Investing in Equities, Futures Investing in Equities, Futures and Options:and Options:

The Efficient Market Hypothesis states that The Efficient Market Hypothesis states that it is not possible to “beat the market” it is not possible to “beat the market” regularly.regularly.

investors should diversify their portfolios by investors should diversify their portfolios by holding a large number of stocksholding a large number of stocks

Organized Stock ExchangesOrganized Stock Exchanges

The New York Stock Exchange (NYSE) lists the The New York Stock Exchange (NYSE) lists the shares of about 2,800 large companies, and has shares of about 2,800 large companies, and has 1,400 seats or memberships with access to the 1,400 seats or memberships with access to the trading floor.trading floor.

The American Stock The American Stock Exchange (AMEX) lists Exchange (AMEX) lists the shares of about the shares of about 750 companies.750 companies.

Regional stock Regional stock exchanges list shares exchanges list shares that are too small or that are too small or too new to be listed on too new to be listed on the NYSE or the the NYSE or the AMEX.AMEX.

The Over-the-Counter MarketThe Over-the-Counter Market

Most shares are not Most shares are not traded on exchanges traded on exchanges but in electronic over-but in electronic over-the-counter (OTC) the-counter (OTC) trades.trades.

NASDAQ lists NASDAQ lists information on information on companies traded companies traded OTC.OTC.

Measures of Stock Performance Measures of Stock Performance

The Dow-Jones The Dow-Jones Industrial Average is Industrial Average is an index made up of an index made up of 30 stocks.30 stocks.

Standard & Poor’s 500 Standard & Poor’s 500 is an index made up of is an index made up of 500 representative 500 representative stocks.stocks.

A bull market is a A bull market is a market in which prices market in which prices are risingare rising

a bear market is a a bear market is a market in which prices market in which prices are falling.are falling.