Pp. 147-150 CHAPTER 8 Pump Primer Define common and preferred stock

pp. 147-150CHAPTER 8

Pump Primer

Define common and preferred stock

CHAPTER 8

The Stock Market


Objectives:Define common and preferred stock.Understand the term shareholder.Understand how to buy and sell stock.Be able to list the three major stock indexesUnderstand how to follow and research stocks and mutual funds.Define PE, PPE, Vol.%, YTD, high, low, and “=“ as they relate to the stock market.Understand and explain the different indexes.


Biblical Integration

We are to be temperate in business as well as in our personal life. Self-control leads to victory. (1 Cor. 9:25)


stock

shares or portions of ownership in a corporation

Types of Stock

• Common stock• most prevalent type• may receive dividends if the company has a

profit• voting privileges• last to be paid if the company fails

CHAPTER 8 pp. 147-150

Types of Stock

• Preferred stock• first to receive dividends• receive revenue before common stockholders

if the company fails• no voting privileges


Selling Stock

• To raise money• Initial public offering (IPO): the initial sale

of a company’s stock through an investment bank


Buying Stock

• Done through a stockbroker• To make a profit• To receive dividends• “Buy low and sell high”


Early Stock Market Development

• Stock exchanges• first ones appeared prior to 1700

• Philadelphia: first in America• New York: best known in the world


Organization

• To facilitate the buying and selling of stock• literal, physical location• virtual, electronic


Examples of Markets

• NYSE (New York Stock Exchange)• prestige

• NASDAQ• over-the-counter

• AMEX (American Stock Exchange)• Tokyo, London, Hong Kong



stock index

a group of stocks that analysts use for certain industrial categories to report the

behavior of prices within these categories

Stock Indices

• Dow Jones Industrial Average (DJIA)• Standard and Poor’s 500 (S&P 500)• Composite indices• Industry-specific indices


The Importance of Stock Markets

• Provides a venue for the sale of stock• Enables corporations to raise revenue• Gives investors opportunities to invest• Provides information to the market



mutual funds

privately managed stock portfolios

Past Problems

• Speculation• 1920s• speculative bubble• stock market crash of 1929


Present Safeguards

• Securities and Exchange Commission (SEC)• required financial reporting


Stock Market Survey Chart

DatePrice per share Increase Decrease Total Amt.

Company Symbol Amt. of shares:

Purchase Price: Sell price:

Company NameType of Company

DTVDirectTVCATV Systems - Service

$22.07

$22.07

100

2/9/09 ----- ----- $2207.00

25.07

2/10/092/11/092/12/092/13/092/16/092/17/092/18/092/19/092/20/09

$22.17 0.10 $2217.00

$2507.00$25.07 0.90

• After your research is complete and you have chosen five companies it is time to begin your assignment.

• Next, after the close of the market on Monday (4pm EST), you will purchase $10,000 worth of stock – using only the five companies you have chosen. (Try to come as close as you can to $10,000 without going over!)

• Use the charts provided to keep track of your stocks daily. The charts will be checked each class session.

• A week from Monday you may sell and buy stocks, however, you must maintain five companies at all times with no more and no less than five.

• All stocks are to be sold at the close of the market a week from this next Friday. Then, your stock market report should be completed. All charts and reports will be due the following class session.

• We will only be tracking the market for a total of two weeks.

Documents

Pp. 147-150 CHAPTER 8 Pump Primer Define common and preferred stock