ECON Lesson 3.4: Corporations and The Stock Market

True or False: Investors in the stock market are always guaranteed they will earn a profit

False

What is an external factor that would cause a positive change to the stock market?

Multinational peace agreement being signed

What are some external factors would cause a negative change to the stock market?

Natural disaster, labor strike, terrorist attack

Franchise

a fee in exchange for the right to use a parent companies name, business model, and products

Stocks

also known as shares that are sold to raise capital

McDonald's

an example of a franchise

Multinational corporations

companies that operate in multiple countries

When investors receive profits from companies, this is known as:

dividends

Charter

government document that gives permission to start a corporation

Stockholder

individuals who purchase shares of a company

Corporation

legally recognized as a separate legal entity that has all the rights of a person or sole propietor

Buying partial ownership in a corporation is identified as:

stocks

Franchisee

the person who pays a fee in exchange for the right to use a parent companies name, business model, and products

Franchisor

the person who sells the rights of a franchise

If a business is under-performing and the stocks, or shares in that business, decrease in value, the market is called:

Bear market

Bonds are different than stocks in that bonds:

Bonds are loans, while stocks you own

When the stock market is doing well and the value of stocks, or shares in a business, increase, this is known as:

Bull market

Paying a percentage of the purchase price and then borrowing the rest of the money is known as:

Buying on margin

Dividend

portion of the companies earnings given to investors