Finance and Investment OBJECTIVE2.0 2 Interpret supply and demand graphs. ESSENTIAL QUESTIONS  How are supply and demand related to price?  How is the.

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Presentation transcript:

Finance and Investment OBJECTIVE2.0 2 Interpret supply and demand graphs. ESSENTIAL QUESTIONS  How are supply and demand related to price?  How is the market (equilibrium) price represented on a supply and demand graph?

MarketIncludes the customers and locations that a business wants to serve. SupplyHow much of a good or service a producer is willing and able to produce at different prices. DemandAn individual’s need or desire for a good or service at a given price. Vocabulary Words

Law of Demand As prices fall for a particular good or service, the demand for that item will increase and vice-versa. Law of SupplyAs the price of a particular good or service increases, the supply for that item will also be increased and vice-versa. PriceThe amount at which a good or service will be sold in a market. Vocabulary Words

Stocks are... you raise money from selling those "pieces" of your business which can be used to build new plants and facilities, pay down debt, or acquire another company. smart owner will keep at least 51% of the stock, which will allow them to retain control of the day to day activities controlling shareholder Stock is ownership in a company. (Equity) If you were to divide your business up into small pieces and sell those pieces, you would essentially have issued stock. Stocks help...

What is the Dow Jones Industrial Average? An index of thirty, blue chip stocks that are traded in the United States. It is believed that by looking at the companies on the list, a person can get a general picture of how the market as a whole is performing. The most quoted and followed index in the world, and dates back to May 26, 1896.

The Dow Jones Industrial Average™ Updated as of: Oct 26, 2:37 pm ET The use of "bull" and "bear" to describe markets comes from the way in which each animal attacks its opponents. That is, a bull thrusts its horns up into the air, and a bear swipes its paws down. These actions are metaphors for the movement of a market: if the trend is up, it is considered a bull market. And if the trend is down, it is considered a bear market. Bear or Bull Market?

Bear Market A prolonged period in which investment prices fall, accompanied by widespread pessimism Bear markets usually occur when the economy is in a recession and unemployment is high, or when inflation is rising quickly 1929 Crash most famous crash in U.S. history Dow Industrials hit a high of 386 in September, It did not get back to that level until November, 1954 Dow dropped 89% 1987 – The Market fell dramatically.

Bull Market long term uptrend (months to years) price movement in any market An extended period of generally rising prices characterized by optimism, investor confidence and expectations that strong results will continue.