstanding of a company’s stock.
Stock split
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30_____________ are stocks in corporations that reinvest their profits.
Growth stocks
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31Benchmark that investors use to judge the performance of their investments.
Stock indices
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32Another term for buying on margin.
Leverage
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33 This type of stock…….
Pays fixed dividends. Carries no voting rights. Less risky Much less potential for major earnings.
Preferred stock
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34Using dividends previously earned on the stock to buy more shares.
Dividend reinvestment
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35If the stock drops to around ½ of
the original purchase price, the investor receives a _______ - the investor must pledge additional cash or securities to serve as collateral for the loan.
Margin call
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36The __________, elected by
the stockholders to guide the corporation, decides the amount of dividends to be paid each year.
Board of directors
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37List the formula for calculating return on investment.
Profit/cost
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38A __________ is one that
remains stable and pays dividends during an economic decline.
Defensive stock
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39This type of stock is selling at a price that is not justified by the corporation’s earnings.
Overvalued stock
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40A ____________is 100 shares or multiples of 100 shares of a particular stock.
Round lot
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41______________ are stocks of large, well-established corporations w/ a solid record of profitability.
Blue Chip stocks
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42________ do well when the
economy is stable or growing, but often do poorly during recessions, when the economy slows down.
Cyclical stocks
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43List an example of a defensive stock. Explain.
Pharmaceutical – people need even in times of recession
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44List an example of a stock index.
DJIAS&P 500
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45Samantha bought XYZ
Corporation stock at $48/share. Later she sold it for $22/share. This is an example of what?
Capital loss
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46 List an advantage to direct investment.
Avoid broker’s commissions.
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47 What do all short-term
investment strategies have in common?
Risky
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#48 ROI Billy Brandon purchased 200 shares
of XYZ Corp stock at $32.50/share & paid a $500 commission. Today’s market price is $41.75/share. Last year he received dividends of $1.45/share.
23.4%
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#49 Dividends There are 6,500 shares of $30
par value preferred stock & 3,000 shares of common stock. Preferred has a 5% guaranteed rate of return. Dividends of $.75 per share are declared of common stock.
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#49 AnswerCommon
StockPreferred
Stock
Total Dividends
$2,250 $9,750
Dividends per Share
$.75 $1.50
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#50 ROI Billy Brandon purchased 250 shares
of XYZ Corp stock at $15.80/share & paid a $283 commission. Today’s market price is $10.11/share. Last year he received dividends of $.85/share.
-35.3%
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Final QuestionList and explain 2 long-term investing strategies & 2 short-term investing strategies.