 Is a company with publicly traded shares that anyone can buy in a stock market.  Is also legally separated from the stockholders (people that own the stock) and the managers that run it  Stock holders own the company

 Stockholders are not responsible for the company’s debt  A corporation continues to exist even if the stockholders or managers change  Stockholders can easily sell their ownership shares through the stock market

 May be owned by an individual  Or privately sell stocks to fund the business  Stocks are not sold publicly on the stock market

 Initial Public Offering – IPO  Initial sale of stock to the public by investment bankers  Underwriter – Investment banker that buys an entire new securities issue from a company and resells it

 3 Major stock markets 1. NYSE – New York Stock Exchange 2. NASDAQ – National Association of Securities Dealer Automated Quotation 3. AMEX- American Stock Exchange

 Common Stock  Preferred Stock

 Shares of the company do not guarantee a dividend (Part of the companies profit that are shared with the stockholder)  Dividend may be more then preferred stock holders  Right to vote for Board of Directors  Right to vote at Annual Meeting

 Guaranteed dividend  No voting rights

 Securities and Exchange Commission (SEC)

 Earnings – The amount of money that remains after subtracting the companies expenses from its revenue  Investor – Someone who risks funds with the hope of it increasing in value for the long haul  Speculator – Someone who risks funds with the hope of it increasing in value for a short period of time

Income Stocks  Income Stocks pay unusually large dividends that can be used as a means of generating income without selling the stock, but the price of the stock generally does not rise very quickly.

Blue-Chip Stocks  Issued by very solid and reliable companies with long histories of consistent growth and stability, blue-chip stocks usually pay small but regular dividends and maintain a fairly steady price throughout market ups and downs.

Growth Stocks  Issued by young, entrepreneurial companies that are experiencing a faster growth rate than their general industries, these stocks normally pay little or no dividend because the company needs all of its earnings to finance expansion. Since they are issued by companies with no proven track record, growth stocks are riskier than other types of stocks but also offer more appreciation potential.

Cyclical Stocks  Cyclical stocks are issued by companies that are affected by general economic trends. The prices of these stocks tend to go down during recessionary periods and increase during economic booms. Examples of cyclical stock companies include automobile, heavy machinery and home building

Defensive Stocks  The opposite of cyclical stocks, defensive stocks—issued by companies producing staples such as food, beverages, drugs and insurance—typically maintain their value during recessionary periods.