We think you have liked this presentation. If you wish to download it, please recommend it to your friends in any social system. Share buttons are a little bit lower. Thank you!
Presentation is loading. Please wait.
Published byKarley Bircher
Modified about 1 year ago
Chapter 11: Financial Markets Section 3
Copyright © Pearson Education, Inc.Slide 2 Chapter 11, Section 3 Objectives 1.Identify the benefits and risks of buying stocks. 2.Describe how stocks are traded. 3.Explain how stock performance is measured. 4.Describe the Great Crash of 1929 and more recent stock market events.
Copyright © Pearson Education, Inc.Slide 3 Chapter 11, Section 3 Key Terms share: a portion of stock capital gain: the difference between the selling price and purchase price that results in a financial gain for the seller capital loss: the difference between the selling price and purchase price that results in a financial loss for the seller stock split: the division of each single share of a company’s stock into more than one share stockbroker: a person who links buyers and sellers of stock
Copyright © Pearson Education, Inc.Slide 4 Chapter 11, Section 3 Key Terms, cont. brokerage firm: a business that specializes in trading stocks stock exchange: a market for buying and selling stock futures: contracts to buy or sell commodities at a particular date in the future at a price specified today options: contracts that give investors the right to buy or sell stock and other financial assets at a particular price until a specified future date call option: a contract for buying stock at a particular price until a specified future date
Copyright © Pearson Education, Inc.Slide 5 Chapter 11, Section 3 Key Terms, cont. put option: a contract for selling stock at a particular price until a specified future date bull market: a steady rise in the stock market over a period of time bear market: a steady drop or stagnation in the stock market over a period of time speculation: the practice of making high- risk investments with borrowed money in hopes of getting a big return
Copyright © Pearson Education, Inc.Slide 6 Chapter 11, Section 3 Introduction How does the stock market work? –Stock, or shares in a company, are bought and sold on the stock market. –Stock brokers help individuals and businesses invest their money in the stock market. –Investors can keep track of the stock market by checking their local paper. When the market is doing well, people see a large return on the initial investment. When it is not doing well, people may lose a great deal of money.
Copyright © Pearson Education, Inc.Slide 7 Chapter 11, Section 3 Benefits of Buying Stock Checkpoint: What are two ways that an investor can make a profit from buying stocks? In addition to selling bonds, corporations can raise money by selling stock shares in that corporation. The benefits of buying stock include: –Dividends—part of the firm’s profits –Capital gains—selling the stock for more than you paid for it
Copyright © Pearson Education, Inc.Slide 8 Chapter 11, Section 3 Types of Stock Stock may be classified by whether or not it pays dividends. –Income stock—provides investors with income by paying dividends –Growth stock—pays few or no dividends and earnings are reinvested in the company
Copyright © Pearson Education, Inc.Slide 9 Chapter 11, Section 3 Types of Stock, cont. Stock is also classified by whether or not the holder has a voice in the company: –Common stock: These holders are voting members of the company. –Preferred stock: These holders are nonvoting members of the company. Common stock owners may initiate a stock split when the price of a stock becomes to high.
Copyright © Pearson Education, Inc.Slide 10 Chapter 11, Section 3 Risks of Buying Stock Buying stock is risky because the dividends are determined by how well a company is doing. Because of the laws governing bankruptcy, stocks are riskier than bonds since bondholders are paid before stockholders when a company goes bankrupt.
Copyright © Pearson Education, Inc.Slide 11 Chapter 11, Section 3 How Stocks are Traded If you want to buy stock, you would first contact a stockbroker to advise you on which stocks to buy. You buy stocks on a secondary market known as a stock exchange. –The New York Stock Exchange is the country’s largest and most powerful exchange, handling stock and bond transactions for the top companies in the United States and the world. –The Nasdaq is the second largest securities market and the largest electronic market.
Copyright © Pearson Education, Inc.Slide 12 Chapter 11, Section 3 Futures and Options Futures are contracts to buy or sell commodities at a particular date in the future at a specified price today. Similarly, options are contracts that give investors the choice to buy or sell stock and other financial assets. Most people who buy stock hold their investment for a significant period of time. –Day traders, on the other hand, trade stocks daily, which is very risky.
Copyright © Pearson Education, Inc.Slide 13 Chapter 11, Section 3 Measuring Stock Performance When the stock market rises steadily over a period of time it is known as a bull market. When the stock market falls or stagnates for a significant period it is a bear market. The Dow Jones Industrial Average measures stock performance. It represents the average value of a particular set of stocks, and it is reported as a certain number of points.
Copyright © Pearson Education, Inc.Slide 14 Chapter 11, Section 3 The Great Crash Checkpoint: What was the Great Crash of 1929? In the 1920s, the stock market was soaring. –Speculation and buying on margin, however, led to a crash in the market that crippled the U.S. economy. The Dow began steadily dropping in September, 1929. People began to sell their shares and companies couldn’t keep up with it. On October 29, 1929, a record 16.4 million shares were sold and the market crashed.
Copyright © Pearson Education, Inc.Slide 15 Chapter 11, Section 3 The Aftermath The Crash led to the Great Depression. –Many people lost everything—their homes, their jobs, and their farms. After the Depression, many people saw stocks as risky investments and avoided them. By the 1980s, with the development of mutual funds, Americans became more comfortable with stock ownership once again. –The stock market crashed again in 1987 but was able to recover much faster than in did in 1929.
Copyright © Pearson Education, Inc.Slide 16 Chapter 11, Section 3 Scandals & the Stock Market Today By the 1990s, when people began once again to buy more stock, investors started to worry that many companies could not make enough money to justify their high stock prices. The Enron scandal and others caused many investors to question how much they knew about the companies they invested in. In 2008, the stock market began falling, causing a major economic crisis in the United States once again.
Copyright © Pearson Education, Inc.Slide 17 Chapter 11, Section 3 Review Now that you have learned how the stock market works, go back and answer the Chapter Essential Question. –How do your saving and investment choices affect your future?
Chapter 15: Financial Markets Opener. Copyright © Pearson Education, Inc.Slide 2 Chapter 11, Opener Guiding Questions Section 3: The Stock Market –How.
Chapter 11: Financial Markets Section 3. Copyright © Pearson Education, Inc.Slide 2 Chapter 11, Section 3 Objectives 1.Identify the benefits and risks.
Chapter 11SectionMain Menu Do Now: There are 4 Exchange Student Guides at each table. Take one and begin reading the first two pages. –DO NOT WRITE ON.
Chapter 11: Financial Markets Opener. Copyright © Pearson Education, Inc.Slide 2 Chapter 11, Opener Essential Question How do your saving and investment.
Financial Markets Chapter 11 Section 3 The Stock Market.
The Stock Market Chapter 11 Section 3. Buying Stock Besides bonds, corporations sell stock to raise money Stocks are issued as shares Stocks are also.
Chapter 11 Section 3 – The Stock Market. Buying Stock Stock or Equities – Represents ownership in a company Issued in portions called shares – Help corporations.
ECONOMICS CHAPTER 11: FINANCIAL MARKETS SECTION 2: BONDS AND OTHER FINANCIAL ASSETS.
Stock- represent ownership in a corporation Shares- portions of stock Purpose??... Raise money to start or expand a business.
The Stock Market 1.Understand the risks 2.Describe how stocks are traded 3.Identify how stock performance is measured 4.Explain the causes and effects.
Chapter 11 Section 3. Share: portion of stock Equities: claims of ownership in a corporation.
Chapter 11 Financial Markets. CHAPTER 11 Section 1.
Financial Markets: Saving and Investing Investment Financial System Financial Asset Financial Intermediary Mutual Fund Diversification Portfolio Prospectus.
Financial Markets. Section 1 Investment- the act of redirecting resources from being used today so they can be used to create future benefits When.
The Stock Market Economics. Vocabulary Investment: act of redirecting resources from being consumed today so they may create benefits in the future. Mutual.
Buying Stock: Corporations sell stock to raise funds. Stock represents ownership in the corporation and is issued in portions called shares.
Savings and Investment. Should you Invest? Why do you come to school today? Besides having a burning desire to learn economics, you expect to get some.
STOCK MARKET. INVESTMENT Definition- act of redirecting resources from being consumed today so they may create benefits in the future.
1. Income stocks pay. Income stocks pay dividends at regular times during the year.
Financial Markets. Private Enterprise and Investing Investment is the act of redirecting resources from being consumed today so that they may create benefits.
Financial Markets. Saving & Investing Investment: the use of assets to earn income or profit. – Ex. Paying for college. Financial System: the system that.
Chapter 9 Section 3 Stocks, Bonds, and Futures Bw6FyPf34.
Bell Ringer #1 Ch What is the difference b/w a savings account and a time deposit? 2. After the stock market crash of 1929, ___________________ was.
Investing: Chapter 11. Investment – use of assets to earn an income or profit The Financial System ◦ Financial Assets (or securities) Flow of Savings.
Investing: Taking Risks With Your Savings. Stocks are also known as securities As proof of ownership, you get a stock certificate Stocks What are they?
The Stock Market. Shares A portion of a stock—aka. Equities (claims of ownership in corporations) Purpose: Corps. Raise $ to start, run and expand.
Chapter 11 Financial Markets. Investment Investment is the act of redirecting resources from being consumed today so that they may create benefits in.
FrontPage: Turn in Savings Calculator worksheet from yesterday if you didn’t finish. The Last Word: Ch 11 Review/Unit 4 Test Tuesday.
CHAPTER 11 The Stock Market. Section 3: The Stock Market Objectives: Evaluate the benefits and risks of buying stock by comparing them to those of.
Saving and Investing How does investing contribute to the free enterprise system? How does the financial system bring together savers and borrowers? How.
Stock Market. The Stock Market Investing in Stocks & Bonds Stocks - shares of ownership Stocks & bonds are also known as SECURITIES.
Date: January 31, 2011 Topic: The Stock Market Aim: How does the stock market function? Do Now: What do you like to buy in the market?
Goals: Describe ways to purchase different types of stock. Explain differences between investing in corporate stocks and corporate bonds.
The Stock Market 3.1 STOCK MARKET BASICS. Objectives.
The Stock Market Bulls and Bears!. Stock Def. A portion of ownership in a corporation. It is a way for a corporation to raise money. Also known as shares.
Economics Chapter 11 Financial Markets. Section 1 Saving and Investing.
CH 11 Financial Markets 11.1 Saving and Investing.
[ 6.7 ] Stocks. Learning Objectives Describe how stocks are traded. Describe the benefits and risks of investing in stock. Explain how corporations raise.
FrontPage: Turn in Savings Calculator webquest from yesterday if you did not do so. The Last Word: Ch 11 Review and Unit 4 Test - Tuesday.
Chapter 11 Financial Markets. Saving and Investing Investing – using assets now to make profit later. – Promotes economic growth – Contributes to a nation’s.
Financial Markets Chapter 11. Investment Act of redirecting resources from being consumed today so that they may create benefits.
Money Investments What is an investment? Investment is something bought for future financial benefit. Promotes economic growth Contributes to wealth.
THE STOCK MARKET. THE FINANCIAL SYSTEM The financial system is a network of institutions which connect investors with borrowers. Institutions in the financial.
Savings – income not used for consumption Investment – the use of income today that allows for a future benefit Financial System – all the institutions.
Investments & The Stock Market Chapter 11 Investments Nations must have a Financial System for investments to work. 2 ways investments help: Allow.
Savings and Investment. Why do we invest? Spend It Save It Put It In The Bank Invest It If we have money we can... What are the Advantages/R isks of each.
SECTION 1 Economics: Principles in Action C H A P T E R 11 Financial Markets.
Today’s Schedule – 11/6 PPT: Stock Market Instructions: Playing the stock market HW: – Stock market simulation summary- 1/10.
Fact or Fiction 1. Only rich people invest money in the stock market. Fiction: anyone that has money can invest. 2. Stocks & bonds are always risky places.
© 2017 SlidePlayer.com Inc. All rights reserved.