Chapter 8- The Stock Martket

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1. NYSE: most well-known & reputable stock market in America. 2. NASDAQ: "over-the-counter" trading; no physical location. 3. AMEX: less known; reputable American market.

3 stock exchanges and the differences.

Companys profits

A dividend payment is based on the

Bear Market

A falling stock market in which investors are selling stocks

Mutual Fund

A group of stocks purchased by individuals and managed by a professional

Bull Market

A rising stocm market in which investors are buying stocks

Portfolio

A set of investment assets owned by am individual

Preferred Stock

A type of stock that is not a true ownership of a corporation

Speculation

Actively buying and selling stocks for the purpose of profiting from short-term changes in their prices is called

Obtain additional financial capital

Businesses sell stock to the public primarily to what

People bought stocks thinking that they were going to go up and make money but really it went down and they lost money.

Describe the circumstances leading up to the crash of 1929.

Speculative Bubble

Excessive rising stock prices due to expected rises in prices

1. Raise needed revenue 2. Provides opportunities for individuals to invest. 3. Provides information to corporate leaders and governmental policies.

Explain three benefits of the stock market to the overall economy.

1. To get a dividend. 2. To get a profit by selling stocks.

Individuals purchase stocks mainly for two reasons.

1. DJIA 2. S &P 500

List two well-known stock indices.

Stock

Portion of a Corporation

30 major US producers of goods and services

The DJIA is an index of

-Great Britain in the 1700's. -Well organized stock in European countries.

The circumstances surrounding the origin of stock exchanges.

NYSE Composite Index

The index that includes all the stocks on the NYSE is the

Common stock

The most prevalent type of stock

The NYSE

The most respected stock exchange in the world is

Investment Bank

The organization that helps a business issue stock to the public for the first time

The company's profitability

The price of a stock tends to reflect information and expectations about

1. Common stock 2. Preferred stock

Two types of stocks

Initial Public Offering

What does the abbreviation IPO stand for

The Securities and Exchange Commission. & Its principal function is to supervise the Securities industry

What does the abbreviation SEC stand for? What is the SEC's is primary function?

A physical location where trading takes place

What does the over-the-counter trading lack that the other stock exchanges have

Stockbroker & commission

What is a person called who works for an investment firm and specializes in buying and selling of stocks? What does he receive that can be either a flat rate or a percentage of the value of the stock trade?

A stock index

What term describes a group of stocks that are listed together with their prices combined and reported together

The DJIA

Which is the most well-known stock index

The NASDAQ

Which stock exchange is entirely electronic with no face-to-face trading


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