Notesale: Turn your study into money

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Stock Market 101
By: Jerome M
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• Stock is a claim on the company’s
assets and earnings
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• Watch: https://youtu
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Some top stocks

©2011 Cengage Learning
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May not be scanned,

Types of Stock
• Common Stock – most common
form of stock
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©2011 Cengage Learning
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part
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Initial Public Offering (IPO)
• The first time a stock is sold to the
public
• Sold in the Primary Market

©2011 Cengage Learning
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part
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All Rights
Reserved
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All Rights
Reserved
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©2011 Cengage Learning
...
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part
...
All Rights Reserved
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The Indices (index)
• A collection of stocks—representative
of the stock market
• Dow Jones – 30 most significant stocks
in the stock market
• S&P 500 – 500 largest companies on the
US stock market
• NASDAQ Composite – all stocks on the
NASDAQ

©2011 Cengage Learning
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part
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Stock Price Goes Up and You Sell
• Buy low, sell high

2
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Why Invest in Stock

©2011 Cengage Learning
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May not be scanned,

©2011 Cengage Learning
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May not be scanned,

What Causes Stock Prices to Change?
• Supply and Demand
• Earnings and Expectations
• Sentiments and Attitudes
• Economic Indicators
• Follow the Leader (volume)
• Anything 

©2011 Cengage Learning
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part
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All Rights Reserved
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How Should I Invest?
• What are your financial goals?
• What is your risk tolerance?
• Return rises with risk

• Do you want to actively manage your
portfolio?
• Diversify
• Don’t put all your eggs in one basket!

©2011 Cengage Learning
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part
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discount?
• The Internet provides a variety of discount
brokerage firms (do it yourself)

• Fees, commission, minimum balance

• Keep it simple as you learn
• Learn about other investment vehicles
©2011 Cengage Learning
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part
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• Price – current stock price
• Open – current day’s opening price
• Close – the last trading price from the previous day
• Net Change – the net change from the previous day

• Day’s Range – the current day’s price range
• 52-Week Hi and Low – the highest and lowest prices at which a
stock has traded over the past year
• Trading Volume – the total number of shares traded for the day
• Market Capitalization – the market value of the company
• Dividend Per Share – annual dividend payment per share
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Bulls and Bears
• Bull Market – the economy is great
and stock prices are rising

©2011 Cengage Learning
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part
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Reserved
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• Buying on Margin - borrowed money that is used
to purchase securities
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• Dollar Cost Average - buying a fixed dollar
amount of a particular investment on a regular
schedule
©2011 Cengage Learning
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May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part
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Futures
• Options give the holder the right to buy or
sell the underlying asset at expiration, a
futures contract is an obligation to fulfill the
terms of a contract
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