Stocks Part 2: Indexes, Market Cap, and Market Orders.

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Presentation transcript:

Stocks Part 2: Indexes, Market Cap, and Market Orders

 2 Types of Stock: Income: Income: These are stocks that pay dividends.These are stocks that pay dividends. Dividends – a payment (usually 4 times a year) from the profits of the company.Dividends – a payment (usually 4 times a year) from the profits of the company. Growth: Growth: These stocks do not pay dividends. They reinvest the profits into the company so that the stock goes up in value.These stocks do not pay dividends. They reinvest the profits into the company so that the stock goes up in value.

 Other terms you need to know:  Blue Chip Stocks: Companies that are well established. Companies that are well established. Ex: Shell(RDA), Coke(KO), IBM Ex: Shell(RDA), Coke(KO), IBM Usually these stocks are expensive to buy! Usually these stocks are expensive to buy!  Penny Stocks: Stocks that sell for less than $5.00 Stocks that sell for less than $5.00 Ex: Solar EnerTech Corp. (SOEN) Ex: Solar EnerTech Corp. (SOEN)

 Stock Market Index: A weighted average of a number of stocks. A weighted average of a number of stocks. Used for tracking the overall progress of a certain market OR industry. Used for tracking the overall progress of a certain market OR industry.  Ex: NYSE: NYSE: Dow Jones Industrial Average – 30 Blue Chip stocksDow Jones Industrial Average – 30 Blue Chip stocks S&P 500 – Weighted Average of 500 Blue Chip stocksS&P 500 – Weighted Average of 500 Blue Chip stocks Nasdaq: Nasdaq: Nasdaq Composite – All of the stocks in the NasdaqNasdaq Composite – All of the stocks in the Nasdaq

 Market Capitalization: Same as “Market Cap” Same as “Market Cap” It is what the public agrees that a company is worth! It is what the public agrees that a company is worth! Number of Shares * Price of a Share Number of Shares * Price of a Share Example for Coke: Example for Coke: 2.3 Billion Shares * $60 per share = 138 Billion!2.3 Billion Shares * $60 per share = 138 Billion! Coke is worth 138 Billion Dollars!Coke is worth 138 Billion Dollars!

 Market Order – An order to buy or sell stock at the current trading price.  A single order will cost you $9.  Buying Stock: Order: Buy Order: Buy Number of Shares Number of Shares Term: Day Order Term: Day Order Pricing Type: Market Pricing Type: Market (This is the information needed)