Economics Chapter 8 The Stock Market.
Stock Portfolio
A collection of stocks from different individual corporations.
Standard and Poor's 500 (S&P 500)
A commonly reported investment index that includes five hundred stocks and is intended to give an even broader perspective on business in the United State than the DJIA.
Dividends
A distribution of a portion of the corporation's profits.
Securities and Exchange Commission (SEC)
A governmental agency founded to ensure that corporations provide accurate and current information to the public about their financial situations and their business dealings.
Stock Index
A group of stocks that analysts use to help identify stock trends in specific industries.
American Stock Exchange (Amex)
A lesser-known but still reputable American stock market.
Stock Exchange
A location at which stock is traded.
Stock Broker
A person who generally works for a brokerage company and who specializes in buying and selling stocks on behalf of his clients.
Speculation
Actively buying and selling stocks for the purpose of taking advantage of short-term price changes.
Tape
An electronic message board used to indicate stock prices and transactions.
1. The stock market being a location (literal, or virtual) at which people come together (physically, or electronically) to buy and sell shares of stocks. 2. The Stock market is also like other markets in that the prices of its products usually reflect what consumers are willing to pay for them.
In what two ways is a stock market like other markets?
1. Provides a venue for the sale of stock. 2. The market also provides opportunities for individuals to invest. 3. Provides information to corporate leaders, economic analysts, and government policy makers.
List the three reasons why stock markets are important the economy.
To cast votes on business decisions proposed by the corporation's board of directories
Owning Shares of stock not only makes a person a partial owner of a corporation but also gives that person what other opportunity?
Mutual Funds
Privately managed stock portfolios.
Stock
Shares or portions of ownership in a corporation.
Speculative Bubble
Stock prices rising in an industry or across the entire market simply because of expectations and rising in excess of the corporations' true value.
Preferred Stock
Stock that carries less risk of loss because preferred share holders have claim to the company's assets before the common shareholders if business losses force the corporation to close.
Floor Traders
Stock traders physically present on the trading floor to execute requested trades.
NASDAQ
The National Association of Securities Dealers Automated Quotations, the largest exchange that does not have a trading floor.
Commission
The fee paid for a stockbroker's services.
Initial Public Offering (IPO)
The initial sale of a company's stock through an investment bank.
Common Stock
The most prevalent type of stock that companies offer, represents true ownership of the firm.
Dow Jones Industrial Average (DJIA)
The most well-known American Stock Index.
New York Stock Exchange (NYSE)
The most well-known and reputable stock market in the world.
History, location, and the corporations that it lists.
What accounts for the importance of The New York Stock Exchange (NYSE)?
1. To make profit. 2. To receive dividend payments.
What are the two principal reasons that individuals purchase shares of stock
NASDAQ
What is the largest stock exchange in the United States that has no trading floor?
Common Stock
What is the most prevalent type of stock that most corporations offer?
New York Stock Exchange (NYSE)
What is the most well-known stock exchange in the world?
Dow Jones Industrial Average (DJIA)
What is the most well-known stock index in the United States?
Charles Dow
Who developed the (DJIA) Dow Jones Industrial Average?
To raise money for business needs, such as expanding production by building a new plant or initiating additional research and development of the good or service that the business already provides
Why do corporations sell stock?