Financial Algebra 25 April 2018

announcements I will be handing out your last homework assignment today It will be due by May 4th It won’t be hard, but you will need to access the internet to complete it I will not be proctoring next week I can finally finish this chapter (by Friday) I can finally finish updating grades (everything should be up to date within the next day or so)

announcements You will be receiving your last take-home quiz on Friday It will be due by May 8th (Seniors, this is the day of your final) You will not need all of that time (it’s only 10 questions long) Expect a study guide/Quizlet to be prepared for your final exam Hopefully by this weekend (I’m working on the vocabulary terms now) A link to it will be posted on the website as soon as it is finished

Key terms and vocabulary Bond Brokerage Commission Corporate bond Coupon payment Coupon rate Discount brokerage Diversification Dividend Face value Federal agency bond Full-service brokerage Initial public offering (IPO) Institutional investor Junk bond Municipal bond Mutual fund National Association of Security Dealers Automated Quotations (NASDAQ) New York Stock Exchange (NYSE) Primary market Publicly traded Secondary market Securities and Exchange Commission (SEC) Security Shareholder Treasury bonds

Stock exchanges The last time I lectured, we introduced IPOs (initial public offering – the first sale of a company’s stock) But unless you personally know someone involved in the company, it’s unlikely you’ll have access to an IPO So, we have a secondary market Secondary market: Organized trading centers where stock can be exchanged New York Stock Exchange (NYSE), National Association of Security Dealers Automated Quotation System (NASDAQ) – U.S. Nihon Keizai Shinbun (Nikkei Stock Average), Tokyo Stock Exchange (TSE) – Japan Newspapers typically report these worldwide

New York Stock Exchange (NYSE) Stock exchanges New York Stock Exchange (NYSE) National Association of Security Dealers Automated Quotation System (NASDAQ) Has a centralized, seemingly chaotic location While some exchanges are digital, there are also phone-, paper- and interpersonal-based communications (face-to-face) going on It works remarkably well as a system for buying and selling stocks When you place an order to buy stock in a company that is “listed”—bought and sold—on the NYSE, that order flows through that chaotic market, and your order is carried out This is a stock exchange without a central location This exchange is an electronic network of dealers who buy and sell stocks Each day that trading occurs, the stock exchanges publish the prices at which stocks trade Relatively ordered, but consider the issues that might arise if computers go down

Investor behaviors There are specialized terms used to refer to how the market is responding: “Bull” and “Bear” are the most-commonly known terms you hear investors use A “Bull market” is a term used for markets that are treading upward Things that can contribute: Strong economic growth, low interest rates, low inflation, strong industry conditions, decisions that foster growth in businesses In this market, there is strong demand for stocks but probably not enough supply to satisfy the demand A “Bear market” is a term for markets that are trending down (signs of a recession) Things that can contribute: Weak economy, high interest rates, high inflation, weak industry conditions, improper decisions that hinder business growth In this market, there is weak demand for stocks in spite of ample supply to satisfy the demand

Investor behaviors Why does any of this matter? Well, you are actually the people investing… Directly or indirectly, that’s your money at risk Shareholder: A person that owns stock in a company Dividends: The distribution of profits that shareholders are due Dividends are another way some stockholders make money in the stock market Companies pay dividends in cash, or sometimes, in additional stock Which brings me to your final homework assignment…