What is Stock? A partial ownership of a company. Given out as piece of paper (certificate) Stock is divided into SHARES - A share is how much of a company you own. Example: A company may release 10,000 total shares of stock You can buy these shares for a given value.

Why do companies issue stock? When a company issues stock, people buy it and the money goes to the company The company can further develop products or pay expenses Let’s say a company decides to issue 10,000 shares of stock for $5 ea. The company instantly made $50,000

Why do people buy stock? People buy stock to hopefully make more money in the future by selling the stock If companies do well  the stock value ↑ people can make $$$ when they sell If companies do poorly  the stock value ↓ people may lose $$$ when they sell

What is the stock market? A system that allows people to buy and sell (trade) stocks from each other People use Brokers (representatives): Brokers trade at an exchange (New York) Brokers trade at offices over phone/on-line People can also trade on-line now

Buying on Margin Making only a small cash payment while getting the rest of the money as a loan. Loans come from stockbrokers Example: You have: $1,000.00 You borrow: $9,000.00 (your margin) You can purchase: $10,000.00

Margin Call After a certain amount of time you will receive a margin call: The stockbroker says its time to pay him back! The stockbroker may not make a margin call because his interest will continue to grow OR He can ask for some or all of his money back

Stock values for Apple – 5 years

Stock values for GM – 1 Day

How it works ! (10 min) See the floor ! (2 min) It can get crazy ! (1 min)

Ready – Set – Buy! It’s now your turn to invest in the Stock Market! You need to PAY ATTENTION in order to successfully complete the worksheet. You will pick TWO companies in which to invest money…

Your stock options on 10/29/24 American Can (AC) American Telephone & Telegraph (AT&T) General Electric (GE) General Motors (GM) United States Steel (USS) Radio Corporation of America (RCA) PER SHARE $73 $123 $182 $14 $106 $10

Your stock on 10/29/27 $110 American Can (AC) $193 PER SHARE $110 $193 $221 $203 $151 $220 American Can (AC) American Telephone & Telegraph (AT&T) General Electric (GE) General Motors (GM) United States Steel (USS) Radio Corporation of America (RCA)

How much money did you make?

Your stock on 10/29/29 $34 American Can (AC) $114 PER SHARE $34 $114 $139 $10 $84 $2 American Can (AC) American Telephone & Telegraph (AT&T) General Electric (GE) General Motors (GM) United States Steel (USS) Radio Corporation of America (RCA)

How much money did you make?

Now you know HOW the market crashed Now you know HOW the market crashed. Tomorrow we’ll look at WHY the market crashed.

On the back of your sheet, explain, in your own words, what buying on margin means and how it is good and bad.