Unit 2: Stock Market

If you bought 20 shares of BestBuy for $12 a share, how much did you spend?

$240

If you bought 20 shares of BestBuy for $12 a share and sold them for $15 a share, what is your profit?

$60

About what percent of insider trading is caught?

5%

What is a stock?

A stock is a share in the ownership of a company.

What is a shareholder?

An owner of the company's earnings as well as any voting rights attached to the stock.

What are two ways limit your risk in the stock market?

Don't put all your eggs in one basket (Spread out money, buy the market, diverse portfolio) Make long term investments

True or False: More insider trading is caught than not.

False.

What is the difference between common and preferred stock?

If a company goes under, then those who hold preferred stock get their dividends in advance, while common stock may not receive theirs.

What is an IPO?

Initial Public Offering First time stock is available to the public for purchase

What is a dividend?

Money that a company pays to it's stockholders from the profits it makes

What are the two main stock markets?

NYSE and NASDAQ

What is the difference between NYSE and NASDAQ

NYSE=Physical location NASDAQ=Virtual market

What is a Bear Market?

Negative or downward trends. Usually occurs when the economy is in a recession and unemployment is high.

Do all companies give dividends?

No

What is a Bull Market?

Positive or upward trends. Can happen as a result of an economic recovery or economic boom.

What does stock represent?

Stock represents a claim on the company's assets and earnings.

What are the major factors in determining the price of stocks?

Supply & Demand and Earnings

Who is in charge monitoring insider trading?

The SEC (Security and Exchange Commission)

What does the 52 Week High and Low mean on a stock table?

The highest and lowest price traded in the last 12 months, or 52 weeks.

What does volume mean on a stock table?

The number of shares that traded that day this stock is traded.

What is a closing price?

The price of a stock at the end of the day when the market closes.

What is an opening price?

The price of the first stock sold at the time the market opens.

What is insider trading?

The trading of an organization's stock or other securities by employees/individuals who have knowledge of non-public/confidential information about the organization to gain an advantage

What is a ticker symbol?

This is the company stock symbol, and it represents the company's stock.

Is it legal to buy stock in a company you are in charge of?

Yes, it is legal