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Investing

Investing. Investment: in economics, using money to attain future profit. Corporation. Corporation: a form of business, authorized by a government charter,that is recognized as a legal person and that carries certain privileges not given to other forms of business. Corporation.

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Investing

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  1. Investing Investment: in economics, using money to attain future profit

  2. Corporation Corporation: a form of business, authorized by a government charter,that is recognized as a legal person and that carries certain privileges not given to other forms of business.

  3. Corporation • Benefits of a Corporation • The corporation is sued for problems that deal with the corporation not the individuals who make up the corporation. Therefore, personal liability in business dealings is greatly reduced. • Can only loose amount of money invested

  4. Corporation • Disadvantages of a Corporation • Loss of control over the company

  5. Corporation Making Money Corporations can sell stock in their companies. Stock: a certificate of investment and usually part ownership in a corporation, expressed in terms of number of shares. People that own stock are called stockholders.

  6. Corporation Making Money • Stockholders can make money from their • investments in the corporation in two ways. • Dividends – a share or percentage of the company’s profits. (when company is making $) • Selling their stock at higher price than they bought the stock (“buy low & sell high”)

  7. Owners in Corporation • Purchased shares help • to fund company • May get to vote • For board members & • issues Corporate Structure Stockholders • Board of Directors • Responsible for goals & policies • Chooses corporate officers • CEO (& other corporate officers) • Carries out Boards decisions • Head of corporate divisions • Vice Presidents • The leaders of Company Divisions • Report to CEO • Department Heads • Leaders of departments • Report to Vice Presidents • Employees • Basic workers • Report to Department Heads

  8. Types of Stock

  9. Stock Names • Stocks are listed by their symbol • A symbol is the name assigned to each stock by the stock exchange. • Do not confuse stock symbols with the abbreviated name of the company found in the financial section a newspaper.

  10. Where Is Stock Traded? • Stock exchange: the place (marketplace) where stocks are bought, sold and • traded. • Examples • New York Stock Exchange (NYSE) • American Stock Exchange (ASE) • NASDAQ (National Association of Securities Dealers Automated Quotation) Brokers: the people that buy, trade and sell stock for the investor.

  11. Reading Stock Quotes The stock price at the end of the previous day. Current trading price per share The $ difference between previous day's closing price and the current price. Opening price of stock The total shares traded on previous day When Dividends Will be paid Higest & lowest prices for the day The price Range of the Stock over The last 52 weeks Average Trading volume The payment per share given to stockholders The price which someone Is willing to pay for the stock closing price divided by the last 12 months' earnings per share The dividend paid the stock (based current price) Price at which stockholder will sell

  12. Measuring the Stock Market Dow Jones Industrial Average: Introduced by Charles Dow in 1896. It is a record of the average performance of a large group of about 30 Blue Chip stocks from various market sectors. (Blue Chip Stocks are stocks from corporations with consistent profits and that are paying dividends.) It is also considered a reflection of how the United States stock market as a whole is doing.

  13. Measuring the Stock Market Standard & Poor's 500 Index (S&P 500): “A well-known, value-rated index of 500 major US companies: 400 industrial firms, 20 transportation firms, 40 utilities firms, and 40 financial firms”

  14. Stock Split When the price of stock becomes very high, a corporation can request a stock split. Stock splits give stockholders two or more shares of stock for each stock that they own. The stockholder’s number of shares increases but value of the stock would then decrease. Example: If you owned 20 shares of Pickul stock at $100 a share, a stock split would then give you 40 shares of Pickul stock at $50.00 a share.

  15. Reverse Stock Split Reverse Stock Split: the opposite of a stock split. The corporation “substitutes one share of stock for a predetermined amount of shares of stock.” Example: Pickul Corporation’s current stock price is $20.00 a share. Then, Pickul Corporation declares a 1 for 4 reverse stock split.

  16. Reverse Stock Split The stock price will now be $80.00. If you owned 100 shares of Pickul Corporation, you now 25 shares at $80 a share after the split. *The total value of your investment did not change. Companies do this because they hope “that the higher stock price will make the company look better and thus more investors will purchase the stock and the stock price will rise as more people buy it.”

  17. More Stock Related Terms Speculation: participating in business transactions with high-risk factors in the hope of making large amounts of money Capital gains: profits made from the sale or trading of an investment, such as stock shares Capital loss: the loss of money when investing

  18. More Stock Related Terms Bear market: a period of declining stocks prices Bull market: a period of increasing stock prices Stock screener: online tool used to help select stocks by select criteria chosen by the user. Example: Yahoo Stock Screener

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