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What is a Stock?

What is a Stock?. BCHS Investment Club. Stock. Represents a share of ownership in a publicly held company (privately held companies do not issue stock). Investor shares in wealth and risks of company. You are a part owner of the company no matter how many shares you own. Types of Companies.

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What is a Stock?

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  1. What is a Stock? BCHS Investment Club

  2. Stock • Represents a share of ownership in a publicly held company (privately held companies do not issue stock). • Investor shares in wealth and risks of company. • You are a part owner of the company no matter how many shares you own.

  3. Types of Companies Public Company Private Company A company owned by a person, family, or small group of investors. Does not sell shares of stock in the company to the public. EX: M & M/Mars; Bass Pro Shops; Burger King • Owned by investors through purchase of stock. • EX: Nike, Facebook, Apple, IBM, Fossil

  4. Stock Exchanges • New York Stock Exchange (NYSE) • American Stock Exchange (AMEX) • National Association of Securities Dealers Automated Quotations (NASDAQ)

  5. Types of Stock Common Stock Preferred Stock Shares of ownership of a company in which the share holder is guaranteed a dividend if one is declared and whose shares are usually not as volatile as common stock. No voting rights in company elections and decisions. • Shares of a company that do not guarantee a dividend and have more risk and volatility than preferred stock. • Has the right to vote in company elections and issues at the annual meeting of shareholders.

  6. Reasons for Buying Stock • To make money • Dividends • Selling stock at a higher price • Shareholders have limited liability • Can only lose what you invested

  7. Risk • The chance of losing all or part of an investment. • Stockholders should make investment decisions based upon their “risk tolerance”.

  8. Initial Public Offering (IPO) • Private company “goes public” and offers shares for sale to the public. • Demand for product/service is too much for banks to finance.

  9. Purchasing Stock • Stock is bought on a “price per share” basis. • There is a fee, or commission every time you buy and/or sell stock (for us, it will be 1% of the purchase price). • EX: if Nike stock is $74.52 per share and you buy 100 shares, it will cost $7,526.52 ($74.52 X 100 shares= $7, 452.00; commission on sale = 1% of $7,453, which =$74.52)

  10. Dividends • Part of a company’s profits (earnings) that it pays as money to stockholders. • Dividends can be paid monthly, quarterly, semi-annually, or annually.

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