SECURITIES

Securities a contract that can be assigned a value and traded. instruments representing ownership (stocks), a debt agreement (bonds) or the rights to ownership (derivatives). Source: Investopedia

STOCKS/SHARES /EQUITIES

A few things to remember ... Individuals and groups of people doing business as a partnership, have 1........... liability for debts, unless they form a limited company. If the business cannot pay its 2..........., any creditor can have it declared 3............ In order not to lose their personal 4..........., most people doing business form 5........... companies, i.e. legal 6........... separate from their owners and only 7........... for the amount of capital that has been 8........... in it. If a limited company goes 9..........., it is wound up and its assets are 10........... (i.e. sold) to pay the debts. If the 11........... do not cover the liabilities or the debts, they remain unpaid and 12........... simply do not get all their money back.Based on MacKenzie (2002), p.91

A few things to remember ... Individuals and groups of people doing business as a partnership, have unlimited liability for debts, unless they form a limited company. If the business cannot pay its 2 debts, any creditor can have it declared 3 bankrupt. In order not to lose their personal 4 assets, most people doing business form 5 limited companies, i.e. legal 6 entities separate from their owners and only 7 liable for the amount of capital that has been 8 invested in it. If a limited company goes 9 bankrupt, it is wound up and its assets are 10 liquidated (i.e. sold) to pay the debts. If the 11 assets do not cover the liabilities or the debts, they remain unpaid and 12 creditors simply do not get all their money back. Based on MacKenzie (2002), p.91

A few things to remember ... Most companies begin as 13… limited companies. Their owners have to put capital themselves, or 14 ….. from friends or a bank. A growing company can apply to a stock exchange to become a 15 … limited company (GB)/listed company (US). Very successful companies can be quoted/listed on major stock exchanges. Public companies fulfill a large number of requirements including publishing independently audited annual reports for their 16…. Based on MacKenzie (2002), p.91

A few things to remember ... Most companies begin as 13 private-limited companies. Their owners have to put capital themselves, or 14 borrow from friends or a bank. A growing company can apply to a stock exchange to become a 15 public-limited company (GB)/listed company (US). Very successful companies can be quoted/listed on major stock exchanges. Public companies fulfill a large number of requirements including publishing independently audited annual reports for their 16 shareholders. Based on MacKenzie (2002), p.91

STOCKS/SHARES /EQUITIES Selling Who? Why? Buying Trading Where?

ISSUERS issuing shares – raising funds for expansion public companies e.g. public limited companies (Plc) *Attention!What does ’public’ mean here? listing shares at a stock exchange listing / quotation listed companies / quoted companies

ISSUING STOCKS flotation / IPO (Initial Public Offering) going public (e.g. They went public last year.) floating a company investment banks- underwriting new share issues

IPO IN PRIVATISATIONS … INA IPO starts today 13 Nov 2006 ‘Croatia has set the price range for local investors seeking to buy shares in oil company INA at between 1,400 kuna and 1,900 kuna. The IPO will start today, when subscription will open for local buyers. A roadshow for investors will start next Monday. The books will close on November 23 for private individuals and four days later for institutional investors from Croatia. The government hopes to fetch up to 2.85 billion kuna from the sale of 15 percent of INA's stock and may float a further two percent, depending on investor interest.’

…OR BY FAMOUS COMPANIES… ‘Nine years ago today, Google started trading on the public markets at $85 a share. The stock price has since risen by more than 900% through Friday’s close, and at last glance was trading north of $870.’ Source: http://blogs.wsj.com/moneybeat/2013/08/19/ (Aug, 2013) Facebook’s newly public shares are losing an average of about $1 per trading day since their offering. If that lasts, the social-networking company would be worth nothing before the end of June, and Chief Executive Mark Zuckerberg’s trips to McDonald's will seem less chic and more necessary…. Some newly public companies actually had worse first days than Facebook did. …Like Facebook, many initial public offerings were overvalued by traditional measures.  Source: http://online.wsj.com/news/articles (30 May, 2012)

…OR BY FAMOUS COMPANIES… ‘Nine years ago today, Google started trading on the public markets at $85 a share. The stock price has since risen by more than 900% through Friday’s close, and at last glance was trading north of $870.’ Source: http://blogs.wsj.com/moneybeat/2013/08/19/ (Aug, 2013) Facebook’s newly public shares are losing an average of about $1 per trading day since their offering. If that lasts, the social-networking company would be worth nothing before the end of June, and Chief Executive Mark Zuckerberg’s trips to McDonald's will seem less chic and more necessary…. Some newly public companies actually had worse first days than Facebook did. …Like Facebook, many initial public offerings were overvalued by traditional measures.  Source: http://online.wsj.com/news/articles (30 May, 2012) See more about FB IPO: http://marketrealist.com/2014/01/facebook-ipo

… OR A RECENT ONE IN CROATIA. http://www.total-croatia-news.com/business/18594-largest-ipo-in-croatia-in-nine-years-to-be-launched

SHAREHOLDERS/STOCKHOLDERS investors purchasing shares - taking part of the ownership small shareholders vs. majority shareholder retail shareholders vs. institutional investors Shareholders’ rights: to vote at AGM (AMS) to receive a dividend to claim the company's assets (in case of liquidation) to sell shares on the secondary market

TRADING trade in shares secondary market different types of shares traders stock market: stock exchanges & OTC different types of shares (e.g. ordinary shares/common stock, preferential shares/preferred stock)

Difference? Preference shares, also known as preferred shares, have the advantage of a higher priority claim to the assets of a corporation in case of insolvency and receive a fixed dividend distribution. They often do not have voting rights. Ordinary shares, also known as common shares, have a lower priority for company assets and only receive dividends at the discretion of the corporation’s management. They are generally entitled to one vote per share. Source: http://www.investopedia.com/ask/answers/043015/what-difference-between-preference-and-ordinary-shares.asp

PREFERENCE SHARES ORDINARY SHARES claim on assets dividend voting rights

The «Farm» Bulls Bears Chicken Pigs Stags bull market / bear market bullish market / bearish market Bulls make money, bears make money, but pigs just get slaughtered. Source: Investopedia

Questions based on MK, p.87 Stocks – definition? What banks are engaged in issuing stocks? Nominal value - definition? Measures of the value of stock markets? Bull/bear market – definition? Synonyms: common stock, buying/selling prices

What do stockholders have a claim on? REVISION: What are Stocks? http://www.investopedia.com/video/play/what-are-stocks Definition of a stock? What do stockholders have a claim on? What assets are mentioned in the video? What major stock exchanges are mentioned in the video clip?

What do stock tables show. Source: http://www. investopedia

Stock information on the web OPTIONAL ASSIGNMENT: WRITING A REPORT AFTER SEARCHING FOR STOCK INFORMATION ON THE WEB Study the link: http://marketrealist.com/quote-page/fb/. This shows the information for Facebook as an example for your own search. Enter the symbol/ticker for one of the three companies you are searching in the top green part of the tool bar (find the ticker on the web). Find information on the following: a) Stock exchange the company is listed at (below the name of the company), b) stock performance: stock price, dividend yield, Price-E Earnings ratio, c) company performance: revenue, gross margin, EBITDA margin, net margin, d)list of the company’s main competitors Trend in the share price (choose the period of time you are interested in: e.g. 3y, 5y, 10y, …) – COPY OR DRAW THE STYLIZED (UNDETAILED) CHART OF THE STOCK PRICE TREND ON THE BACK PAGE OF YOUR REPORT! LEAVE SPACE BELOW. Write a report on the performance of the X Company stock (stock performance of 3 days in 2008 vs. a recent period of X no. of years) Bring the printout of the report in class – all the students should have their own report of one of the companies of their choice.