1. THE STOCK MARKET Le marché boursier Die Börse 株式市場 By: Will Brennan-Arffmann

2. Table of Contents The History of the Stock Market The Definition of a Stock Market The Stock Market’s Function and Purpose Difficulties of a Stock Market

3. HISTORY First Signs of a Stock Market Cairo (11 th century): - Cairo formed a trade association and knew methods of credit and payment France (12 th century): - This nation founded Les courratiers de change; they were concerned w/ managing and regulating the debts of agricultural communities on behalf of the bank Bruges (13 th century): - Formed “Brugse Buerse” in 1309, a group which was made up of commodity traders which soon spread to Ghent and Amsterdam

4. DEFINITION Main Definition: The trading of Company stocks, and securities »Securities: Instruments representing value 1.Bond – Debt Security 2.Equities – Represent ownership interest 3.Investment Funds – Firms that invest in pooled funds of retail investors for a fee: Retail- Selling directly to the customer 4.Derivatives: Contract between two or more parties - Futures Contracts – Used to hedge or speculate the price movement of an underlying asset: An item of economic value owned by an individual or a company - Forward Contracts – Cash market transactions that are made in the future - Options – The right to buy or sell a specific amount of a given stock - Swaps – An exchange of payments over time 5.Structured Finance – A service offered to compensate with unique financing needs (involves complex financial transaction) 6.Agent Securities (AAA) – Put out by agencies of the government, not a company

5. Function And Purpose Important for companies to raise money Raises additional capital for expansion Liquidity (marketability): The ability to change assets to cash quickly 1. Enables business to meet its payment Shares: 1. Important part of the dynamics of economic activity 2. Rising share prices are associated w/ increased business investment 3. Prices affect the wealth of household consumption Central Bank (“The Fed”): 12 Federal Reserve Banks in US 1. Main responsibility is to maintain the stability of the national currency 2. Keep an eye on control and behavior of the stock market and smooth operation of financial system functions Exchanges (“Share Exchange”/ “Bourse”): A clearing house for each transaction; A physical location where traders meet to conduct business or an electrical platform

6. DIFFICULTIES Stock Markets are very risky, and can lead to the loss of millions/billions of dollars, creating a stock market crash Examples: Amsterdam Stock Exchange Crash of 1636- This crash was one of the earliest of the crashes. It was mainly caused by “tulip mania”, a phrase that is used metaphorically to mean an “economic bubble.” Wall Street Crash of 1929- This crash began on Black Tuesday, when the Dow Jones Industrial average fell 38 points to 260 (12.8% drop). A huge amount of selling had occurred, and the New York technology was not able to cope with it. By July of 1932, the Dow Jones Industrial average fell 89% of its value. Dow Jones Industrial Average (DJIA): A price weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The Crash of 1987- Black Monday was the first day of the crash of 1987. Many people lost money due to the failed Nasdaq market system. Stocks in the NYSE faced trading halts and delays due to the amount of sell orders. Liquidity in the Nasdaq dried up because of its system that allowed traders to withdraw from the system. From October 14-19, the DJIA lost 760 points, the equivalent of over 31%. All of these examples of a stock market crash show how important it is to invest well, and always be careful of what goes on in the world of the STOCK MARKET

7. THE STOCK MARKET SpeakerWill Brennan-Arffmann DirectorWill Brennan-Arffmann ProducerWill Brennan-Arffmann Coffee Guy Will Brennan-Arffmann Assistant Will Brennan-Arffmann WriterWill Brennan-Arffmann NO ANIMALS WERE HARMED IN THE MAKING OF THIS MOVIE Given to you in part by: The Math department at Saint Thomas Choir School The computer: http://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/wiki/Stock_market http://investopedia.com/ Saint Thomas Church Mr. O’keefe THIS MOVIE IS DEDICATED TO ALL OF YOU OUT THERE WHO HAVE LOST A LOT OF MONEY IN THE STOCK MARKET