StocksStocksPart 2: Indexes, Market Part 2: Indexes, Market Cap, and Market OrdersCap, and Market Orders

2 Types of Stock:2 Types of Stock:

Income: Income: • These are stocks that pay dividends. These are stocks that pay dividends. • Dividends – a payment (usually 4 times a year) from the Dividends – a payment (usually 4 times a year) from the

profits of the company.profits of the company.

Growth: Growth: • These stocks do not pay dividends. They reinvest the profits These stocks do not pay dividends. They reinvest the profits

into the company so that the stock goes up in value.into the company so that the stock goes up in value.

Other terms you need to know:Other terms you need to know:

Blue Chip Stocks:Blue Chip Stocks: Companies that are well established. Companies that are well established. Ex: Shell(RDA), Coke(KO), IBMEx: Shell(RDA), Coke(KO), IBM Usually these stocks are expensive to buy!Usually these stocks are expensive to buy!

Penny Stocks:Penny Stocks: Stocks that sell for less than $5.00Stocks that sell for less than $5.00 Ex: Solar EnerTech Corp. (SOEN)Ex: Solar EnerTech Corp. (SOEN)

Stock Market Index:Stock Market Index: A weighted average of a number of stocks.A weighted average of a number of stocks. Used for tracking the overall progress of a certain Used for tracking the overall progress of a certain

market OR industry.market OR industry.

Ex:Ex: NYSE:NYSE:

• Dow Jones Industrial Average – 30 Blue Chip stocksDow Jones Industrial Average – 30 Blue Chip stocks• S&P 500 – Weighted Average of 500 Blue Chip stocksS&P 500 – Weighted Average of 500 Blue Chip stocks

Nasdaq:Nasdaq:• Nasdaq Composite – All of the stocks in the NasdaqNasdaq Composite – All of the stocks in the Nasdaq

Market Capitalization:Market Capitalization: Same as “Market Cap”Same as “Market Cap” It is what the public agrees that a company is It is what the public agrees that a company is

worth!worth! Number of Shares * Price of a ShareNumber of Shares * Price of a Share

Example for Coke:Example for Coke:• 2.3 Billion Shares * $60 per share = 138 Billion!2.3 Billion Shares * $60 per share = 138 Billion!• Coke is worth 138 Billion Dollars!Coke is worth 138 Billion Dollars!

Market Order – An order to buy or sell stock at Market Order – An order to buy or sell stock at the current trading price. the current trading price.

A single order will cost you $9.A single order will cost you $9.

Buying Stock: Buying Stock: Order: BuyOrder: Buy Number of SharesNumber of Shares Term: Day OrderTerm: Day Order Pricing Type: MarketPricing Type: Market

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