Stock Market TermsStandard 3.2 Apply the concepts of buying and selling stock

Objectives:

TSW define the basic terminology for buying and selling stock by using them in written form.

TSW display their understanding of buying and selling stock through the simulation game How the Market Works buy spending at least three fourths of their $100,000 portfolio.

Two Types of Stock

Common Stock

Preferred Stock

Common Stock

Shares or units of ownership in a public corporation

Basic form of ownership

5 ways common stock values can be changed

The dollar value increases or decreases

Stock split occurs– shares owned by existing stockholders are split into larger numbers of shares

A merger between two companies

Dividends are paid

Preferred Stock

Shares that pay fixed dividends and have priority over common stock

Dividends are stated as a percentage known as par value

A fixed value on the stock certificate

Less risky than common stock

Reading Stock Quotes

YTD is the Year to Date percent change of the stock price from January 1st of the current year.

Example: If the stock was $43.00 on January 1st and $36.00 on July 30th, the percent change would be -16.3%

52 Week High Low

52-Week High & Low shows the highest and lowest prices the stock was sold per share during the last 52 weeks

Stock Ticker

Every stock’s company is abbreviated with a Ticker symbol this is provided.

Dividends Per Share

Dividends per share is the total cash paid to common stockholders per share annually

Helpful when determining the type of stock

If a company paid $10,000 in dividends for 30,000 shares, the dividends per share would be $0.33

Price/Earnings Ratio

Price/earnings ratio is the closing price of the share compared to the annual earnings per share If the stock’s market price is $50.00 and the earnings

per share is $2.25, the P/E ratio is 22.2For every dollar the company earns, the stock’s

market price is worth $22.00 A high number indicates people are optimistic about

the company and health of the market.