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Transcript of Stocks 101
Images from Shutterstock.com
The Primary Market describes stocks sold directly to the public by a particular corporation
Also known as an IPO-Initial Public Offering
Secondary Market-Trading of previously issued stocks
Secondary Market trades may take place on organized exchanges or in what is known as the Over-the-counter Market
Brokerage houses help investors with financial decisions and many are available on the internet
The two biggest stock markets in the United States are the New York Stock Exchange (NYSE) and the NASDAQ market.
The American Stock Exchange is now part of the New York Exchange, and NASDAQ bought both the Boston and Philadelphia regional exchanges.
Exchanges used to be divided into organized exchanges and over-the-counter markets, but during the last several years, dramatic changes have occurred in the markets.
Both the NYSE and NASDAQ became publicly traded companies. They were previously not-for-profit organizations but are now for-profit companies.
A basic look at finance
A Stock is a type security that signifies ownership in a corporation
Represents a claim on part of the corporation's assets & earnings
Stocks, Bonds and Babble
Over the Counter Market
Unlike the organized exchanges, the over-the-counter (OTC) market is a network of dealers all over the country linked by computers, telephones, and Teletype machines.
It has no central location. Today, the OTC market consists of small stocks, illiquid bank stocks, penny stocks, and companies whose stocks trade on the “pink sheets.”
A exchange, companies quoted on the pink sheets system do not need to meet minimum requirements or file with the SEC. Pink sheets also refers to OTC trading
Indicator of 30 Blue-Chip Stocks on the New York Stock Exchange
Blue-chip stocks- A common stock of a nationally known company whose value and dividends are reliable
Mkt Cap 487.39B
Market Cap=the total value of the issued shares of a publicly traded company
The bankers engaged in risky financial behavior packaged up billions of dollars of mortgages into securitized assets.
In other words, an investor could buy a pool of assets and collect the interest income and eventually get a payment at the end of the life of the product.
This technique allowed banks to make a mortgage, collect a fee, package the mortgage, and collect another fee.
A financial institution owned and controlled by its depositors, who usually have a common employer, profession, trade group, or religion.
The Aggieland Credit Union in College Station, Texas, for example, provides banking services for faculty, employees, and current and former students of Texas A&M University
Because the credit union is tied to a common organization, the members (depositors) are allowed to vote for directors and share in the credit union's profits in the form of higher interest rates on accounts and/or lower loan rates.
A mutual fund pools individual investor dollars
and invests them in large numbers of well-diversified
Individual investors buy shares in a mutual fund in the hope of earning a high rate of return and in much the same way as people buy shares of stock.
The NYSE was created on
May 17, 1792 underneath a Buttonwood Tree
A special type of mutual fund called a money market fund invests specifically in short-term debt securities issued by governments and large corporations.
Although they offer services such as check-writing privileges and reinvestment of interest income, money market funds differ from the money market accounts offered by banks
Money Market Funds
Because of the large numbers of people investing in any
one mutual fund, the funds can afford to invest in hundreds (if not thousands) of securities at any one time, minimizing the risks of any single security that does not do well.
Mutual funds provide professional financial management for people who lack the time and/or expertise to invest in particular securities, such as government bonds.
These securitized mortgages were sold to the market as asset-backed securities with a AAA credit rating off their books and replaced with cash to make more loans.
In this case, when the bubble burst, it had extremely severe consequences for the economy, workers, and investors.
Brokerage Money Market Funds represent a pool of funds,
While Banking Money Market Funds, are basically specialized, individual checking accounts.
Money market funds usually offer slightly higher rates of interest than bank money market accounts.
You and your group have $100,000 total
Please choose between 5 & 7 stocks
You can divide the money between those stocks any way you like
I will post a worksheet to WebAccess
You will track your stocks for and present on 6/30
Wall Street vs Gangsters
What's the Difference?
YOU MUST INCLUDE THE TOTAL GAIN OR LOSS OF THE ENTIRE PORTFOLIO