What is a Stock?Stock Market Game

Video #3

Want to buy a share?• Five friends want to chip in to purchase the latest Xbox game system. They

have agreed to keep it in one friend’s basement and play it together every day. It cost $360.00. If they each pay an equal share how much would each friend pay?

• What rights and responsibilities should each friend have as part owners of this game system?

• How can they each prove they are part owners in the game system?

• Stock ownership allows an investor to be part owner in a company they believe is going to be successful. Just like the friends, a stock owner has rights and responsibilities when they buy share or a piece of a public company.

• Most companies are public companies that sell shares of the company called stock to people called investors.

• Stock allows investors to share ownership in a company with others.

• In a publicly traded company, an investor will choose to buy stock in a particular company because he or she thinks the company will make money, the stock price will increase and the investor will make money on his or her investment.

• There is always a risk, however that they will lose money.

Buying Stocks• When you buy stock you become part owner of a company -- whether

you own one share or thousands.

• As a stockholder you risk only the money you invest. If the stock price exceeds what you paid for it, your investment increases in value. If the stock price falls below what you paid for it, your investment decreases in value.

• As a stockholder you are entitled to collect dividends - a portion of the company’s profits - if the company’s board of directors declares dividends. Stockholders are entitled to vote on nominees to the company’s board of directors and other important issues decided at annual or special stockholders’ meetings.

• Not all companies publicly trade stock. An individual family or a small

Where do I buy stocks?

• Stocks are bought and sold in marketplaces called exchanges.

• You can buy and sell simulated shares on all major U.S. stock markets: the New York Stock Exchange (NYSE) and NASDAQ.

Your turn!!

Profits

Try this!

Go public or stay private?

Challenge yourself!

Another one . . .

Super challenge!