Presentation on theme: "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?"— Presentation transcript:
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?
Buying Stock Issued in portions known as shares. Represent ownership in the corporation. Corporations raise money to start, run, or expand business. Stocks are also known as equities – claims of ownership in a corporation.
Benefits – Making Money!! Dividends profits that are paid to stockholders usually 4 times a year. Capital Gains selling the stock for more than you paid for it (opposite capital loss).
Types of Stock Income Stock Pays dividends at regular times during the year. Growth Stock pays few or no dividends. The issuing company will reinvest its dividends in the company. Common Stock owners are voting owners of the company. Preferred Stock nonvoting owners of the company. If the company goes out of business preferred stockholders get their money back before common stockholders.
STOCK EXCHANGES WHERE STOCKS ARE BOUGHT AND SOLD. Ex: New York Stock Exchange and NASDAQ (National Association of Securities Dealers Automated Quotations).
The OTC Market – Over the Counter Many stocks are bought and sold electronically – over the counter
How Stocks Are Traded? Stockbroker links buyers and sellers of stock Brokerage firms businesses that specialize in trading stocks Earn a profit by charging a commission
Bull and Bear Markets Bull Market when the stock market rises steadily over a period of time Bear Market falls for a period of time
The Dow Jones Represents 30 large companies in different industries.
3M Company Alcoa Incorporated American Express AT&T Bank of America Caterpillar Incorporated Chevron Group Cisco Systems DuPont Exxon Mobil Corporation General Electric Company Hewlett-Packard Company Intel Corp. International Business Machines Corporation J.P. Morgan Chase and Company Johnson & Johnson Kraft Foods McDonald’s Corporation Merck & Company, Inc. Microsoft Corporation Pfizer Incorporated Procter & Gamble Company The Boeing Company The Coca-Cola Company The Home Depot Inc. Travelers Group United Technologies Inc. Verizon Communications, Inc. Wal-Mart Stores Incorporated Walt Disney Company
S&P 500 Tracks performance of 500 different stocks and bonds.
STOCK SPLIT MEANS THAT A SINGLE SHARE OF STOCK SPLITS INTO MORE THAN ONE SHARE. Why? a company may initiate a stock split when the price of a stock becomes so high that it discourages potential investors from buying it.