Transcript Slide 1

Investment: in economics, using money
to attain future profit
Corporation: a form of business, authorized
by a government charter,that is recognized
as a legal person and that carries certain
privileges not given to other forms of
business.
Benefits of a Corporation
The corporation is sued for problems
that deal with the corporation not the
individuals who make up the corporation.
Therefore, personal liability in business
dealings is greatly reduced.
Can only loose amount of money
invested
Disadvantages of a Corporation
Loss of control over the company
Making Money
Corporations can sell stock in their
companies.
Stock: a certificate of investment and
usually part ownership in a corporation,
expressed in terms of number of shares.
People that own stock are called
stockholders.
Making Money
Stockholders can make money from their
investments in the corporation in two ways.
1. Dividends – a share or percentage of
the company’s profits. (when company is
making $)
2. Selling their stock at higher price than
they bought the stock (“buy low & sell
high”)
Stockholders
Board of Directors
Responsible for goals & policies
Chooses corporate officers
Owners in Corporation
Purchased shares help
to fund company
May get to vote
For board members &
issues
CEO (& other corporate officers)
Carries out Boards decisions
Head of corporate divisions
Vice Presidents
The leaders of Company Divisions
Report to CEO
Department Heads
Leaders of departments
Report to Vice Presidents
Employees
Basic workers
Report to Department Heads
Common Stock
•Have voting
rights
•May receive
dividends but this
is not guaranteed
Preferred Stock
•Have no voting
rights
•Are guaranteed
to be paid
dividends
Stocks are listed by their symbol
A symbol is the name assigned to each
stock by the stock exchange.
Do not confuse stock symbols with the
abbreviated name of the company found in
the financial section a newspaper.
Company name
Microsoft
Lockheed Martin
Disney
Gap
Dell Inc.
Stock Symbol
MSFT
LMT
dis
GPS
dell
Stock Market
Nasdaq, US
NYSE
NYSE
NYSE
Nasdaq, NM
Stock exchange: the place (marketplace)
where stocks are bought, sold and
traded.
Examples
New York Stock Exchange (NYSE)
American Stock Exchange (ASE)
NASDAQ (National Association of Securities
Dealers Automated Quotation)
Brokers: the people that buy, trade and sell stock
for the investor.
Current trading
price per share
The stock price at the end
of the previous day.
The $ difference
between previous
day's closing price and
the current price.
Opening
price of stock
The total shares
traded on previous day
Higest &
lowest prices
for the day
The price
Range of the
Stock over
The last 52
weeks
NIKE INC CL B (NYSE:NKE)
Last
Trade
April 10 ·
118.38
Day's Range
112.00 118.50
Change
+3.44 (+2.99%)
Bid
118.69
52-week Range
50.12 - 120.00
The price which someone
Is willing to pay for the stock
Price at which stockholder will sell
Ask
119.00
Prev Cls
114.94
Volume
19,187,900
Open
113.69
P/E
54.47
closing price
divided by the last
12 months' earnings
per share
Div Date
Mar 1
Avg Vol
25,019,180
Div/Shr
0.12
Yield
0.10
When
Dividends
Will be
paid
Average
Trading
volume
The payment per share
given to stockholders
The dividend paid the stock
(based current price)
Dow Jones Industrial Average: Introduced
by Charles Dow in 1896. It is a record of the
average performance of a large group of
about 30 Blue Chip stocks from various
market sectors. (Blue Chip Stocks are
stocks from corporations with consistent
profits and that are paying dividends.)
It is also considered a reflection of how the
United States stock market as a whole is
doing.
Standard & Poor's 500 Index (S&P
500): “A well-known, value-rated index
of 500 major US companies: 400
industrial firms, 20 transportation firms,
40 utilities firms, and 40 financial firms”
When the price of stock becomes very high, a
corporation can request a stock split. Stock
splits give stockholders two or more shares of
stock for each stock that they own. The
stockholder’s number of shares increases but
value of the stock would then decrease.
Example: If you owned 20 shares of Pickul
stock at $100 a share, a stock split would then
give you 40 shares of Pickul stock at $50.00 a
share.
Reverse Stock Split: the opposite of a stock
split.
The corporation “substitutes one share of
stock for a predetermined amount of shares
of stock.”
Example: Pickul Corporation’s current stock
price is $20.00 a share. Then, Pickul
Corporation declares a 1 for 4 reverse stock
split.
The stock price will now be $80.00. If you
owned 100 shares of Pickul Corporation, you
now 25 shares at $80 a share after the split.
*The total value of your investment did not
change.
Companies do this because they hope “that
the higher stock price will make the company
look better and thus more investors will
purchase the stock and the stock price will
rise as more people buy it.”
Speculation: participating in business
transactions with high-risk factors in the hope
of making large amounts of money
Capital gains: profits made from the sale or
trading of an investment, such as stock
shares
Capital loss: the loss of money when
investing
Bear market: a period of declining stocks
prices
Bull market: a period of increasing stock
prices
Stock screener: online tool used to help
select stocks by select criteria chosen
by the user. Example: Yahoo Stock Screener