Warm - up Have out a sheet of paper and something to write with. Answer the following questions (not on the paper though, we’ll discuss this): 1.What is a share of stock? 2.Describe the process of how people make and lose money in the stock market. 3.What is a stock market vs. a stock exchange vs. a stock index? Don’t worry if you do not know the answer...just do your best.

The Stock Market An Introduction

Agenda Brief Lecture on terms Complete stock market handout Make sure you put down five stocks and their ticker symbols (see handout for details when it comes time).

Agenda and Terms Objective: By the end of the day, we should be able to explain these terms: Stock Stock Market Stock Exchange Stock Index Ticker Symbol Beta Stock Points

How we’re going to do this: I will ask what you wrote for certain things, get feedback from other students, and clarify on certain powerpoint slides to minimize lecture time.

Stock Fancy Definition: claim to a part of a corporation's assets and earnings. Definition in plain English: ownership of a company. The more shares of stock you have, the more ownership you have of a company.

How you make money off stocks (step-by-step): 1. You buy Starbucks stock at $60 per share. 1. The price of Starbucks stock increases to $65 per share. 3. You sell it when it’s at $65 a share 4. You pocket $5 ($65-$60) Imagine if you had 1,000 shares of Starbucks stock, you’d make $5000.

Stock Market Def’n: A general place where stocks can be bought and sold.

Stock Exchange Def’n: A specific place where stocks can be bought and sold. (A stock market is MADE UP OF numerous stock exchanges). Examples of major stock exchanges: New York Stock Exchange (NYSE) - Wall Street NASDAQ - online London Stock Exchange Group (LSE) Japan Exchange Group (JPX)

Stock Index Definition: The average value of a selected group or sample of stocks. The Big 3: Dow Jones Industrial Average: comprised of 30 of the biggest and most influential companies selling stock in the U.S. NASDAQ: A little over 1,000 companies (mostly tech companies) S&P 500: 500 companies Why indexes? It takes way too much time to measure the individual performance of ALL stocks, so, to get an idea, we take samples instead of the whole population.

The Points System In the news, you’ll see numbers or hear the reporter say, “the Dow Jones went up 300 points” That alone means nothing. The % increase or decrease is what’s important. However, the points system helps us figure out the % increase or decrease in the stock market’s performance. If the Dow Jones Industrial Average increases by 3%, that means on average, all stocks on the Dow increased by 3%

Ticker Symbol A maximum four-letter abbreviation of a certain company trading on the stock market. Examples: Starbucks = SBUX Ford = F Microsoft = MSFT

Beta Beta is a measure of the riskiness of a certain stock in comparison to the market as a whole. A beta of less than 1 means that the stock will be less volatile than the market. A beta of greater than 1 indicates that the stock will be more volatile than the market. Example: A stock with a beta of 1.2 means the stock is 20% more volatile or riskier than the market as a whole. Next slide has details….(you’ll see how it works)

Beta example Stock X has a beta of 0.8 Stock prices in the stock market as a whole increase by 5%. Stock X will only increase by 4% 5% x 0.8 = 4% If stock prices in the stock market as a whole decreases by 5%. Stock X will only decrease by 4%. Is this a risky or less risky stock than the market? Why am I covering this?

Re-cap What is a… Stock Stock Market vs. Stock Exchange Ticker Symbol Stock Index How does the point system for stocks work?

Handout Time Please follow instructions and MAKE SURE TO LIST 5 Stocks and their ticker symbols. Here are some sites you can use: Other sites (cnn.money.com) may not have the betas but you can find those by typing something like (google stock beta) in the internet search bar.