Stock Market
and
Investments
Terms/Tracking
History
1531- stock market emerged, in Antwerp,
Belgium. “…the first stock market, sans
stock.”
1600′s- Britain, France, and the Netherlands
all chartered voyages to the East Indies.
limited liability companies were formed to
raise money from investors, who received a
share of profits commensurate with their
investment.
History
September of 1599 – London merchants
created corporation which would limit
each member’s liability to the amount they
personally invested.
1600- Queen Elizabeth I approves – East
India Trading Company
1602- Dutch East India Trading Company
-first to issues stocks to public
-Amdsterdam Stock Exchange
Facts
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Wall Street was laid out
behind a 12-foot-high
wood stockade across
lower Manhattan in
1685. The stockade
was built to protect the
Dutch settlers from
British and Native
American attacks.
The New York Stock
Exchange (NYSE)
began in 1817 as the
brokers formed the
New York Stock &
Exchange Board
(NYS&EB), renting
rooms at 40 Wall Street
Facts
 NYSE
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The first listed company on the NYSE was the Bank of
New York
It is fourth largest in terms of listings behind the
Bombay Stock Exchange, the London Stock
Exchange, and the NASDAQ.
On December 1st, 2005, the highest price was paid
for membership in the NYSE at $4 million.
There are currently 1,366 seats available on the
NYSE.
On February 27th, 2007, the NYSE has its largest
volume day of record at over 4 billion shares.
Facts
 Dow
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Jones Industrial Average
an index that shows how 30 large, publicly
owned companies based in the United
States have traded during a standard
trading session in the stock market
founded on May 26, 1896
General Electric only original left on index
Facts

NASDAQ
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The NASDAQ was created in 1971
and was the first electronic stock
exchange, focusing on the trading
of OTC stocks.
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"over-the-counter" stocks that
trade via a dealer network as
opposed to on a centralized
exchange.
NASDAQ stands for “National
Association of Securities Dealers
Automated Quotation.”
The highest price per share stock on
the NASDAQ is none other than
Google.
http://www.econedlink.org/less
ons/index.php?lid=292&type=st
udent
Terms:
Types of
Investments
Basic Investment
Considerations
 Risk
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and Return
Higher return for a riskier investment
How much risk are you willing to take?
 Investment

Objectives
Reason for investing
 Retirement-
long term
 Vacation fund- easily liquidated
 Steady stream of income- bonds
Considerations
 Consistency

Consistent investment generates more
wealth than amount invested at one time
 Avoid
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Complexity
Stick with what you know
#1 rule- if too complicated let it go!
Bonds
 Long-term
investment that pays interest
for a specified number of years
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Coupon- stated interest
Maturity- life of the bond
Principal(par value =$amt) amount that
will be repaid to lender at maturity
Ex. 20- year $1000 bond with 6% interest
-- owner receives $30 semianually
-- at end of 20 years, owner gets $1000
Bond Prices
 Bond
is a financial asset that will pay
interest 2x year plus final value at maturity
 Investor determine their price based on
future interest rates, risk, supply demand,
etc.
Other Financial Assets
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Certificate of Deposit (CD)
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Common form
Loans investors make to financial institutions that
return with interest after specific period of time
Jumbo CD’s = $100,000 +
Municipal Bonds
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State and local gov’ts
Finance highways, stadiums, civic
improvements
Safe, taxing power to pay the interest, tax
exempt
Financial Assets
 Government
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Savings Bonds
Federal gov’t
Low denominations, non-transferable
Purchased at a discount and not full value
for several years depending on interest rate
Interest built into redemption price
Easy to obtain, no risk
Treasury Notes/Bonds
 Treasury
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Notes and Bonds
Fed gov’t borrows funds for more than 1
year = T-Note and Bonds
T-Note: maturities 2-10 years
T-Bond: maturities 10-30 years
Regarded as safest of all financial assests
Have lowest return
Treasury Bills
 T-bill:
short-term obligation with maturity of
13, 26, 52 weeks in min of $10,000
 No interest directly, sold at discount and
collects total amount at maturity

$10,000 T-bill purchased at $9300 will be
repaid at $10,000. Return of $700 in shortterm