1. The Stock Market VOCABULARY
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The Stock Market
VOCABULARY
Equities – stocks that represent ownership shares in corporations
Efficient market hypothesis (EMH) – stocks are always priced about right and bargains are hard to find because of the large number of investors watching the market.
Selling stocks in a company is basically selling ownership of the company to other people
Each piece of ownership is called a shares of stock
People can sell the stock whenever they wish
40% of Americans own stock in U.S. companies
Portfolio Diversification – holding a large number of stocks in different industries

2. “Don’t put all of your eggs in one basket”
Have different forms of investments and stocks in different industries

3. Portfolio Diversification – holding a large number of stocks in different industries

4. Portfolio Diversification – holding a large number of stocks in different industries
Benefit – when one industry declines, it will be offset by gains in another.
Stockbroker – person who buys and sells equities for other people
STOCK EXCHANGES
New York Stock Exchange (NYSE) – oldest, largest and most prestigious organized stock exchange in the U.S.

7. STOCK EXCHANGES
New York Stock Exchange (NYSE) – oldest, largest and most prestigious organized stock exchange in the U.S.
- Located on Wall Street in NY
- 1,400 seats (memberships), cost millions each
- firms have to meet size and profit requirements
American Stock Exchange (AMEX) – also in NY
-usually smaller companies

9. STOCK EXCHANGES
New York Stock Exchange (NYSE) – oldest, largest and most prestigious organized stock exchange in the U.S.
- Located on Wall Street in NY
- 1,400 seats (memberships), cost millions each
- firms have to meet size and profit requirements
American Stock Exchange (AMEX) – also in NY
-usually smaller companies
Regional Stock Exchanges – small & new companies
Global Stock Exchange – ex; Tokyo, Sydney etc.
OVER THE COUNTER MARKETS

10. OVER THE COUNTER MARKETS
NASDAQ – national Association of Securities Deals Automated Quotation
- world’s largest electronic stock market

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13. OVER THE COUNTER MARKETS
NASDAQ – national Association of Securities Deals Automated Quotation
- world’s largest electronic stock market
companies in 80 countries
- Trading happens over internet
MEASURING STOCK PERFORMANCE
The Dow-Jones Industrial Average (DJIA)
the average closing prices of 30 active
stocks on the NYSE
Standards and Poor’s 500
- price changes on 500 stocks from NYSE, AMEX, and OTC markets

14. Standards and Poor’s 500
- price changes on 500 stocks from NYSE, AMEX, and OTC markets
BULL VS. BEAR MARKETS
Bull Market = strong , prices increasing over several months/years in a row (good)
- a bull has horns that go UP
Bear Market = weak market, prices decreasing over several months/years in a row (bad)
- a bear has claws that go DOWN

18. Standards and Poor’s 500
- price changes on 500 stocks from NYSE, AMEX, and OTC markets
BULL VS. BEAR MARKETS
Bull Market = strong , prices increasing over several months/years in a row (good)
- a bull has horns that go UP
Bear Market = weak market, prices decreasing over several months/years in a row (bad)
- a bear has claws that go DOWN
TRADING IN THE FUTURE

19. TRADING IN THE FUTURE
Spot market – transactions made immediately
Futures Contract – agreement to buy or sell at a future date at a specific price
Futures markets – market where they buy and sell futures contracts
Options market – contracts to buy or sell commodities or assets at a future date at a specified price

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