Gov and Economics Chapter 8 The Stock Market

PE ratio

Calculating relationship between price of company's stock and the earnings a company makes in the entire year

True

Look closely at the volume number - if a tiny "z" is shown before the number, the volume is not given in hundreds but is the actual number of stocks traded.

Mutual Funds

Millions of people purchase _______, which is an easy way to have a professional buy stocks for them.

True

Standard & Poor's ® 500 is a type of stock index favored by professionals because it includes a wider range of public companies than the Dow Jones SM industrial average does.

True

When you buy stocks, you are buying a small percentage of everything owned by the company. This includes computers, desks, and bookshelves, among other things.

True

When you purchase a share, you have purchased a little piece of the company.

floor of the New York Stock Exchange ®

When you told the broker you wanted to get those six shares of Mattel ® stock, he sent a message to a person who is working on the

52 weeks high and low

You are checking up on your stocks in the newspaper. What column will tell you the volatility or risk and profit potential of a particular stock?

False

Your broker tells someone to buy six shares of Mattel ® stock for you. The person he is talking to is called the sales broker and the transaction take place on the floor of the stock market.

True

Your portfolio is all of the various stocks or bonds you, as an investor, hold.

Blue Chip Stocks

________ are the safest stock investment you can make, since these corporations are so large and powerful they can withstand a downturn in the economy.

demand

a call for a product or service, a need or want

stock ticker

a device which gives constant updates on the activity of the New York Stock Exchange ® .

downturn

a dip in the market.

dip

a drop in the market which may signify a good time to buy stocks

Barron's

a financial weekly publication which features information on buying and selling stock.

stock certificate

a form of proof as to the stock transaction; mostly obsolete nowadays

symbol

a one to four character symbol that is like a nickname for the company

stock exchange

a place where financial securities are bought and sold

plunge

a significant drop in the market that is more exaggerated than the normal dips that would take place.

Share

a unit of the equal parts of the capital stock divided by a corporation

open mutual fund

company combines your money with millions of other investing people, and buy stocks and bonds with it

penny stocks

considered the first and lowest level of stocks.

bear

one who believes the outlook for a market or stock is down.

shareholder

one who owns shares of a business on the stock exchange.

prospectus

plan of a financial endeavor, including how much capital is needed in order to be a shareholder

retail

selling directly to consumer with costs included to cover manufacturing, advertising, and overhead

climb

similar to a rise in the market, signifies a good time to buy if you are looking to purchase stocks

Industrial Revolution

started in the mid-19th century; financial emphasis moved from farming to the factory

crash

stock market events of 1929 in which investors lost millions of dollars due to a stock market that kept falling.

net change

the change of the price of the stock from the previous day

New York Stock Exchange

the largest of all American stock exchanges, created in 1792

volume

the number of stocks that were traded on the previous day

preferred stock

the owners of this type of stock will collect their dividends first, before the owners of common stock

broker

the person who will do the actual purchasing of the stocks for you.

correction

when the market is trying to steady itself out after a monumental movement

broker services

work done for the shareholder by the broker, such as selling and buying stock.

receipt

written proof that a purchase has been made.

Purchasing

A broker is the person who does the actual _____ of the stocks for you.

Dividend

A share of profits received by a shareholder is called a

True

A stock is a representation of the part of the company that you own.

profit

After all expenses are subtracted, the amount of money left after a sale is called a:

List the following procedures for purchasing stock in the correct order.

First --- You call a broker. Second --- The broker calls a person on the floor of the exchange, probably an employee of his. Third --- The floor broker goes to the area allotted for that particular stock. Fourth --- He buys the desired amount of stock from the company. Fifth --- He reports it on the floor and then back to your brokerage house. The stock is yours.

True

First, all the common stock in a company must be issued. Then the company will begin to issue preferred stock.

1700's

From its humble origins of the _____ the stock market in America has grown to be a financial force in the world today.

Which statements are TRUE?

If the company has been making a good profit against competition, you may continue to see that profit grow, and that is not a good sign for investing. One of the first rules that almost any investor will tell you is: Don't invest any money that you cannot afford to lose!

False

If you do not see a demand for a product, it is best to be quick about buying stock from that company.

Shareholder

If you own stock, you would be known as a

False

If you see a wide margin between the high and low numbers, you can tell that there will be a smaller risk than with other stocks which have a large difference between their numbers in that column.

Mark the boxes that are TRUE.

In the early days of our nation, the Colonial Government was looking for a way to finance its wartime operations, so it sold bonds. In addition to bonds, the banks sold little parts of their banks to whomever had the money and the desire to own a share in the business.

True

Investors' fears can become so powerful that increased movement on the stock exchange occurs, causing a financial panic.

False

People will subscribe to publications such as USA Today ® or The Baltimore Sun ® to get information on investing more wisely.

1987

Percentage-wise, which stock market crash was worse?

True

Purchasing and selling has to do with the rises and dips in the market.

True

Putting money into stocks is a risky thing.

not good enough

Some of the stocks offered were_____ to be put in the NYSE ® , so a brisk business was running outside on the curb of the street.

3

The AMEX ® stock symbols usually_____ have letters

False

The Wall Street Journal ® actually added to the fears of people in 1929 by reporting in an irresponsible manner about unfound fears.

American Stock Exchange

The formal name of the curb traders; it began in 1908

True

The very first stock exchange was created in 1531 in Antwerp, Belgium.

Hundreds One Hundreds

The volume number is given in the_____ , so if you want to get the actual number of stocks traded, simply multiply the volume number by ______

Fearful shareholders

What is the MAIN cause of stock market crashes of 1929 and 1987?

Common

What type of stock simply shows that you own part of the company; it is the basic stock a company will issue?

Commision

When selling your stock, you would call the broker and the process would go almost the same way. The broker will deduct his ________ (, , , ) and then pass the money on to you

brokerage house

initial location where stock transaction takes its first steps. The broker acts as an intermediary in purchase