1. Stock Market

2. The Stock Market Investing in Stocks & Bonds Stocks - shares of ownership Stocks & bonds are also known as SECURITIES

3. Two Types of Stock Common Stock All profit-making corporations must offer Holders participate directly or indirectly in the management of the company. Receive DIVIDENDS (return on their investments) Preferred Stock Gives holders certain privileges Paid dividends first Generally no voice in the company

4. Stock Terms Blue Chip Stocks Refers to the stocks of the largest, most consistently profitable corporations. Income stocks Stocks that pay dividends regularly Growth Stocks Pay little or no dividend, while reinvesting their profit

5. The Value of Stock Capital Gains The profit from selling stock at a higher price than they paid for it. “Timing it right” Buy low, sell high Capital Losses The lost money from selling stock at a lower price than you paid for it. Dividends Portion of the company’s profit paid out to its shareholders

6. Those involved in stock transactions: Stockbroker A dealer who specializes in stock transactions. Stockholder (Shareholder) One who owns stock.

7. Investments

8. Mutual Funds A professionally-managed form of collective investments that pools money from many investors and invests it in stocks, bonds, and other securities. Bonds Written promises to pay back by the issuer of the bond to the lender plus interest

9. Stock Exchanges Stock exchanges are trading markets where stocks & bonds are bought and sold. NYSE AMEX NASDAQ TSX

10. Securities Markets Deal primarily with stocks and bonds Purpose is for businesses to acquire investment capital Ex. NYSE/NASDAQ Not all markets are the same. Different rules for buying and selling. NASDAQ Computer based, deals with technology and new companies. Growth stocks. NYSE Floor-based, brokers represent investors. Deal with blue chip companies. Income stocks.

11. Regulation of Financial Markets Assurance that those who conduct business with the public do so in a professional and ethical manner in compliance with industry rules. Ex. Securities & Exchange Commission (SEC)

12. Factors that affect stock prices: Actions of investors Business conditions Government actions Economic indicators International events and conditions

13. Additional Terms: Initial Public Offering (IPO) - To take a company public, to make it possible for investors to buy the stock. Stock Split - More shares created at lower price per share; stockholders profit if price goes up. Reverse Split - Exchange more stocks for fewer stocks, and the price increases accordingly..

14. Bulls, Bears, and the Pigs The Bulls - A bull market is a stock market with rising prices over an extended period of time. The Bears - A bear market is a stock market with falling prices over an extended period of time. The Pigs - A pig is a greedy animal. Stock buyers who try to make every last cent of gain on an investment may end up with losses.