STOCK MARKET

Two Things to do with Money

Income not used for

consumption

Income today that

allows future benefit

INVESTMENTSAVE

What is a Financial Intermediary?

•A financial institution that collects funds from savers & then invests that money in loans & other financial assets

Financial Intermediaries

Financial Intermediaries

Commercial BanksSavings and Loans

Credit UnionsFinance Companies

Mutual FundsPension Funds

Life Insurance Companies

savingsloans

assetsInterest & dividends

Savers Borrowers

Financial System consists of:

•Banks• Stock Markets•Bond Markets• Insurance Markets

•A ____________ of a ______________which can be bought, sold, or traded as an investment

Stock

COMPANYSHARE

Shareholder

•A _______________ or institution that ___________ a share of stock in a corporation

PERSONOWNS

Stock Exchange

•A secondary market where securities (stocks & bonds) are bought and sold

http://www.youtube.com/watch?v=_2Kt4moES0U

American Stock Exchange (AMEX)• Third largest stock exchange• Located in NYC• Is traditionally where smaller

companies & new companies start• Requirements are much less strict

than those on NYSE

NASDAQ

• Second largest stock exchange in the U.S.• _____________ (computerized) stock

market listing of over 5,000 companies•Many ________________company stocks

are sold here

Electronically

tech

New York Stock Exchange (NYSE)• Is considered a ______________exchange

b/c all trades must be made on the ___________________________• Largest & oldest exchange

Minimum Qualifications• Earning Power• Assets• Market value of common stock $18 million• 1.1 million publicly held shares• At least 2,000 shareholders

centralized

Exchange floor

Dow Jones Industrial Average (DIJA)

• A measure of stock market prices based on the weighted average of _____________

________________________ on the NYSE. • Dow is measured in ___________ that

represent dollars

Dow 30 Companies - CNNMoney

30leading stocks

points

S&P 500

•An average of 500 popular stock prices used to represent the level of general stock prices

•Considered a more accurate measure of the U.S. stock market than the Dow Jones

Securities and Exchange Commission (SEC)

• Federal agency established in 1934 to protect investors and enforce laws in the securities (stocks & bonds) industry.

Bull Market

•Stock prices are risingHints•Wide• Low• Heavily traded• 15• Below 30

Bear Market

•Stock prices are falling

http://www.youtube.com/watch?v=hashPaU7Dpk

Day Trader

•Constantly trading online to make a living

Dividend

•Company shares profits with Stockholders•Payments may be in the form of cash or stocks•Considered income so it is taxable

Stock Split

•When a company divides its shares in smaller, more economical shares.• The most common split ratios are 2-for-1

and 3-for-1, which means that the stockholder will have two or three shares for every share held earlier. The price of the new shares is adjusted downward.• Stock splits are usually done to attract new

investors.

Capital Gains

•Profit that is made from selling an asset•Considered income so it is taxable

Mutual Fund

•A pool of money managed by an investment company that gathers money from individual investors and purchases a range of financial assets

Parent Company

•A company that controls other companies by owning at least 50% of voting stock

Ex: General Mills Kraft Johnson & Johnson Pepsi Co

STOCK MARKET GAMEhttp://www.cnbc.com/id/49918947