Stock Prices A stock’s price is an indication of what investors believe a company is worth reflects a company's current value investor’s expectations.

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Presentation transcript:

Stock Prices A stock’s price is an indication of what investors believe a company is worth reflects a company's current value investor’s expectations of future growth and earnings.

Events and Situations that influence stock prices market forces such as supply and demand which impacts the share prices If more people want to buy a stock (demand) than sell it (supply), then the price goes up. if more people wanted to sell a stock than buy it, supply exceeds demand and the price falls.

Events and Situations that influence stock prices News events working in conjunction with public opinion also play a role Fundamental data such as P/E ratios and projected earnings help investors place a value on a stock

Events and Situations that influence stock prices Reports on internal corporate activity, industry trends, and national/international events (e.g. political, social and scientific news) are interpreted as either “good” or “bad” news by the public, who in turn determine whether a company is a good investment or not.

Events and Situations that influence stock prices Public companies must report their earnings four times a year (once each quarter). Analysts base their opinions about future value of a company on its earnings projections. If a company's results are better than analysts expected, the stock price rises. If a company's results are worse than expected the stock price falls.

Events and Situations that influence stock prices Investors have developed literally hundreds of variables, ratios and indicators to predict stock price changes. The main forms of stock analysis are: fundamental, technical and quantitative. Each approach involves following various market indicators to decide whether to buy, sell, or hold.

Vocabulary Market Capitalization: A measure of the value of a company, calculated by multiplying the number of outstanding shares by the current price per share. For example, a company with 100 million shares of stock outstanding and a current market value of $25 a share has a market capitalization of $2.5 billion.

Activity Activity Sheet 2: Influences on the Market