Investments: Chapter 11 Section 3 The Stock Market Investments: Chapter 11 Section 3
Buying Stock Shares – a portion of a stock Benefits of Buying Stock Dividends – portion of company profit (quarterly) Capital Gains – sell for more than purchased Capital loss
Buying Stock Types of Stock Stock Splits Income Stock Growth Stock or Common Stock Preferred Stock Stock Splits Splitting single shares of a stock into multiple shares for lower prices
Buying Stock Risks of Buying Stock Company may lose money Dividend is smaller, stock price drops If Company goes bankrupt, shareholders are paid last
How Stocks Are Traded Stockbroker – person who links buyers and sellers of stock Brokerage Firm – a business that specializes in trading stocks Stock Exchange The market for buying and selling stock NYSE, Nasdaq
How Stocks Are Traded Futures and Options Day Trade?????? Futures – contracts to buy or sell commodities at a particular date in the future at a price specified today Options – contracts that give investors the right to buy or sell stock and other financial assets at a particular price until a specified future date Call/Put Option – contract to buy/sell stock at a particular price until a future date Day Trade??????
Measuring Stock Performance Bull and Bear Markets Bull Market – a steady rise in the stock market over a period of time Bear Market – a steady drop or stagnation in the stock market over a period of time Dow Jones Industrial Average 30 large companies in various industries Meant to represent the whole market S&P 500 500 stocks to measure performance