1. Do Now  If you didn’t finish your study guide on Friday, come up and get it. Finish answering the questions. We will correct them in a few minutes.  If you’re done with your study guide, get a laptop and print your spreadsheet. Make sure your name is TYPED at the top. Staple it (if necessary) and turn it in.

2. Personal Finance & Economics

3. 1 Billy bought ABC corporation stock at $27/share. Later he sold it at $31/share. This is an example of. Capital gain

4. 2 List ways that an investor can make money on stocks. Dividends Capital gain

5. 3 _______ are spaced at intervals around the trading floor of the NYSE. Trading posts

6. 4 The largest securities exchange in the USA. NYSE

7. 5 A name for owners of a corporation. Shareholders or stockholders

8. 6 The over-the-counter market. NASDAQ

9. 7 _______ buy and sell stocks on the exchange. They must be members of the exchange. Floor brokers

10. 8 Prolonged period of rising stock prices and a general feeling of investor optimism. Bull market

11. 9 ______________ are the part of the corporations profits paid to stockholders. Dividends

12. 10 Borrowing money from a broker to buy stock. Leverage or buying on margin

13. 11 In order to purchase stock, you must know the ______ of the corporation. Ticker symbol

14. 12 Period of falling stock prices and a general feeling of investor pessimism. Bear market

15. 13 A _________ is a stockholder’s written authorization to transfer his or her voting rights to someone else, usually a company manager. Proxy

16. 14 This is an increase in the value of the stock above the price initially paid for it. Capital gain

17. 15 The _______ is an assigned, arbitrary dollar value that is used to calculate dividends. Par value

18. 16 This type of stock pays a variable dividend and gives the holder voting rights. Common stock

19. 17 A marketplace where brokers who are representing investors meet to buy and sell securities. Stock exchange or security exchange

20. 18 List a long term investing strategy. Dollar-cost averaging Buy and hold Reinvesting dividends Direct investment

21. 19 This is when a shareholder sells stock for less than what they paid for it. Capital loss

22. 20 List an example of a cyclical stock. Explain. Travel agency  travel spending can easily be cut during times of recession

23. 21 List a short term investing strategy. Short selling Leverage or buying on margin

24. 22 This type of stock is a bargain for investors, but is dangerous for businesses because it makes them vulnerable to takeovers. Undervalued stock

25. 23 Buying stock directly from a corporation. Direct investment

26. 24 Selling stock borrowed from a broker that must be replaced at a later time. Short selling

27. 25 ________ is the price investors are willing to pay for the stock. Market value

28. 26 List an advantage to owning stock as opposed to investing in a small business. The investor can lose no more than their initial investment.

29. 27 The systematic purchase of an equal dollar amount of the same stock at regular intervals. Dollar-cost averaging

30. 28 ____________ have a consistent history of paying high dividends. Income stocks

31. 29 A _____ is an increase in the number of shares outstanding of a company’s stock. Stock split

32. 30 _____________ are stocks in corporations that reinvest their profits. Growth stocks

33. 31 Benchmark that investors use to judge the performance of their investments. Stock indices

34. 32 Another term for buying on margin. Leverage

35. 33  This type of stock…….  Pays fixed dividends.  Carries no voting rights.  Less risky  Much less potential for major earnings.  Preferred stock

36. 34 Using dividends previously earned on the stock to buy more shares. Dividend reinvestment

37. 35 If the stock drops to around ½ of the original purchase price, the investor receives a _______ - the investor must pledge additional cash or securities to serve as collateral for the loan. Margin call

38. 36 The __________, elected by the stockholders to guide the corporation, decides the amount of dividends to be paid each year. Board of directors

39. 37 List the formula for calculating return on investment. Profit/cost

40. 38 A __________ is one that remains stable and pays dividends during an economic decline. Defensive stock

41. 39 This type of stock is selling at a price that is not justified by the corporation’s earnings. Overvalued stock

42. 40 A ____________is 100 shares or multiples of 100 shares of a particular stock. Round lot

43. 41 ______________ are stocks of large, well-established corporations w/ a solid record of profitability. Blue Chip stocks

44. 42 ________ do well when the economy is stable or growing, but often do poorly during recessions, when the economy slows down. Cyclical stocks

45. 43 List an example of a defensive stock. Explain. Pharmaceutical – people need even in times of recession

46. 44 List an example of a stock index. DJIA S&P 500

47. 45 Samantha bought XYZ Corporation stock at $48/share. Later she sold it for $22/share. This is an example of what? Capital loss

48. 46  List an advantage to direct investment.  Avoid broker’s commissions.

49. 47  What do all short-term investment strategies have in common?  Risky

50. #48 ROI  Billy Brandon purchased 200 shares of XYZ Corp stock at $32.50/share & paid a $500 commission. Today’s market price is $41.75/share. Last year he received dividends of $1.45/share.  23.4%

51. #49 Dividends  There are 6,500 shares of $30 par value preferred stock & 3,000 shares of common stock. Preferred has a 5% guaranteed rate of return. Dividends of $.75 per share are declared of common stock.

52. #49 Answer Common Stock Preferred Stock Total Dividends $2,250$9,750 Dividends per Share $.75$1.50

53. #50 ROI  Billy Brandon purchased 250 shares of XYZ Corp stock at $15.80/share & paid a $283 commission. Today’s market price is $10.11/share. Last year he received dividends of $.85/share.  -35.3%

54. Final Question  List and explain 2 long- term investing strategies & 2 short-term investing strategies.