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Published byMeryl Aubrey Daniels Modified over 8 years ago
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SAVING AND INVESTMENT CHOICES Savings plans Savings account Certificate of deposit Money market account Securities Stock investments Bond investments Mutual funds Alternative investments Real estate Commodities Collectibles SLID E 1
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EVALUATING SAVINGS AND INVESTMENTS Safety and risk Potential return Liquidity Taxes SLID E 2
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INVESTMENT PYRAMID SLID E 3
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TYPES OF STOCK Preferred stock Common stock SLID E 4
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Common Common stock provides its holder with the right to vote on major company issues and on who will serve on the company’s board of directors. Common stock is usually more prone to rapid changes in its value than is preferred stock. Therefore, there is more risk associated with common stock than preferred.
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Preferred Holders of preferred stock usually do not have voting rights and the stock usually does not grow or drop in value as much as common stock. It is usually more expensive than common stock. If the company issues dividends, preferred stock holders are always paid first—before holders of common stock—and they are guaranteed a portion of the profits if dividends are declared. .
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Drawbacks Each type of stock has benefits and drawbacks. Both common and preferred stocks are bought and sold in the same manner. A company may offer both common and preferred stocks. Both common and preferred stock signify ownership in the issuing company. Both common and preferred stock are traded on stock exchanges
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Stock Info Review How does preferred stock differ from common stock? Preferred stock has priority over common stock in the payment of dividends. Investing in preferred stock is less risky than common stock, but preferred stockholders generally have no voting rights within the corporation. Common stock represents general ownership in a corporation and a right to share in its profits. Common stockholders are entitled to one vote per share. Although preferred stockholders are paid first, their dividends usually are limited to a set rate. SLID E 8
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STOCK MARKET PRICE REPORT SLID E 9
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Economic Factors How do various economic factors affect stock prices? Inflation affects stock prices by causing lower spending by consumers, reducing company profits out of which dividends are paid. Falling or rising interest rates can also increase or decrease company profits as the cost of money changes. The employment rate also affects stock prices; when more people are employed, they spend more money on a company ’ s products and stock prices rise. SLID E 10
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