How do Stock Markets Work?. Stocks involve more RISK than Bonds.

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Presentation transcript:

How do Stock Markets Work?

Stocks involve more RISK than Bonds

Stocks- most risk because you can lose it all if company closes down Bonds- least risk because you’re first in line to get paid if company closes down

Capital Gain (or Loss) DEFINITION- profit from selling a stock at a higher price than you paid for it

DEFINITION- a company divides its existing shares into multiple shares. STOCK SPLIT

Only licensed stock brokers can buy and sell stock through an exchange Only those with a seat on the stock exchange can buy and sell stock… a seat can cost $2.5 million

STOCK EXCHANGE place where shares are bought/sold TWO MAJOR EXCHANGES NYSE- New York Stock Exchange NASDAQ- see note box