1. Chapter 11 Section 3 – The Stock Market

2. Buying Stock Stock or Equities – Represents ownership in a company Issued in portions called shares – Help corporations raise money

3. Benefits Dividends – Corporations pay out part of their profits (Quarterly) Capital Gains – Selling a stock for more than paid – Capital Loss

4. Types of Stock Income Stock – Pays dividends at regular times during year Growth Stock – Issuing company reinvests its earnings in its business Common Stock – Voting Owners Preferred Stock – Nonvoting, receive dividends before Common

5. Stock Split Owners of common stock may vote for this Each single share of stock splits into more than one share – Companies may do this when stock prices are too high and push away investors – Usually a good thing

6. Risk More Risky than Bonds – Stockholders only receive dividends after bondholders have been paid If company earns low profits then dividends are smaller than expected (based on profit)

7. How Stocks are Traded Brokerage Firm – Stockbroker Advises investors Links Buyers and Sellers of Stock Commission or sell stocks at higher price than they paid and earn the “spread” Stock Exchanges – Markets for buying/selling stock – Internet

8. New York Stock Exchange NYSE since 1792 Largest in Country – Handles only the largest and most established companies (Blue Chip Companies)

9. NASDAQ-AMEX American Stock Exchange – Used to be second largest till lost business to internet – 1998 merged with National Association of Securities Dealers’ Automated Quotation system Riskier stocks than NYSE (Small companies, High-tech and Energy, Global Stocks)

10. Trading Stocks OTC Market – Internet Futures Options – Call Option – Put Option Day trading

11. Measuring Stock Performance Bull Market Bear Market The Dow S&P 500

12. The Great Crash of 1929