pp CHAPTER 8 Pump Primer Define common and preferred stock

CHAPTER 8 The Stock Market

pp CHAPTER 8 Objectives: Define common and preferred stock. Understand the term shareholder. Understand how to buy and sell stock. Be able to list the three major stock indexes Understand how to follow and research stocks and mutual funds. Define PE, PPE, Vol.%, YTD, high, low, and “=“ as they relate to the stock market. Understand and explain the different indexes.

pp CHAPTER 8 Biblical Integration We are to be temperate in business as well as in our personal life. Self-control leads to victory. (1 Cor. 9:25)

pp CHAPTER 8 stock shares or portions of ownership in a corporation

Types of Stock Common stockCommon stock most prevalent typemost prevalent type may receive dividends if the company has a profitmay receive dividends if the company has a profit voting privilegesvoting privileges last to be paid if the company failslast to be paid if the company fails CHAPTER 8 pp

Types of Stock Preferred stockPreferred stock first to receive dividendsfirst to receive dividends receive revenue before common stockholders if the company failsreceive revenue before common stockholders if the company fails no voting privilegesno voting privileges CHAPTER 8 pp

Selling Stock To raise moneyTo raise money Initial public offering (IPO): the initial sale of a company’s stock through an investment bankInitial public offering (IPO): the initial sale of a company’s stock through an investment bank CHAPTER 8 pp

Buying Stock Done through a stockbrokerDone through a stockbroker To make a profitTo make a profit To receive dividendsTo receive dividends “Buy low and sell high”“Buy low and sell high” CHAPTER 8 pp

Early Stock Market Development Stock exchangesStock exchanges first ones appeared prior to 1700first ones appeared prior to 1700 Philadelphia: first in AmericaPhiladelphia: first in America New York: best known in the worldNew York: best known in the world CHAPTER 8 pp

Organization To facilitate the buying and selling of stockTo facilitate the buying and selling of stock literal, physical locationliteral, physical location virtual, electronicvirtual, electronic CHAPTER 8 pp

Examples of Markets NYSE (New York Stock Exchange)NYSE (New York Stock Exchange) prestigeprestige NASDAQNASDAQ over-the-counterover-the-counter AMEX (American Stock Exchange)AMEX (American Stock Exchange) Tokyo, London, Hong KongTokyo, London, Hong Kong CHAPTER 8 pp

CHAPTER 8 stock index a group of stocks that analysts use for certain industrial categories to report the behavior of prices within these categories

Stock Indices Dow Jones Industrial Average (DJIA)Dow Jones Industrial Average (DJIA) Standard and Poor’s 500 (S&P 500)Standard and Poor’s 500 (S&P 500) Composite indicesComposite indices Industry-specific indicesIndustry-specific indices CHAPTER 8 pp

The Importance of Stock Markets Provides a venue for the sale of stockProvides a venue for the sale of stock Enables corporations to raise revenueEnables corporations to raise revenue Gives investors opportunities to investGives investors opportunities to invest Provides information to the marketProvides information to the market CHAPTER 8 pp

CHAPTER 8 mutual funds privately managed stock portfolios

Past Problems SpeculationSpeculation 1920s1920s speculative bubblespeculative bubble stock market crash of 1929stock market crash of 1929 CHAPTER 8 pp

Present Safeguards Securities and Exchange Commission (SEC)Securities and Exchange Commission (SEC) required financial reportingrequired financial reporting CHAPTER 8 pp

Stock Market Survey Chart Company Symbol Amt. of shares: Purchase Price:Sell price: Company Name Type of Company DTV DirectTV CATV Systems - Service $ /9/ $ /10/09 2/11/09 2/12/09 2/13/09 2/16/09 2/17/09 2/18/09 2/19/09 2/20/09 $ $ $ $

After your research is complete and you have chosen five companies it is time to begin your assignment. Next, after the close of the market on Monday (4pm EST), you will purchase $10,000 worth of stock – using only the five companies you have chosen. (Try to come as close as you can to $10,000 without going over!) Use the charts provided to keep track of your stocks daily. The charts will be checked each class session. A week from Monday you may sell and buy stocks, however, you must maintain five companies at all times with no more and no less than five. All stocks are to be sold at the close of the market a week from this next Friday. Then, your stock market report should be completed. All charts and reports will be due the following class session. We will only be tracking the market for a total of two weeks.