1. V. STOCKS

2. F. Stock Markets 1.New York Stock Exchange – contains traditional (physical) trading and online trading, operates in the U.S. and Europe NYSE, New York Stock Exchange > About UsNYSE, New York Stock Exchange > About Us 2.NASDAQ – totally electronic market with no trading floor NASDAQ Stock Market - Stock Quotes - Stock Exchange News - NASDAQ.comNASDAQ Stock Market - Stock Quotes - Stock Exchange News - NASDAQ.com 3.Regional Stock Exchanges – there are six regional exchanges listed with the Securities and Exchange Commission, including the Boston Stock Exchange, the Chicago Stock Exchange, the National Stock Exchange, the Philadelphia Stock Exchange, the Pacific Stock Exchange and the CBOE Stock Exchange Read more: http://www.finweb.com/investing/regional-stock- exchanges.html#ixzz2fjNAdjQHhttp://www.finweb.com/investing/regional-stock- exchanges.html#ixzz2fjNAdjQH 4.Over the Counter (OTC) – “Pinksheets” and NASD Bulletin Board – Bulletin Board for registered stocks that do not meet exchange listing requirements, Pinksheets are unregistered – generally small and new companies with small market volume Why Do Stock Exchanges Matter?Why Do Stock Exchanges Matter?

3. F. Stock Markets (Continued) 4.Each market has its own listing requirements:

4. F. Stock Markets (Continued) 5.Physical Trading – trading floor a.Bid – the price a potential buyer is willing to pay for a security b.Ask – the price that a seller wants to receive for his or her securities c.Spread – the difference between bid and ask d.Liquidity – how “easy” it is to buy or sell a security – depends upon average number of shares traded per day, an indicator of liquidity is the bid/ask spread

5. F. Stock Markets (Continued)

6. 6.Electronic Market Trading a.No physical location – trading distributed over a telecommunications network b.Stocks are offered for purchase and/or sale by market makers – market makers post buy and sell prices for guaranteed lots of shares, purchasing or selling on behalf of their clients when that price is met c.Stocks can be listed for purchase or sale on several different markets

7. F. Stock Markets (Continued)

8. 7.Electronic Communications Networks (ECNs) a.Stocks listed directly by buyers and sellers b.Reduces cost, but generally limited to institutional shareholders (with sufficient numbers of shares to trade)

9. G. The Value of a Stock 1.Pricing depends upon supply and demand 2.Return on Investment a.Price appreciation (capital gain) or depreciation (capital loss) is generally the primary component of stock gains or losses b.Return also includes dividends i.Dividends are declared by corporate boards of directors, and paid quarterly – payable to holders of the stock as of the declaration date ii.Ex-Dividend – the period between the declaration and the payment date – shares purchased when a stock is ex-dividend do not have a right to receive dividend payments