* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download - Fairview High School
Survey
Document related concepts
Financial crisis wikipedia , lookup
Algorithmic trading wikipedia , lookup
Security (finance) wikipedia , lookup
Investment fund wikipedia , lookup
Naked short selling wikipedia , lookup
Market sentiment wikipedia , lookup
Hedge (finance) wikipedia , lookup
Socially responsible investing wikipedia , lookup
Efficient-market hypothesis wikipedia , lookup
Day trading wikipedia , lookup
2010 Flash Crash wikipedia , lookup
Stock valuation wikipedia , lookup
Stock market wikipedia , lookup
Short (finance) wikipedia , lookup
Securities fraud wikipedia , lookup
Transcript
Click here to advance to the next slide. Chapter 31 Investing Section 31.2 Stocks Read to Learn Discuss stocks and stock markets. Identify the advantages and disadvantages of owning stocks. The Main Idea A stock is a share of ownership in a corporation. Stock prices may change continuously. Though stocks offer the possibility of high rates of return on investment, they also carry a greater degree of risk. Key Concepts Investing in Stocks Advantages and Disadvantages of Stocks Key Terms stock a share of ownership in a corporation dividends a share of profits given to stockholders Key Terms capital gain a profit made from the sale of a financial asset such as stock or a bond capital loss an amount lost when an asset is sold for less than its cost Key Terms common stock that provides the most basic stock form of corporate ownership stock that gives the owner the advantage preferred of receiving cash dividends before stock common stockholders receive any. Key Terms a person who buys and sells stockbroker stocks, bonds, and other securities for clients stock exchange an organized market for buying and selling financial securities Key Terms mutual fund a fund created by an investment firm that raises money from many shareholders and invests it in a variety of stocks or other investments Investing in Stocks When a person buys a stock, there is no promise of a return on investment. stock a share of ownership in a corporation Figure 31.2 Possible Investments Investing in Stocks Companies that sell stock must follow rules set up by the Securities and Exchange Commission, or SEC. The SEC also has strict rules for financial professionals. Return on Stocks A shareholder can receive a return on stocks through payment of dividends and from selling the stock. dividends a share of the profits given to shareholders Return on Stocks The government taxes the amount received in dividends or capital gains. capital gain a profit made from the sale of a financial asset such as stock or a bond Return on Stocks Sometimes, selling a stock can result in a capital loss. capital loss an amount lost when an asset is sold for less than its cost Return on Stocks The return on foreign stocks is generally issued in the currency of the nation where the firm has its headquarters. Return on Stocks The rate of return on stocks is always expressed as a percentage of the original investment and figured on an annual basis. Types of Stock Common stock entitles the stockholder to voting privileges. common stock stock that provides the most basic form of corporate ownership Types of Stock Preferred stock does not entitle the stockholder to vote on company issues. preferred stock stock that gives the owner the advantage of receiving cash dividends before common stockholders receive any Types of Stock Blue-chip stocks are stocks in large, wellestablished companies. Speculative stocks are stocks in new firms without an established track record. Stockbrokers Stockbrokers act as a link between buyers and sellers. stockbroker a person who buys and sells stocks, bonds, and other securities for clients Stockbrokers Stockbrokers charge a commission for their services. Many people lower their investment fees by buying and selling securities on the Internet. Stock Exchanges Most stocks are bought and sold through a trading market known as a stock exchange. stock exchange an organized market for buying and selling financial securities Stock Exchanges Some of the best-known exchanges are the New York Stock Exchange (NYSE®) and the American Stock Exchange (Amex®). Stock Exchanges Companies are listed on exchanges with codes called stock symbols, or ticker symbols. Over-the-Counter Markets Over-the-counter securities are traded directly between buyers and sellers in person or via computer. Over-the-Counter Markets Many over-the-counter securities can be bought and sold through the National Association of Securities Dealers Automated Quotations (NASDAQ®). Mock Portfolios Build a mock portfolio by choosing at least three companies that interest you. Write each company’s ticker symbol next to its name and the date. Document their performance. Read stories about them. Mutual Funds A mutual fund has great buying power. mutual fund a fund created by an investment firm that raises money from many shareholders and invests it in a variety of stocks or other investments Short- and Long-Term Investing Long holding periods are an excellent way to build wealth while minimizing risk. Short- and Long-Term Investing Day traders are people who buy and sell stock based on minute-by-minute changes in the price of stocks. The risk that day traders face is high. Advantages and Disadvantages of Stocks A general principle when investing is that the greater the risk, the greater the possibility of a larger return. Advantages and Disadvantages of Stocks Advantages of Buying Stocks Over time, stocks offer better returns than savings accounts or bonds. Common stockholders can help make decisions about the company in which they are investing. The liquidity of stocks allows them to be quickly converted into cash. Stocks generally keep up with inflation. Advantages and Disadvantages of Stocks Disadvantages of Buying Stocks More risk than other forms of investing. No guarantee of return. If the company goes bankrupt, its stockholders may receive little or none of their investment back. A stockholder may lose money when he or she sells a stock because the value may have decreased. 1. Discuss stocks and stock markets. Stock is a share of ownership in a business. Return is the amount of money the stock earns. Stocks are traded on stock exchanges. 2. Identify an advantage and a disadvantage of stocks. Advantage: possibility of receiving a higher rate of return. Disadvantage: riskier than savings accounts or bonds. 3. Why is it important to discuss your financial goals with a financial professional? so you can reassess your investment strategies as your needs change End of Chapter 31 Investing Section 31.2 Stocks