Stocks and the Stock Market

1. Stocks and the Stock Market Investing Continued

2. What is a stock? • A stock is a share of a stock • It entitles the buyer to a certain part of the future profits and assets of a corporation selling the stock • You become part owner of a corporation • When you purchase a stock you get a stock certificate

3. Who are the stockholders? • Stockholders are owners of a stock • They make money from the stock in 2 ways

4. How do stockholders earn money? • 1. Dividends- the money return a stockholder receives on the amount he or she originally invested in the company • Paid only when a company makes a profit • 2. Sell the stock • You make money by selling it for more than what you paid for it • You buy stock hoping that the price will increase so they can sell it for a profit

5. Stock Market • Stocks are bought and sold through brokers • A broker is a person who acts as a go-between for buyers and sellers • Largest stock market is the New York Stock Exchange (NYSE) • 2nd largest is the American Stock Exchange (AMEX) • More than 70% of stocks are on these 2 exchanges

6. Stock Market Continued • Stocks must be listed to be sold on all of the exchanges • To be on the stock market: • Corporation must be in good financial condition • Must engage in legal business • Most are larger corporations

7. Over-the-Counter Markets -Most stocks can be sold on the National Association of Securities Dealers Automated Quotations (NASDAQ) -Stocks are not traded in a specific place -Brokerage firms hold quantities of shares they buy and sell for investors -Stocks are from smaller, lesser known companies