1. An Introduction to the Equity Markets
The Stock Market
An Introduction to the Equity Markets

2. What is a Stock
Stock
Stock is a share or unit of ownership in a company.
Represents a claim on a company’s assets and earnings
Stock may be publicly traded or privately held
Being a shareholder gives you voting rights attached to the stock
Look up XOM on yahoo finance. Find the top shareholders. Who owns Exxon Mobile?

3. Dividends Dividends are payments of company profits to shareholders
What is the current per share dividend for AT&T? (Symbol: T)
What is the current yield?
What about Apple? (AAPL)
Why would a company pay a dividend?
Why would they choose not to pay one?

4. Limited Liability Limited Liability.
You as a shareholder are only on the hook for your investment in the company.
It allows you, the shareholder, to be an owner in a company without risking all you own.

5. Different Types of stock
Common - shares represent ownership in a company and a claim (dividends) on a portion of profits. Investors get one vote per share to elect the board members, who oversee the major decisions made by management.
has variable dividends that are not guaranteed.
Preferred - stock represents some degree of ownership in a company but usually doesn't come with the same voting rights. (This may vary depending on the company.)
investors are usually guaranteed a fixed dividend until the stock is called.
Preferred is ahead of common in liquidation of company assets
Preferred stock may also be callable, meaning the company has the right to buy them back from you at a certain price.
Different Classes – maybe issued with different levels of voting rights.

6. Discussion Zone What is a Stock? What is a dividend?
What does it represent?
What is a dividend?
What is dividend yield?
What is limited liability? Why is it important?
What are the 2 types of stock?
Why are they different?

7. Stock Exchanges A Stock Exchange is a place where stocks are traded.
The purpose of a stock exchange is to facilitate the exchange of securities between buyers and sellers, reducing the risks of investing.
Imagine how difficult it would be to sell shares if you had to call around the neighborhood trying to find a buyer.
Most famous – NYSE (New York), NASDAQ (over the counter), American Exchange (AMEX)
Over the Counter (OTC) – means no central location or facility. Trades done electronically over the phone or computer.
Pink Sheets – Penny Stocks –

8. Primary Vs Secondary
primary market - is where securities are created (by means of an IPO).
secondary market -investors trade previously-issued securities without the involvement of the issuing-companies. The secondary market is what people are referring to when they talk about the stock market. It is important to understand that the trading of a company's stock does not directly involve that company.

9. Bulls and Bears Bulls – Think the market or stock is going up
The buyers
Bears – Think the market or stock is going down
The sellers

10. How Price is determined
Bids – A bid is the price that a buyer is willing to buy a stock.
Asks – An ask is the price that a seller is willing to sell
The trade price is determined when these to prices meet and a trade or exchange occurs

11. Order Types
Market – An order where you are willing to take the best bid (if you are selling) or ask (if you are buying). Your order is entitled to execution but not a price.
Limit – An order where you set your bid(if you are buying) or ask(if you are selling). You are guaranteed a price, but not order execution
Stop – The lowest price (or highest if you are buying) you are willing to let the stock drop to before a market order is entered
Stop – Limit - The lowest price (or highest if you are buying) you are willing to let the stock drop to before a limit order is entered

12. Discussion Zone What is an stock exchange?
The most popular?
What is the difference between a primary and secondary exchange?
Describe a Bull and a Bear.
How is price determined?
What are the 4 order types?

13. Account Types
Non-Qualified – Regular Individual, Joint, or Corporate Account
Qualified
Traditional IRA
Roth IRA
IRA – Individual Retirement Arrangement

14. Non-Qualified Accounts
Fully Taxable
Money maybe withdrawn and deposited without limits or penalties
Individual Account
One Person
Joint Accounts
2 or more people
UTMA – Universal Transfer to Minor Accounts
Custodial accounts for Minors
Must have an Adult as a custodian
In Texas, adult does not have to give up control until Minor is 21 years old

15. Qualified Accounts Tax benefits
Limits on contributions based on income
Not available to everyone
Restrictions and penalties on withdrawals
Generally used for retirement purposes

16. IRA – Individual Retirement Arrangement
Both require W2 wages to contribute
Contribution limit lesser or 100% of income or $5,000 ($6,000 if over 50)
Penalties for withdrawals if done before age 59 ½. Some exemptions.
Traditional IRA
Tax-deferred
Contributions may be tax deductible
Pay taxes on growth when money withdrawn
Roth IRA
Tax free – No taxes paid on growth
Contributions are not tax deductible

17. Discussion
What are the difference between Qualified and non-Qualified?
What is an IRA and how is it helpful for retirement?
At what age must a custodian give up control of an account to the Minor in Texas?