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Stocks!

Stocks!. Unit 4. Homework: Due Wed, 4/17/13. Choose 10 corporations that you think will increase in value over the next 5 weeks. Type a paragraph for each. In each paragraph, discuss 1) What good or service this corporation sells, 2) Why you think it’ll gain in value

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Stocks!

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  1. Stocks! • Unit 4

  2. Homework: Due Wed, 4/17/13 Choose 10 corporations that you think will increase in value over the next 5 weeks. Type a paragraph for each. In each paragraph, discuss 1) What good or service this corporation sells, 2) Why you think it’ll gain in value 3) What the stock ticker symbol is (finance.yahoo.com) 4) What market is it traded on (NYSE, NASDAQ or AMEX)?

  3. Forming a corporation • To become a corporation, a business needs to incorporate • Why Incorporate?? • Expand the business • Gain capital

  4. how to incorporate:initial public offering • Initial Public Offering (IPO): • AKA: Stock Market Launch • First sale of a stock from a private company to the public

  5. how to incorporate:initial public offering • Example: Small airline wants to incorporate • Hires Goldman Sachs as an investment bank • Files the necessary papers to the Security Exchange Commission (SEC) • Has an Initial Public Offering • 10 Million shares are sold to the public at $50 each • Goldman Sachs takes $5 Million for fees • The airline raised $495 million for resources

  6. What is a stock? • Certificate of ownership in a corporation • Represents partial ownership of a corporation

  7. Share of a stock • Share of a Stock: piece of ownership in a corporation • The value of the share changes when the value of the corporation changes

  8. Ticker Symbol • The abbreviation used to represent a stock • Ex) Apple = AAPL • Ex) Google = GOOG

  9. Is it a game of luck? • A stock could either increase or decrease in value • Because of this, many choose to have a diverse portfolio

  10. Portfolio diversification • Portfolio diversification means having different types of stocks. • Why?: To offset any declining stocks

  11. Determining the value of a stock • Potential for growth • Reputation (past history) • Internal and external events

  12. How to Purchase a stock • Hire a stockbroker to buy or sell stocks • Go through a discount brokerage firm online (i.e. E-Trade)

  13. Organized Stock Trades • Organized securities exchange: places where buyers and sellers meet to trade stocks • New York Stock Exchange (NYSE) • American Stock Exchange (AMEX)

  14. New York stock Exchange (NYSE) • Oldest, largest, most prestigious stock exchange in the U.S. • Lists stocks from 2,800 companies

  15. American stock exchange (AMEX) • Also prestigious • Companies on AMEX are smaller than on NYSE • Has about 750 listed stocks

  16. Over-the-counter markets • OTC Markets: Electronic marketplace for stocks not exchanged in organized stock exchanges • NASDAQ

  17. NASDAQ • National Association of Securities Dealers Automated Quotation • Largest electronic stock market • Has mostly technology-related companies

  18. Measurements of stock performance • Dow-Jones Industrial Average • Standard & Poor’s 500 • Bull vs. Bear Markets

  19. Dow-Jones Industrial Average • Most publicized and popular measure of stock market performance on the NYSE • Looks at the stocks of 30 top corporations

  20. Standard & Poor’s 500 (S&P 500) • Looks at the prices of 500 different stocks • Includes stocks from NYSE, AMEX, and NASDAQ

  21. Bull vs. bear markets • Bull Market: “Strong” market that is moving up • Bear Market: “Mean” market with falling prices

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