1. Mr. Stasa – Willoughby-Eastlake City Schools
TYPES OF STOCKS
Mr. Stasa – Willoughby-Eastlake City Schools

2. Order of financial priorities
When should you invest?
Order of financial priorities
Establish an 8-month emergency fund to establish financial security
Invest in the stock market for long-term goals

3. Investments usually earn higher rates of return than savings accounts
What’s a rate of return?
The rate of return is the total return (profit) of an investment expressed as a percentage
Total Return
Amount of Money Invested
Rate of Return
Investments usually earn higher rates of return than savings accounts

4. Avandy Sandy
Avandy placed $2,200 into the stock market. After one year, she has a return (profit) of $110. What is Mandy’s rate of return?
$110
$2,200
.05 = 5%

5. Derek Carrot
Derek invested $900 in mutual funds. When he withdrew his money from the investment, he had a total of $1,050. What is Derek’s rate of return?
$150
$900
.167 = 16.7%

6. Not all stocks offer dividends. (AMZN) Dividends are taxable income
A dividend is a paid portion of a company's profits to its shareholders on a quarterly basis.
Not all stocks offer dividends. (AMZN)
Dividends are taxable income

7. Common stock are stocks that pay a variable dividend
Gives the holder voting rights.

8. Preferred stock are stocks that pays a fixed dividend
No voting rights.
Stockholder earns the stated dividend regardless of how the company is doing.
Less risky than common stock.

9. EX. Coke, Apple, IBM. Conservative, low risk.
BLUE CHIP STOCK
Blue chip stock are stocks of large, well established corporations with a solid record of profitability.
EX. Coke, Apple, IBM. Conservative, low risk.

10. Penny stock are stocks of young, usually small companies.
High risk stocks since they have no record or history.

11. Do poorly during a recession, when the economy is slow.
CYCLICAL STOCK
Cyclical stock are stocks that do well when the economy is stable or growing
Do poorly during a recession, when the economy is slow.
These are usually “luxury” stocks that perform poorly when people lose their jobs.
Ex. Airlines, resorts, banks.

12. DEFENSIVE STOCK
Defensive stock are stocks that remain stable and still pay dividends during an economic decline.
Not greatly effected by the business cycle.
Ex. Utilities, drugs, food

13. Reflects the price investors are willing to pay for the stock.
MARKET VALUE
Market value is the price for which the stock is bought and sold in the marketplace.
Reflects the price investors are willing to pay for the stock.
How well a company is doing determines its market value

14. BEAR MARKET
A bear market is a prolonged period of falling stock prices and a general feeling of investor pessimism.
Develops when investors become negative about the overall economy and start to sell stock.

15. BULL MARKET
“Charge ahead!”
A bull market is a prolonged period of rising stock prices and a general feeling of investor optimism.