Write This Down The Stock Market VOCABULARY Equities – stocks that represent ownership shares in corporations Efficient market hypothesis (EMH) – stocks are always priced about right and bargains are hard to find because of the large number of investors watching the market. Portfolio Diversification – holding a large number of stocks in different industries

“Don’t put all of your eggs in one basket” Have different forms of investments and stocks in different industries

Portfolio Diversification – holding a large number of stocks in different industries

Stockbroker – person who buys and sells equities for other people STOCK EXCHANGES New York Stock Exchange (NYSE) – oldest, largest and most prestigious organized stock exchange in the U.S. Portfolio Diversification – holding a large number of stocks in different industries Benefit – when one industry declines, it will be offset by gains in another.

- firms have to meet size and profit requirements STOCK EXCHANGES New York Stock Exchange (NYSE) – oldest, largest and most prestigious organized stock exchange in the U.S. - Located on Wall Street in NY - 1,400 seats (memberships), cost millions each American Stock Exchange (AMEX) – also in NY -usually smaller companies

- firms have to meet size and profit requirements STOCK EXCHANGES New York Stock Exchange (NYSE) – oldest, largest and most prestigious organized stock exchange in the U.S. - Located on Wall Street in NY - 1,400 seats (memberships), cost millions each American Stock Exchange (AMEX) – also in NY -usually smaller companies Regional Stock Exchanges – small & new companies Global Stock Exchange – ex; Tokyo, Sydney etc. OVER THE COUNTER MARKETS

NASDAQ – national Association of Securities Deals Automated Quotation - world’s largest electronic stock market

OVER THE COUNTER MARKETS NASDAQ – national Association of Securities Deals Automated Quotation - world’s largest electronic stock market The Dow-Jones Industrial Average (DJIA) companies in 80 countries - Trading happens over internet MEASURING STOCK PERFORMANCE -the average closing prices of 30 active stocks on the NYSE Standards and Poor’s price changes on 500 stocks from NYSE, AMEX, and OTC markets

Standards and Poor’s price changes on 500 stocks from NYSE, AMEX, and OTC markets BULL VS. BEAR MARKETS Bull Market = strong, prices increasing over several months/years in a row (good) - a bull has horns that go UP Bear Market = weak market, prices decreasing over several months/years in a row (bad) - a bear has claws that go DOWN

Standards and Poor’s price changes on 500 stocks from NYSE, AMEX, and OTC markets BULL VS. BEAR MARKETS Bull Market = strong, prices increasing over several months/years in a row (good) - a bull has horns that go UP Bear Market = weak market, prices decreasing over several months/years in a row (bad) - a bear has claws that go DOWN TRADING IN THE FUTURE

Spot market – transactions made immediately Futures Contract – agreement to buy or sell at a future date at a specific price Futures markets – market where they buy and sell futures contracts Options market – contracts to buy or sell commodities or assets at a future date at a specified price

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