Stock Market Essentials and Vocabulary

1. Write This Down The Stock Market VOCABULARY Equities – stocks that represent ownership shares in corporations Efficient market hypothesis (EMH) – stocks are always priced about right and bargains are hard to find because of the large number of investors watching the market. Portfolio Diversification – holding a large number of stocks in different industries

2. “Don’t put all of your eggs in one basket” Have different forms of investments and stocks in different industries

3. Portfolio Diversification – holding a large number of stocks in different industries

4. Portfolio Diversification – holding a large number of stocks in different industries Benefit – when one industry declines, it will be offset by gains in another. Stockbroker – person who buys and sells equities for other people STOCK EXCHANGES New York Stock Exchange (NYSE) – oldest, largest and most prestigious organized stock exchange in the U.S.

7. STOCK EXCHANGES New York Stock Exchange (NYSE) – oldest, largest and most prestigious organized stock exchange in the U.S. - Located on Wall Street in NY - 1,400 seats (memberships), cost millions each - firms have to meet size and profit requirements American Stock Exchange (AMEX) – also in NY -usually smaller companies

9. STOCK EXCHANGES New York Stock Exchange (NYSE) – oldest, largest and most prestigious organized stock exchange in the U.S. - Located on Wall Street in NY - 1,400 seats (memberships), cost millions each - firms have to meet size and profit requirements American Stock Exchange (AMEX) – also in NY -usually smaller companies Regional Stock Exchanges – small & new companies Global Stock Exchange – ex; Tokyo, Sydney etc. OVER THE COUNTER MARKETS

10. OVER THE COUNTER MARKETS NASDAQ – national Association of Securities Deals Automated Quotation - world’s largest electronic stock market

12. OVER THE COUNTER MARKETS NASDAQ – national Association of Securities Deals Automated Quotation - world’s largest electronic stock market - 4000+ companies in 80 countries - Trading happens over internet MEASURING STOCK PERFORMANCE The Dow-Jones Industrial Average (DJIA) • the average closing prices of 30 active • stocks on the NYSE Standards and Poor’s 500 - price changes on 500 stocks from NYSE, AMEX, and OTC markets

13. Standards and Poor’s 500 - price changes on 500 stocks from NYSE, AMEX, and OTC markets BULL VS. BEAR MARKETS Bull Market = strong , prices increasing over several months/years in a row (good) - a bull has horns that go UP Bear Market = weak market, prices decreasing over several months/years in a row (bad) - a bear has claws that go DOWN

17. Standards and Poor’s 500 - price changes on 500 stocks from NYSE, AMEX, and OTC markets BULL VS. BEAR MARKETS Bull Market = strong , prices increasing over several months/years in a row (good) - a bull has horns that go UP Bear Market = weak market, prices decreasing over several months/years in a row (bad) - a bear has claws that go DOWN TRADING IN THE FUTURE

18. TRADING IN THE FUTURE Spot market – transactions made immediately Futures Contract – agreement to buy or sell at a future date at a specific price Futures markets – market where they buy and sell futures contracts Options market – contracts to buy or sell commodities or assets at a future date at a specified price

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