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Warm Up
What does it mean when a person has stock in a
company?
Monday, March 23, 2015
Objective: Students will be able to assess ways to be a wise investor in
the stock market and in other personal investment options.
Purpose: Making investments can be risky, so it is important to know
how to identify risks when making an investment.
Stocks
• Stock: a portion of
ownership of a company
• People who own stocks are
called shareholders
• By selling shares,
corporations raise money to
start, run, and expand their
businesses.
Benefits of Stocks
• Dividends: the profits by the corporation that are paid to
the stockholders.
• The size of the dividend depends on the amount of profit that the
corporation made.
• Capital Gains: the difference between a higher selling price
and a lower purchasing price.
• You could also have a capital loss
Risks of Stocks
• Buying stock is a risky
business because
stockholders may lose a
lot of money.
• The more money that an
investor pays for stock,
the greater the risk of
losing money.
Stock Exchanges
• Stock Exchange: market for buying and selling stock
• Most American stock exchanges are in New York
• Most newspapers publish the results of daily activity on the
floor of major stock exchanges.
Buying Stocks
• Most people buy and sell stocks through brokers
• Brokers buy and sell stocks for others in exchange for a small fee
• Others will buy and sell stocks on the floor of a stock
exchange
• Some even buy and sell stocks online, although it is not as
secure
New York Stock Exchange
• Largest stock exchange in the world
• Two indices
• The Dow (The Dow Jones Industrial Average)
• They take the 30 most representative companies in each industry and
come up with an index number
• S&P 500: Looks at 500 different companies as a measure of the
overall stock market performance.
New York Stock Exchange
• NASDAQ: stock index of technological companies
• Stock indices tell us:
• How well the economy is performing
• How the economy will perform in the future
• Stock prices change due to the performance of a company