C12S3: Investing in Equities, Futures, and Options Main Idea: ▫Equities, or stocks, represent ownership of a corporation.

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Presentation transcript:

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