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Stock Market and Investments

Stock Market and Investments

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Stock Market and Investments

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  1. Stock Market and Investments Terms/Tracking

  2. History 1531- stock market emerged, in Antwerp, Belgium. “…the first stock market, sans stock.” 1600′s-Britain, France, and the Netherlands all chartered voyages to the East Indies. limited liability companies were formed to raise money from investors, who received a share of profits commensurate with their investment.

  3. History September of 1599 – London merchants created corporation which would limit each member’s liability to the amount they personally invested. 1600- Queen Elizabeth I approves – East India Trading Company 1602- Dutch East India Trading Company -first to issues stocks to public -Amdsterdam Stock Exchange

  4. Facts • Wall Street was laid out behind a 12-foot-high wood stockade across lower Manhattan in 1685. The stockade was built to protect the Dutch settlers from British and Native American attacks. • The New York Stock Exchange (NYSE) began in 1817 as the brokers formed the New York Stock & Exchange Board (NYS&EB), renting rooms at 40 Wall Street

  5. Facts • NYSE • The first listed company on the NYSE was the Bank of New York • It is fourth largest in terms of listings behind the Bombay Stock Exchange, the London Stock Exchange, and the NASDAQ. • On December 1st, 2005, the highest price was paid for membership in the NYSE at $4 million. • There are currently 1,366 seats available on the NYSE. • On February 27th, 2007, the NYSE has its largest volume day of record at over 4 billion shares.

  6. Facts • Dow Jones Industrial Average • an index that shows how 30 large, publicly owned companies based in the United States have traded during a standard trading session in the stock market • founded on May 26, 1896 • General Electric only original left on index

  7. Facts • NASDAQ • The NASDAQ was created in 1971 and was the first electronic stock exchange, focusing on the trading of OTC stocks. • "over-the-counter" stocks that trade via a dealer network as opposed to on a centralized exchange. • NASDAQ stands for “National Association of Securities Dealers Automated Quotation.” • The highest price per share stock on the NASDAQ is none other than Google.

  8. http://www.econedlink.org/lessons/index.php?lid=292&type=studenthttp://www.econedlink.org/lessons/index.php?lid=292&type=student

  9. Terms:

  10. Types of Investments

  11. Basic Investment Considerations • Risk and Return • Higher return for a riskier investment • How much risk are you willing to take? • Investment Objectives • Reason for investing • Retirement- long term • Vacation fund- easily liquidated • Steady stream of income- bonds

  12. Considerations • Consistency • Consistent investment generates more wealth than amount invested at one time • Avoid Complexity • Stick with what you know • #1 rule- if too complicated let it go!

  13. Bonds • Long-term investment that pays interest for a specified number of years • Coupon- stated interest • Maturity- life of the bond • Principal(par value =$amt) amount that will be repaid to lender at maturity Ex. 20- year $1000 bond with 6% interest -- owner receives $30 semianually -- at end of 20 years, owner gets $1000

  14. Bond Prices • Bond is a financial asset that will pay interest 2x year plus final value at maturity • Investor determine their price based on future interest rates, risk, supply demand, etc.

  15. Other Financial Assets • Certificate of Deposit (CD) • Common form • Loans investors make to financial institutions that return with interest after specific period of time • Jumbo CD’s = $100,000 + • Municipal Bonds • State and local gov’ts • Finance highways, stadiums, civic improvements • Safe, taxing power to pay the interest, tax exempt

  16. Financial Assets • Government Savings Bonds • Federal gov’t • Low denominations, non-transferable • Purchased at a discount and not full value for several years depending on interest rate • Interest built into redemption price • Easy to obtain, no risk

  17. Treasury Notes/Bonds • Treasury Notes and Bonds • Fed gov’t borrows funds for more than 1 year = T-Note and Bonds • T-Note: maturities 2-10 years • T-Bond: maturities 10-30 years • Regarded as safest of all financial assests • Have lowest return

  18. Treasury Bills • T-bill: short-term obligation with maturity of 13, 26, 52 weeks in min of $10,000 • No interest directly, sold at discount and collects total amount at maturity • $10,000 T-bill purchased at $9300 will be repaid at $10,000. Return of $700 in short-term