The Stock Market 1.1 Business Organization
How Do Businesses Start? • What is the number one thing you need to be able to start any type of business? • MONEY!!! • The money used to start or expand a business is call capital
How are businesses owned? • If the business is owned by one person, it is called a sole proprietorship. The owner is also referred to as the proprietor. • Ex: Whitney’s Auto and RV • The money left after all of the expenses are paid is called profit. • In a sole proprietorship the owner is entitled to all of the profit • The owner is also responsible, or personally liable for any losses. • The owner is responsible for all of the bills even if there is no profit made
Business Partners? • A business that is owned by a group of people, called partners, is a partnership • Ex: Cronie’s • Partners share profits and responsibilities for any losses
Corporation • A corporation is a business organization that can be owned by one person or a group of people • Share holders have limited liability, meaning each owner cannot lose more than the value of his or her share in the business • Each owner who invests money in the corporation receives shares of stock in the corporation • The owners of stock are called stockholders • Stock Certificates are used as proof of ownership • When anyone can buy stock in a corporation it is called a public corporation
Where does the math come in? • When a business is owned by more than one person, the owners do not necessarily own the same portions of the business • Ratios and percents are used to represent the financial responsibilities of owners and partners • Remember: • To convert a decimal to percent, mult by 100 (move decimal to right 2 places) • To convert percent to a decimal, divide by 100 (move decimal to left two places)
Example 1 • Michelle invests $15,000 in a partnership that has four other partners. The total investment of all partners is $240,000. What percent of the business does Michelle own??
Example 2 • The total number of shares of stock in the Bulls Corporation is 650,000. Mike owns 12% of the shares. How many shares of Bulls Corporation stock does he own?
Example 3 • Three partners are investing a total of $900,000 to open a garden and landscaping store. Their investments are in the ratio 2:3:5. How much does the partner that invested the least contribute?
Example 4 • Two partners each invest 35% in a startup business. They need to find another investor for the rest of the money. What percent of the business will that person own? Write a ratio to represent the investments of the business.
1.2 Stock Market Data • What is a stock market??? • A general term for an institution through which stocks are bought and sold • EX: New York Stock Exchange (NYSE) • EX: National Association of Securities Dealers Automated Quotation System (NASDAQ) • Stock market transactions are called trades
Take out a separate piece of paper and answer the following questions with your group • Where have you heard the word trend used before? • How might trends be important when following the stock market? • What makes an Internet site credible? • Name credible Internet sources for financial information. • What is a stock trade? • Why is net change an important stock statistic?
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