Bell Ringer If you could own stock in any company, which one would it be? Why?

Bell Ringer

• If you could own stock in any company, which one would it be? Why?

What is a Stock Market?

• Where do you go to buy CDs, jeans and books?– Just like a market for CDs, jeans and books,

there is a market for stocks• People buy stocks to receive dividends and

they anticipate increased stock price

• Firms sell stocks to receive financial capital to use to expand the business

• Sold through brokers–Person who acts as a go-between for buyers

and sellers of stocks and bonds.

• Stock market– Mechanism whereby people who

want to own shares of stock can buy from people who want to sell shares of stock

• Stockholder– People who have invested in a

corporation and own some of its stock.

• Asset– All items to which a business or

household holds legal claim.

• Capital Gain– Increase in value of an asset from

the time it was bought to the time it was sold.

• Capital Loss– Decrease in value of an asset

from the time it was bought to the time it was sold.

What is a Stock Market?• Dividend

– Portion of a corporation’s profits paid to its stockholders.

What is a Stock Market?• Common Stock

– Shares of ownership in a corporation that give stockholders voting rights and a portion of future profits.

What is a Stock Market?• Preferred Stock

– Shares of ownership in a corporation that give stockholders a portion of future profits but no voting rights.

What is a Stock Market?• 3 different stock markets

– NYSE– AMEX– NASDAQ

What is a Stock Market?• New York Stock Exchange (NYSE)

– Founded in 1792– About 2,800 companies listed– Dow Jones and S&P 500– Listed companies must have at least

$100,000,000 in outstanding stock and trade an average of at least 100,000 shares per day

– 1,366 member seats

What is a Stock Market?• American Stock Exchange (AMEX)

– Founded after Civil War– More than 800 companies listed– Listed companies must have more than 500,000

shares outstanding and trade an average of more than 1,000 shares per day

– 807 member seats

What is a Stock Market?• National Association of Securities Dealers

Automated Quotations (NASDAQ)– Founded in 1971– More than 3,700 companies listed– Consider the home of tech stocks– No physical location; trades done via computer

network– Largest market in terms of stocks traded– No fixed number of seats

What is a Stock Market?• Dow Jones Industrial Average (DJIA)• Standard and Poor’s 500 (S&P 500)• Securities Exchange Commission (SEC)

• Regulatory agency of the stock market

• Bull/bull market– A bull is an investor or analyst who

believes that the price of a security or security prices in general will rise. A bull market is an extended period of rising prices for a security or the securities market in general.

• Bear/bear market– A bear is an investor who believes that a

security’s price or security prices in general will go down. A bear market is an extended period of price decline for a security or the securities market in general.

May 3, 2023 What Are Mutual Funds? 20

What Are Mutual Funds?• A mutual fund is an investment

company that pools the money of many individuals to buy stocks, bonds, or other investments.

• The investment club shares all profits and losses, thereby lowering overall risk to the investor.

Lesson 7 Visual 2Types of Mutual Funds

Low Risk and Low Potential Reward

High Risk and High Potential Reward

Money-market funds (short-term securities)

Bond funds (corporate or longer- term government bonds)

Income funds (high- yield stocks and bonds)

Growth funds (larger company stocks long-term capital gains)

Aggressive growth funds (smaller company stocks; short- and long- term capital gains)

Initial investment

CompanyPriceper

No. of Shares Owned

Amount Invested

Investment Value

1 Year Later

American Cellular $ 5 100 $ 500

Big Box Stores $ 20 50 $1,000

Biotech Industries $ 10 0 0

General Grocery $ 20 0 0

Giant Auto $ 10 100 $1,000

Gold Mining Group $ 5 100 $ 500

Total Investment Value

XXXX XXXX $3,000

CompanyPriceper

No. of Shares Owned

Amount Invested

Investment Value

1 Year Later

American Cellular $ 8 100 $ 500 $ 800

Big Box Stores $ 23 50 $1,000 $1,150

Biotech Industries $ 8 0 0 $ 0

General Grocery $ 22 0 0 $ 0

Giant Auto $ 11 100 $1,000 $1,100

Gold Mining Group $ 4 100 $ 500 $ 400

Total Investment Value XXXX XXXX $3,000 $3,450

One Year Later: An Example

Reading a stock table

Reading a mutual fund table

Bell Ringer

• List the three U.S. stock markets.

Bell Ringer If you could own stock in any company, which one would it be? Why?

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