Stocks and Bonds

• Invest: To use money to earn interest or income in the hopes of making a profit.

• What are some examples of investments? _________________________________________________________________________________________________________

• Why do people want to invest money? ___________________________________

What are stocks?

• Stocks are shares in a corporation.– A business sells stocks to people to get money.

In return, the people own part of that business. It is good for the company and the stock holders.

Stock Dividends

• Preferred Stock :Stock that offers the stockholder stated dividends / no voting rights– Example – General Motors

• Common Stock : Stock that gives the stockholder voting rights. May or may not get dividend– Example – Smaller businesses

Buying and Selling Stock

• People can buy stock for a certain price and then sell it at a higher price.

• What are these stocks? ______________________________________________________________________

• Where can you buy them? ______________________________________________________________________

Where to buy and sell stocks

• Stockbroker: A person who is licensed to buy and sell stocks for other people.– They handle the sales “middle man”

• Stock Market: A place where stocks and bonds are traded. – In the US: New York City

Gains and Losses

• Capital Gain: Profit made on selling stocks– Example: If you buy 10 shares of K-Mart stock

at $10 a share. You sell in 3 years for $20 a share. What is your capital gain? __________

• Capital Loss: Money lost from investment– Example: If you buy 10 shares of K-Mart stock

at $10 a share. You sell in 3 years for $5 a share. What is your capital loss? ___________

Bonds

• Basically an IOU

• The person who buys the bond is lending money to the government or corporation that sells the bond.

• The person earns interest.

Securities and Exchange Commission

• Government agency that regulates the trading of stocks and bonds.

• Tries to prevent people with inside information from making money unfairly.

Reading the Stock Report

• Name of stock (pf means preferred)• 52 week high/low: Shows the high and low prices

for the last 52 weeks• Div: Annual dividend paid per share• Sales Hds: Sales in hundreds (shares traded that

day)• Last: Price when market closed• Net Chg: Increase or decrease in price from

previous day.

Classwork

• 1. Page 97 1-9

• 2. Personal Economics

• 3. Look at a newspaper stock report and complete the worksheet.