LESSON 20
THE LANGUAGE OF
FINANCIAL MARKETS
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.1
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The Language of Financial Markets: Terms
Buying and Selling in the Market
•
Buying on Margin
•
Commission
•
Ponzi Scheme
•
Price
•
Short Selling
Exchanges and Indexes
•
Dow Jones Industrial Average (DJIA)
•
NASDAQ Stock Market
•
New York Stock Exchange (NYSE)
•
Over-the-Counter Market
•
S&P 500 Stock Index
People in Financial Markets
•
Broker
•
Dealer
•
Institutional Investor
•
Investment Bank
•
Stockholder
LEARNING, EARNING, AND INVESTING
FOR A
Stocks, Bonds, and Mutual Funds
•
Bond
•
Common Stock
•
Initial Public Offering (IPO)
•
Index Fund
•
Mutual Fund
•
Preferred Stock
Technical Terms
•
Capital Gain
•
Dividend
•
Growth Stock
•
Income Stock
•
Liquidity
•
Risk
•
Return
•
Stock Spill
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.2
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The Language of Financial Markets:
Quiz Bowl Score Sheet
Group
Score
1
2
3
4
5
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.3
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The Language of Financial Markets:
Quiz Bowl Game Board
Invest in
This
Potent
Investments
Index or
Exchange
Earn It
Who Am I?
Financial
Markets
Potpourri
10
10
10
10
10
10
20
20
20
20
20
20
30
30
30
30
30
30
40
40
40
40
40
40
50
50
50
50
50
50
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.4
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Invest in This:
A debt investment in which an investor lends
money to an entity (corporate or governmental)
that borrows the money for a defined period of
time at an agreed interest rate.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.5
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Bond
10
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.6
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Invest in This:
An ownership share or shares of ownership in
a corporation.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.7
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Common
Stock
20
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.8
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Invest in This:
A company that pools money from investors
and uses it to buy stocks or bonds on the
investors’ behalf.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.9
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Mutual Fund
30
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.10
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Invest in This:
The stock of a firm that is expected to do
well – to have above-average increases in
revenues and earnings. These stocks often pay
no dividend, but the stockholder gains if the
price of the stock increases.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.11
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Growth Stock
40
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.12
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Invest in This:
An ownership share in a corporation with a
guaranteed dividend that is paid before any
dividends are paid on common stock.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.13
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Preferred Stock
50
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.14
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Potent Investments:
Buying stock by paying only a percentage of the
purchase price (typically 50 percent) and
borrowing the balance from a broker.
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.15
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Buying on Margin
10
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.16
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Potent Investments:
A mutual fund whose objective is to match the
composite investment performance of a large
group of stocks or bonds such as those
represented by the Standard & Poor’s 500.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.17
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Index Fund
20
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.18
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Potent Investments:
An investment fraud that holds no real assets,
paying off existing investors by using funds from
new investors.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.19
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Ponzi Scheme
30
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.20
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Potent Investments:
The chance of losing money on an investment.
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.21
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Risk
40
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.22
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Potent Investments:
A stock transaction that allows an investor to
make money on a stock expected to fall in value.
This transaction involves the immediate sale of
shares not owned by the seller, who expects to
buy them back later at a lower price.
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.23
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Short Selling
50
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.24
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Index or Exchange:
The acronym stands for American Stock
Exchange, formerly an independent market but
now part of the New York Stock Exchange.
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.25
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
AMEX
10
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.26
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Index or Exchange:
The most commonly quoted measure of stockmarket performance. The averages it reports
are calculated by reference to 30 large, wellknown firms.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.27
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Dow Jones Industrial
Average
20
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.28
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Index or Exchange:
Founded in 1971, this stock market is the
world’s largest in terms of trading volume and is
the home to many technology stocks including
Apple, eBay, Intel, and Yahoo!
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.29
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
NASDAQ Stock
Market
30
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.30
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Index or Exchange:
The oldest stock exchange in the United States,
founded in 1792. Merged in 2007 with the
European stock exchange Euronext.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.31
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
New York Stock
Exchange
40
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.32
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Index or Exchange:
The acronym stands for the Standard and
Poor’s 500 Stock Index. The index includes 500
large and varied stocks.
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.33
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
S&P 500
50
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.34
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Earn It:
A profit realized from the sale of property,
stocks, or other investments.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.35
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Capital Gain
10
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.36
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Earn It:
A percentage of a stock trade (a buy or sell)
paid by a customer to a stockbroker.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.37
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Commission
20
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.38
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Earn It:
A share of a company’s profits paid to
shareholders.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.39
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Dividend
30
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.40
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Earn It:
The market value of anything being offered for
sale.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.41
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Price
40
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.42
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Earn It:
Money earned from an investment. The money
could be profits, interest, appreciation, or a
combination of these.
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.43
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Return
50
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.44
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Who Am I?
A professional trader who buys and sells stocks
for individuals and institutional customers.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.45
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Broker
10
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.46
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Who Am I?
Someone who buys and sells stocks from his or
her own accounts or the accounts of the firm he
or she represents.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.47
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Dealer
20
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.48
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Who Am I?
An organization (an insurance company or
pension fund, for example) that invests in the
stock market for clients.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.49
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Institutional Investor
30
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.50
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Who Am I?
An institution that participates in the primary
markets for the sale of newly issued stocks and
corporate and government bonds.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.51
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Investment Bank
40
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.52
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Who Am I?
A person who owns stock; sometimes called a
shareholder.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.53
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Stockholder
50
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.54
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Financial Markets Potpourri:
A stock that pays dividends regularly.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.55
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Income Stock
10
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.56
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Financial Markets Potpourri:
The first sale of stock by a private company to
the public.
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.57
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Initial Public Offering
20
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.58
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Financial Markets Potpourri:
The ease with which savings or investments
can be turned into cash.
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.59
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Liquidity
30
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.60
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Financial Markets Potpourri:
A network of securities dealers connected
by a computer network to buy and sell stock
without a centralized trading floor.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.61
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Over-the-Counter
Market
40
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.62
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
Financial Markets Potpourri:
The division of a firm’s outstanding shares
of stock into a higher number of shares. The
purpose is to lower the price of the stock to
attract more buyers.
Click to Check
LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY
SLIDE 20.63
LESSON 20 – THE LANGUAGE OF FINANCIAL MARKETS
The correct answer is…
Stock split
50
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LEARNING, EARNING, AND INVESTING
FOR A
NEW GENERATION © COUNCIL FOR ECONOMIC EDUCATION, NEW YORK, NY