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.
