The Stock Market
Content Objectives: Students will learn about the
stock market and how it effects the economy.
Language Objective: Students will be able to
describe in their own words at least 3 vocabulary
words associated with the Great Depression.
In some countries,
most businesses are
owned and operated
by the government.
But in the United
States, most
businesses are
privately owned and
operated.
Why do people want to start their own
business?
There are many reasons, but the main reason
is that business owners hope to earn a profit.
Profit is the money that is left over after all of
the expenses have been paid. If a business is
successful, profits can make the owners rich!
Where do people get the money to
start their own business?
If a business is going to be small, people can
borrow money from a bank. But if a business
is going to be big, LOTS of money is needed!
And that’s where stocks and the stock market
come in.
• In order to raise LOTS of money for a BIG
business, the owners will sell shares of
ownership in the business to investors. These
shares are also called stock When the
investors buy stocks, the business has more
money to grow.
Investors who buy
stock are called
stockholders.
Why do investors buy stocks in a
business?
There are two main ways to make money
buying stocks:
1. If the business is successful (profitable),
stockholders can get a percentage of the
profits. These are called dividends.
2) Stockholders can buy or sell their stock any
time. If the business is successful, the
value/price of the stock will go up. Investors
can earn money by selling their stocks at a
higher price than what they paid for it.
“Buy low, sell high”= GOOD!
Why is the stock market a risky
investment?
There are two main ways to lose money in the
stock market:
1) Businesses are NOT always successful. When
businesses perform poorly, there are NO
profits (dividends) for investors.
2) If the business performs poorly, stock prices
will go down. Investors may lose money if
they have to sell their shares for less than
what they paid.
“Buy high, sell low” = BAD
How do people like ourselves invest in
the stock market?
The place where
stocks are bought &
sold is called the
stock market. The
New York Stock
Exchange is the
biggest stock market
in the world.
Ordinary people like
ourselves, cannot
“shop” at a stock
market. In order to buy
and sell stocks, we have
to go through a
brokerage house or a
stock broker (someone
who buys & sells
stocks).
How is the price of stock determined?
When a business offers its stock for the 1st
time, it will set the price of the stock. After
that, the price of the stock goes up or down
depending on the demand for it. Demand for
stock is affected by the profitability of the
business, AND investor confidence.
Exit Ticket
• 1) Why do people want to invest in the stock
market?
• 2) Define the following in your own words
Bankruptcy, Productivity and Depression