do now if you didn’t finish your study guide on friday, come up and get it. finish answering the...

Do Now

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Personal Finance & Economics

1Billy bought ABC corporation stock at $27/share. Later he sold it at $31/share. This is an example of.

Capital gain

2List ways that an investor can make money on stocks.

DividendsCapital gain

3_______ are spaced at intervals around the trading floor of the NYSE.

Trading posts

4The largest securities exchange in the USA.

NYSE

5A name for owners of a corporation.

Shareholders or stockholders

6The over-the-counter market.

NASDAQ

7_______ buy and sell stocks on the exchange. They must be members of the exchange.

Floor brokers

8Prolonged period of rising stock prices and a general feeling of investor optimism.

Bull market

9______________ are the part of the corporations profits paid to stockholders.

Dividends

10Borrowing money from a broker to buy stock.

Leverage or buying on margin

11In order to purchase stock, you must know the ______ of the corporation.

Ticker symbol

12Period of falling stock prices and a general feeling of investor pessimism.

Bear market

13A _________ is a stockholder’s

written authorization to transfer his or her voting rights to someone else, usually a company manager.

Proxy

14This is an increase in the value of the stock above the price initially paid for it.

Capital gain

15The _______ is an assigned, arbitrary dollar value that is used to calculate dividends.

Par value

16This type of stock pays a variable dividend and gives the holder voting rights.

Common stock

17A marketplace where

brokers who are representing investors meet to buy and sell securities.

Stock exchange or security exchange

18List a long term investing strategy.

Dollar-cost averagingBuy and holdReinvesting dividends Direct investment

19This is when a shareholder sells stock for less than what they paid for it.

Capital loss

20List an example of a cyclical stock. Explain.

Travel agency travel spending can easily be cut during times of recession

21List a short term investing strategy.

Short sellingLeverage or buying on margin

22This type of stock is a

bargain for investors, but is dangerous for businesses because it makes them vulnerable to takeovers.

Undervalued stock

23Buying stock directly from a corporation.

Direct investment

24Selling stock borrowed

from a broker that must be replaced at a later time.

Short selling

25________ is the price investors are willing to pay for the stock.

Market value

26List an advantage to owning stock as opposed to investing in a small business.

The investor can lose no more than their initial investment.

27The systematic purchase of an equal dollar amount of the same stock at regular intervals.

Dollar-cost averaging

28____________ have a consistent history of paying high dividends.

Income stocks

29A _____ is an increase in the number of shares outstanding of a company’s stock.

Stock split

30_____________ are stocks in corporations that reinvest their profits.

Growth stocks

31Benchmark that investors use to judge the performance of their investments.

Stock indices

32Another term for buying on margin.

Leverage

33 This type of stock…….

Pays fixed dividends. Carries no voting rights. Less risky Much less potential for major earnings.

Preferred stock

34Using dividends previously earned on the stock to buy more shares.

Dividend reinvestment

35If the stock drops to around ½ of

the original purchase price, the investor receives a _______ - the investor must pledge additional cash or securities to serve as collateral for the loan.

Margin call

36The __________, elected by

the stockholders to guide the corporation, decides the amount of dividends to be paid each year.

Board of directors

37List the formula for calculating return on investment.

Profit/cost

38A __________ is one that

remains stable and pays dividends during an economic decline.

Defensive stock

39This type of stock is selling at a price that is not justified by the corporation’s earnings.

Overvalued stock

40A ____________is 100 shares or multiples of 100 shares of a particular stock.

Round lot

41______________ are stocks of large, well-established corporations w/ a solid record of profitability.

Blue Chip stocks

42________ do well when the

economy is stable or growing, but often do poorly during recessions, when the economy slows down.

Cyclical stocks

43List an example of a defensive stock. Explain.

Pharmaceutical – people need even in times of recession

44List an example of a stock index.

DJIAS&P 500

45Samantha bought XYZ

Corporation stock at $48/share. Later she sold it for $22/share. This is an example of what?

Capital loss

46 List an advantage to direct investment.

Avoid broker’s commissions.

47 What do all short-term

investment strategies have in common?

Risky

#48 ROI Billy Brandon purchased 200 shares

of XYZ Corp stock at $32.50/share & paid a $500 commission. Today’s market price is $41.75/share. Last year he received dividends of $1.45/share.

23.4%

#49 Dividends There are 6,500 shares of $30

par value preferred stock & 3,000 shares of common stock. Preferred has a 5% guaranteed rate of return. Dividends of $.75 per share are declared of common stock.

#49 AnswerCommon

StockPreferred

Stock

Total Dividends

$2,250 $9,750

Dividends per Share

$.75 $1.50

#50 ROI Billy Brandon purchased 250 shares

of XYZ Corp stock at $15.80/share & paid a $283 commission. Today’s market price is $10.11/share. Last year he received dividends of $.85/share.

-35.3%

Final QuestionList and explain 2 long-term investing strategies & 2 short-term investing strategies.