C12S3: Investing in Equities, Futures, and Options Main Idea: ▫Equities, or stocks, represent ownership of a corporation.
C12S3: Investing in Equities, Futures, and Options Key Terms: ▫Efficient Market Hypothesis (EMH) ▫Stockbroker ▫Seat ▫Dow-Jones Industrial Average ▫Standard & Poor’s 500 ▫Spot market ▫Futures market ▫Options market
C12S3: Investing in Equities, Futures, and Options Market Efficiency ▫Stocks should be traded at the correct value ▫You are expected to get a good deal
C12S3: Investing in Equities, Futures, and Options Organized Stock Exchanges ▫Also called securities exchanges, this is where stocks are traded ▫New York Stock Exchange (NYSE) Oldest, largest, most prestigious Has 1,400 seats Lists stocks from about 2,800 companies
C12S3: Investing in Equities, Futures, and Options Organized Stock Exchanges
C12S3: Investing in Equities, Futures, and Options Organized Stock Exchanges ▫American Stock Exchange (AMEX) 750 stocks Smaller and more speculative stocks ▫Regional Exchanges Chicago, Pacific, Philadelphia, Boston, Memphis Share some stock listings with NYSE ▫Global Stock Exchanges Operate in large cities like Sydney, Tokyo, Hong Kong People from around the world trade on them
C12S3: Investing in Equities, Futures, and Options Over-the-Counter Markets ▫Electronic trade markets Most important: National Association of Securities Dealers Automatic Quotation (NASDAQ) Connects more than 80 countries Lists over 4,000 large and small companies
C12S3: Investing in Equities, Futures, and Options Measures of Stock Performance ▫Dow-Jones Industrial Average Samples 30 stocks to give an idea of overall performance Measures NYSE ▫Standard & Poor’s 500 Samples NYSE, AMEX and OTC markets
C12S3: Investing in Equities, Futures, and Options Measures of Stock Performance ▫Bull vs. Bear Markets Bull markets are strong markets with prices moving up Bear markets are mean markets with falling prices
C12S3: Investing in Equities, Futures, and Options Trading in the Future ▫Spot and Future Markets Spot markets allow trades to take place at the current price Futures markets can drive up the price of stocks that are expected to rise
C12S3: Investing in Equities, Futures, and Options Trading in the Future ▫Options Markets Like futures markets, but you can back out of the deal Call option lets you buy a share at some point in the future Put option lets you sell a share of stock at some point in the future
C12S3: Investing in Equities, Futures, and Options Chapter 12 Quiz in 10 minutes With a partner, answer “Reviewing the Facts” 1, 3, 4, 7, 8, 12