1. Buying and Selling Securities

2. Objectives Explain the operation and regulation of securities markets.
Discuss factors to consider when selecting a brokerage firm.
Interpret newspaper quotations for listed securities.

3. Objectives Describe the process of buying and selling securities.
List the major sources of investment information about securities.
Estimate and calculate potential returns on investments.

4. Objectives
Explain the 12-step investment process.

5. Buying and Selling Securities
BROKERAGE FIRM
specializes in buying and selling negotiable securities, such as stocks, bonds, and mutual funds.

6. Securities Markets PRIMARY MARKET: Initial public offerings (IPOs)
Investment banking firms
Venture capitalists

7. Flow of Stocks and Bonds in Primary Markets

8. Securities Markets SECONDARY MARKETS: Securities markets Stock broker
Account executive
Registered representative

9. Flow of Securities in Secondary Markets

10. ORGANIZED STOCK EXCHANGES:
Securities Markets
New York Stock Exchange
American Stock Exchange
Regional Stock Exchanges
NASDAQ Over-the Counter Market
ORGANIZED STOCK EXCHANGES:

11. SECURITIES MARKET REGULATION:
Securities Markets
SECURITIES MARKET REGULATION:
Self-regulation
State
Federal
Investor’s insurance

12. Brokerage Firm Operation
General brokerage firms
Commissions and fees
Discount brokerage firms
Opening an account

13. Interpretation of Quotations
Columns 1 and 2: 52 weeks, high and low
Column 3: Stocks
Column 4: Sym
Column 5: Div
Column 6: Yld%
Column 7: P/E
Column 8: Vol 100s
Column 9,10,11: High, Low, Close
Column 12: Net Chg

14. Securities Transactions and the Investor
Trading process
Matching or negotiating prices
Types of orders
Market Order
Limit Order
Stop Order

15. Securities Transactions and the Investor
Time limits
Purchasing mutual funds
Direct purchase
Contractual accumulation plan

16. Information About Securities
General economic conditions
Securities market indexes
Dow Jones Industrial Average (DJIA)
Standard & Poor’s 500
New York Stock Exchange Composite
American Stock Exchange (AMEX)
NASDAQ Composite
Nikkei Dow

17. Information About Securities
Information about industries
Trade associations
Industry-oriented investment publications

18. Information About Securities
Information about specific companies and funds
Annual reports
Prospectuses
Profile prospectuses
10-K reports
Investment rating publications
Research reports

19. Estimating and Calculating Potential Returns on Investments
Use Beta to calculate estimated required rate of return
Calculate potential rate of return on particular investment
Compare estimated required rate of return with projected rate of return

20. Total Estimated Rate of Return Calculation

21. How to Invest: A Twelve-Step Process
1. Identify personal investment philosophy.
2. Identify desired total return.
3. Keep an eye on local situations.
4. Set time horizon for investing objectives.
5. Choose your preferred investment medium.
6. Study available investment alternatives.

22. How to Invest: A Twelve-Step Process
7. Choose an investment for it components.
8. Invest in companies that will out earn competitors.
9. Develop plan for investing and stick with it.
10. Diversify portfolio.
11. Invest regularly.
12. Reinvest earnings.