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What is stock?

What is stock?. Equity =ownership of part of corporation Stockholder =person who buys stock Price of stock =determined by how much investors want to pay VIDEO: What is purpose of the stock market. Common & Preferred Stock. COMMON STOCK If price increases sell shares at a profit

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What is stock?

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  1. What is stock? Equity=ownership of part of corporation Stockholder=person who buys stock Price of stock =determined by how much investors want to pay VIDEO: What is purpose of the stock market

  2. Common & Preferred Stock • COMMON STOCK • If price increasessell shares at a profit • If price decreasesshares lose value • Earn dividends if corporation pays them • PREFERRED STOCK • Dividend payment has priority • Dividends do not increase if company prospers • If company fails, shareholders more likely to get $$$$ back Schoolhouse Rock BASIC DEFINITIONS

  3. Blue Chip Stocks

  4. Blue Chip Stocks • LARGE CAP = $1B value Market cap = # of shares multiplied by price of shares • Why invest in Blue Chips? • Reliable returns • Well established • Dividends • Examples of Blue Chips Heinz, Coca Cola, Gilette, Exxon, General Mills, Kellogg , IBM, Nestle, McDonalds • Origin of “Blue Chip

  5. Major Exchanges in U.S. New York Stock Exchange (NYSE) History of the New York Stock Exchange NASDAQ NASDAQ—What is it? American Stock Exchange

  6. Talking about stocks….

  7. Indexes In the case of financial markets, an index is an imaginary portfolio of securities representing a particular market or a portion of it. Each index has its own calculation methodology. Thus, the percentage change is more important than the actual numeric value. Stock and bond market indexes are used to construct index mutual funds and exchange-traded funds (ETFs) whose portfolios mirror the components of the index. most well known: S & P 500 (index includes 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities, mostly blue chips)

  8. Examples of Index Funds S & P 500 (index includes 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities, mostly blue chips) Dow Jones Industrial Average (represent sectors) NASDAQ 100 (many hi-tech companies) DJ Wilshire 5000 MSCI EAFE (foreign stocks in Europe, Australasia, Far East)

  9. RESEARCH ON COMPANIES Finance Yahoo Additional Resources: Class Website with Links

  10. Bear Market

  11. Meanings of “Public” and “Private”

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