p604, 643 -644. 1. pay debts 2. raise money ex. to expand business
TRANSCRIPT
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The Stock MarketP604, 643 -644
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STOCK –part ownership of a corporation
CORPORATION –a business organization owned by shareholders, but treated by law as though it were owned by one person
What is STOCK?
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1. Pay debts
2. Raise money
Ex. To expand business
Why SELL ownership?
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You Choose?
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You Choose?
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It’s an investment
Buy stock at one price
Price of stock rises
Sell stock
Your profit is the difference between
purchase price & sale price
CAPITAL GAIN
Why BUY stock?
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Buy 1 share @ $30
Price rises to $50/sh.
You sell
Your profit = _____?◦$20
What if you’d initially purchased 100 shares?◦$2,000
Se-ries1
$0
$40 $30$50
Price of Company "X" Stock
TIME
Dol-lars
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As an owner you’re entitled to a portion of that corporation’s earnings
DIVIDENDS–◦payment of a portion
of a company’s earnings
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What if Apple consisted of 25 shares?
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& you owned 1 share
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What fraction or percent of Apple’s profits are you entitled to?
1/25th or 4% (2011= $6.2B)
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Facebook OwnershipFacebook: 2.8 billion shares / 2, 800, 000, 000
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Past century (1900-2000)
Stock Market rate of return = 6%/yr
Investment of $1,000 = ______?
◦earn $60 at yr’s end (on average)
Current average return for savings account
= 1%/yr
Investment of $1,000 = _______?
◦earn $10 at yr’s end
GUARANTEED
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Stock Purchaser
Brokerage Firm
Corporation
Purchasing Stock
$ $
StockStock
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1. NYSE The New York Stock Exchange
est. in 1792
Co.’s must meet size &
profitability requirements to be
traded on NYSE
Over 3,000 co.’s traded on NYSE
The 3 Major U.S. Stock Exchanges
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2. NASDAQ National Association of Securities Dealers
Automated Quotations
est. 1971
Mostly tech. stocks
No floor for trading
Over 5,300 co.’s traded on this market
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3.AMEX The American Stock Exchange
Est. 1842
originally known as NYCE (NY Curb
Exchange)
700 co.’s traded on AMEX
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Bull Market◦a 20% or more increase over 2-3 month
period
Bear Market◦a 20% or more decrease over a 2-3
month period
Market Trends