Evaluating Stocks

What are stocks? – are-stocks#axzz1nnLDblG4 are-stocks#axzz1nnLDblG4 How do they move? – moves-stock-prices#axzz1oLS1Hrtk moves-stock-prices#axzz1oLS1Hrtk

Two Classes of Stock (1) Blue chip stocks – Well-established corporations – History of steady sales and profits – Generally pay dividends every year – Stock values generally don’t change rapidly – Lower risk – AT&T, Ford, General Motors

Two Classes of Stock (2) Growth stocks – Smaller or younger corporations that produce new products may grow rapidly in their sales and profits – Often pay no, or very small, dividends – Investors hope to earn a large capital gain in the future – Riskier! – Intel and Microsoft

Two Classes of Stock (2) Growth stocks (continued) – Investors hope to earn a large capital gain in the future – Riskier! – Intel and Microsoft

Chart Comparison Blue Chip Stock - NKE Growth Stock

What are mutual funds? oduction-mutual-funds#axzz1nnLDblG4 oduction-mutual-funds#axzz1nnLDblG4

Mutual Funds Investors pool money to buy stocks, bonds and other securities. – Characteristics Managed by investment advisors Can sell at any time Purchase through funds itself or through stock exchange or NASDAQ – Examples: Money Market Funds Bond Funds

Bonds d-investing#axzz1oLS1Hrtk d-investing#axzz1oLS1Hrtk

Junk Bonds Businesses in financial difficulty will sell bonds to raise money – Offer high interest rates to entice buyers High-return, high-risk bonds – Also called high-yield bonds