what are stocks? a stock represents a share in the ownership of a company. ownership of stock is...

What are Stocks? A stock represents a share in the ownership

of a company. Ownership of stock is represented by a stock

certificate. These days, you usually do not get the actual stock

certificates any more. Instead, your ownership is tracked electronically, making it easier to buy and sell shares.

Companies sell stock to get $ to…

Research better ways to make things

Create new products Improve the products they have Hire more employees Enlarge or modernize their

buildings

How Stocks Work! If you own a company's stock, then you are a owner,

or shareholder, of the company. You will benefit when the price of the stock goes up, or lose

if the price goes down. As a part-owner of the company, you are given the right to

vote for company's board of directors. Another way you may benefit is if the company pays

dividends. Dividends represent a percent of the company's profit,

paid to the shareholders. The ownership percent of a company that you own

is calculated by dividing the number of shares a person owns by the number of shares of stock outstanding. Ex.) 1,000 shares owned, with 10,000 shares outstanding=

10% ownership

Sample Stock Market Table: Ex.) General Electric Ticker Company Name Sales 100s Hi Low Last

Change

GE General Electric 6567 26.86 24.64 25.73 -2.40

Stock ticker symbol: This is the company stock symbol, and it represents the company's stock. 

Company Name: This is the name of the stock. Sales 100s: The number of shares that traded the last

day this stock traded.  The number is given in hundreds, so you need to add 2 zeros to the number to get the actual number of shares traded.

continued… Ticker Company Name Sales 100s Hi Low Last Change

GE General Electric 6567 26.86 24.64 25.73 - 2.40

Hi: The stock's highest price the last day this stock traded.

Low: The stock's lowest price the last day this stock traded.

Last: The stock's last traded price.  Also sometimes called closing price.

Change: The amount of change of the stock's closing price and the prior trading day's closing price.  A "-" represents a negative change.

Important Stock Info! There are 2 major stock exchanges in the U.S., they are:

The New York Stock Exchange (NYSE), nicknamed the "Big Board," is a New York City- based stock exchange.

The NASDAQ (National Association of Securities Dealers Automated Quotations) is an electronic stock exchange.

The Dow 30 (Dow Jones Industrial Average) is the most widely recognized stock market indicator in the United States. It shows how 30 large, publicly traded companies did in a given

trading day.

Rewards

Unpredictable swings in prices.

Could lose some or all of money invested.

Can turn your initial investment into a large profit.

Risks

Blue-Chip vs. Speculative Stocks

Blue-chip stocks are stocks in large, well-established companies with a good track record of profitability and success. Apple, McDonald’s, Google, Ford, Wal-Mart.

Speculative stocks, or growth funds, are stocks in relatively new firms that don’t have an established track record of success.