The Stock Market

Bear Market Extended period in which indexes show investment prices steadily falling. Usually accompanied by recession, high unemployment, and/or quickly rising inflation. Opposite of Bull Market

Bull Market Extended period in which investment prices rise faster than their historical average. Often result of economic recovery, economic boom, and/or investor confidence.

Capital Gain Amount by which an asset’s selling price exceeds it’s initial purchase price. Not realized until the asset is sold.

Diversification Combining a variety of investments to reduce risk in a portfolio.

Dividend Taxable payment given to shareholders out of a company’s earnings, usually quarterly; an incentive to own stock in stable companies that may experience little growth.

Equity Refers to ownership; used as a synonym for stock. Shareholders’ equity is the amount of assets owned by a company’s shareholders.

Index Statistical measure of change that serves as a gauge for a given market or industry, against which financial economic performance is measured. Examples include the Dow Jones Industrial Average and S&P 500.

Load Fees Sales charge or commission added to the purchase and/or sales price of some mutual funds. May be charged at the time of the purchase (front-end load) or when mutual fund shares are redeemed (back-end load)

Market Capitalization Measure of a company’s total value, estimated by multiplying the number of shares outstanding by the price per share.

Market Value Price on an investment determined by buyers and sellers in an open market.

Mature Reach a limit of time; due for payment. When bonds are worth their face value, they’ve matured.

Percentage Gainers (Losers) Proportion of stocks that increase (or decrease) in value during a trading period.

Securities Investments that signify evidence of debt or ownership of a corporation, government or other organization. Frequently used securities include stocks, bonds, and treasuries.

Share Represents ownership in a corporation, mutual fund, or limited partnership.

Shareholder One who owns shares of stock in a corporation or mutual funs. Also known as a stockholder.

Stock Unit of ownership in a corporation, represented shares; signifies claim on part of the corporation’s assets and earnings. Also known as equity.

Stock Exchange Public market on which shares of stock are bought and sold; also, an association that provides or maintains a marketplace where securities are traded according to fixed regulations. Examples include the American Stock Exchange (AMEX), the New York Stock Exchange (NYSE), and NASDAQ. Also known as Stock Market.

Yield Annual rate of return on an investment, expressed as a percentage.

Mutual Funds Different Types Global Funds A global fund can seek to invest in any region or country in the world. It may choose a specific concentration or it may invest broadly across asset classes and countries. Global funds can be offered as closed-end mutual funds, open-end mutual funds or exchange- traded funds (ETF). Index Funds An index fund is a type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.

Sector Funds A sector fund is a fund that invests solely in businesses that operate in a particular industry or sector of the economy. Sector funds are commonly structured as mutual funds or exchange-traded funds (ETFs). Mid-Cap Funds A mid-cap fund is a type of investment fund that focuses its investments on companies with a capitalization in the middle range of stocks in the investable market. Companies with market capitalizations ranging from $2 billion to $10 billion are typically considered mid-cap companies.

General Questions What are some strengths and weaknesses of Mutual Funds? Which type of Mutual Fund may be more profitable or less profitable than others?

Chart It Select three different mutual funds, including one index fund, and research the returns over the past ten years. Create a chart showing the funds profitability. Compare the different types of mutual funds you chose and identify the most and least successful. Which mutual fund do you think is best?

Scavenger Hunt What is a bull market? What is a bear market? What is the Dow Jones Industrial Average? List three companies in it. What is the S&P 500? How is it helpful to investors? What is the NASDAQ? How is it different than the NYSE? Identify a company in each of the following categories and find its ticker symbol on the NYSE: auto manufacturer, clothing retailer, pharmaceutical company, restaurant, sporting goods manufacturer, and toy maker. How does a ticker symbol on the NASDAQ differ from the NYSE ticker symbol? Identify two NASDAQ companies and their ticker symbol.

Building a Mock Portfolio You have to research ten companies and invest $10,000 in those ten companies. It must be in these company types: sports equipment, soft drinks, clothing, restaurants, electronics You will track the company on a stock sheet and keep track of it’s progress through a line graph.