1. Investments & the Stock Market PowerPoint Objective: Explain how the Federal Reserve, Stock Market, and e-commerce impact the United States’ economic system.

2. What are stocks? Stocks are shares of ownership in corporations Stocks are shares of ownership in corporations Shareholders have partial ownership in the corporation Shareholders have partial ownership in the corporation Corporations are permitted to sell stock to raise capital for the corporation Corporations are permitted to sell stock to raise capital for the corporation Shareholders may receive dividend payments from the corporation Shareholders may receive dividend payments from the corporation

3. What other investments are traded? Bonds—loans made by the investor to the issuer; the investor is repaid with interest Bonds—loans made by the investor to the issuer; the investor is repaid with interest Corporate Bonds Corporate Bonds Municipal Bonds Municipal Bonds Treasury Bonds Treasury Bonds US Savings Bonds US Savings Bonds Futures—agreement to buy or sell a commodity (oil, gold, etc.) at some point Futures—agreement to buy or sell a commodity (oil, gold, etc.) at some point Mutual Funds—combination of individual stocks Mutual Funds—combination of individual stocks Stocks, Bonds, Futures, and Mutual Funds are called Securities. Stocks, Bonds, Futures, and Mutual Funds are called Securities.

4. The Stock Market’s Purpose The stock market is where shares of stocks, bonds, and futures are bought and sold (or traded). (Can be electronic.) The stock market is where shares of stocks, bonds, and futures are bought and sold (or traded). (Can be electronic.) The stock exchange is the actual physical location where stocks are listed and traded. The stock exchange is the actual physical location where stocks are listed and traded. New York Stock Exchange (NYSE) New York Stock Exchange (NYSE) American Stock Exchange American Stock Exchange NASDAQ—virtual exchange NASDAQ—virtual exchange

5. The Stock Market’s Functions Provides companies with a way of issuing shares of stock to people who want to invest in the company. The sale of shares of stock is a way for the corporations to raise money. Provides companies with a way of issuing shares of stock to people who want to invest in the company. The sale of shares of stock is a way for the corporations to raise money. Provides a place for the buying, selling and trading of stocks (and other securities). Provides a place for the buying, selling and trading of stocks (and other securities).

6. Impact of the Stock Market on the Economy Bull Market Bull Market Stock prices going up or rising Stock prices going up or rising Consumers are optimistic and buy stock hoping to earn more money Consumers are optimistic and buy stock hoping to earn more money Consumers buy goods and businesses prosper Consumers buy goods and businesses prosper Bear Market Bear Market Stock prices are going down or falling Stock prices are going down or falling Consumers are pessimistic and reluctant to buy stock Consumers are pessimistic and reluctant to buy stock Investors sell stock so they won’t lose more money Investors sell stock so they won’t lose more money Consumers buy fewer goods and businesses may lose money. Some workers may lose jobs. Consumers buy fewer goods and businesses may lose money. Some workers may lose jobs.