1. How do Stock Markets Work?

2. Stocks involve more RISK than Bonds

4. Stocks- most risk because you can lose it all if company closes down Bonds- least risk because you’re first in line to get paid if company closes down

5. Capital Gain (or Loss) DEFINITION- profit from selling a stock at a higher price than you paid for it

6. DEFINITION- a company divides its existing shares into multiple shares. STOCK SPLIT

7. Only licensed stock brokers can buy and sell stock through an exchange Only those with a seat on the stock exchange can buy and sell stock… a seat can cost $2.5 million

8. STOCK EXCHANGE place where shares are bought/sold TWO MAJOR EXCHANGES NYSE- New York Stock Exchange NASDAQ- see note box