1. Stock Market Notes

2.  Definition: Part ownership in a business › If the business is successful, you make money › If not, you lose money  How much stock one has is measured in Shares › e.g., 5 shares means you own 5 parts of the company

3.  Blue Chip Stock: nickname for a stock that is considered safe and in excellent financial shape; usually don’t go up or down that much; e.g., Coca Cola  Growth Stock: stock expected to grow at an above average rate relative to the market; e.g., Under Armour  Penny Stock: company with shares trading less than $3 on average -***New trend; high risk, high reward!  Volatility: Measure of how risky it is to invest in the stock

4.  Dividends: portion of the company’s profits from one year › Example: $50 dividend; you have 100 shares  = $5,000 dividend  Increase in Stock Value: If the company is successful, the ownership is worth more. ***You only see this profit if you sell your stock!!!

5.  Capital Gains: selling your stock for a profit  Capital Loss: selling your stock for a loss  When you sell your stock, you must also pay a capital gains tax  Stock Splitting: Is it a good thing? › Yes!!! You get double the shares › Usually the stock’s value increases significantly before it splits

6.  Stock Exchange: brokers, investors, and companies all connected › New York Stock Exchange (NYSE) is the largest in the entire world › A Company must be in excellent financial shape to be listed on a stock exchange  National Association of Securities Dealers Automated Questions (NASDAQ): over the counter stocks are sold › NOT sold at a stock exchange › Sold through brokers online

7.  Dow Jones Industrial Average: average stock increase of 30 of our largest companies › Examples???  Standard and Poor’s (S&P): average stock increase of 500 other companies

8.  Bull Market: stock market is doing well on average for a prolonged time  Bear Market: stock market is doing poorly on average for a prolonged time

9.  Sales & company profits  Confidence in the economy  Confidence in the companies  Natural disasters, terrorist attacks, catastrophic events

10.  Securities & Exchange Commission (SEC): › Created after the Great Depression by FDR › Protects against fraud, illegal trading, & faulty companies › Example: Martha Stewart  Received inside info that stocks/companies were going down & sold right before they plummeted – went to jail

11.  Stock Table: gives you basic information and price history for stocks

12.  Stock Ticker Symbol: Represents the company’s stock; ***Usually the symbol is similar to the name but not always  Company Name will not be listed; always listed by the Ticker symbol  Sales 100s: number of shares that were bought and sold the last day the stock traded (volume) › Always given in hundreds, so you need to add 2 zeros to the number to get the actual number of shares traded › GE 6567 = 656,700 shares

13.  Hi: the stock’s highest price the last day it traded; ***Don’t always get to sell it for the highest price  Low: the stock’s lowest price the last day it traded  Last: the stock’s last traded price of the day; Also known as the Close (closing price); Price we will use for the stock market challenge  Change: amount of change of the stock’s closing price from today compared with the previous day’s closing price › What was GE’s closing price yesterday? › Last: 25.73 + 2.40 = 28.13 › UNCH = Unchanged