What’s Your Financial ID?
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17-21: Ready to Invest!
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12-16: Maybe in a couple years…
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11- under: Try sticking your cash in a
savings account!
INVESTING 101
MS. SMITH
What are Stocks?
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A stock represents a share in the ownership of a
company.
Ownership of stock is represented by a stock
certificate.
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These days, you usually do not get the actual stock
certificates any more. Instead, your ownership is
tracked electronically, making it easier to buy and sell
shares.
Companies sell stock to get $ to…
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Research better ways to make
things
Create new products
Improve the products they have
Hire more employees
Enlarge or modernize their buildings
How Stocks Work!

If you own a company's stock, then you are a owner, or
shareholder, of the company.
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You will benefit when the price of the stock goes up, or lose if
the price goes down.
As an part-owner of the company, you are given the right to
vote for company's board of directors.
Another way you may benefit is if the company pays
dividends.
 Dividends represent a percent of the company's profit, paid
to the shareholders.
The ownership percent of a company that you own is
calculated by dividing the number of shares a person
owns by the number of shares of stock outstanding.

Ex.) 1,000 shares owned, with 10,000 shares outstanding= 10%
ownership
How to Calculate Ownership Percent:

You own 25,000 shares of Nike. Today, Nike has 1
million shares trading on the stock market.
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
What is your ownership percent in Nike?
 2.5%
Your family has 48,725 shares of Target. As of right
now, Target has 2.5 million shares outstanding.

What is your family’s ownership percent in Target?
 1.9%
Understanding the Stock Market…
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The stock market tables give you basic information
and price history for stocks.
Sample Stock Market Table:
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Ex.) General Electric
Ticker
Company Name
GE
General Electric
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Sales 100s
6567
Hi
Low
Last
Change
26.86 24.64 25.73 -2.40
Stock ticker symbol: This is the company stock symbol, and
it represents the company's stock.
Company Name: This is the name of the stock.
Sales 100s: The number of shares that traded the last day
this stock traded. The number is given in hundreds, so you
need to add 2 zeros to the number to get the actual
number of shares traded.
continued…
Ticker Company Name Sales 100s Hi
GE
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General Electric
6567
Low
Last
Change
26.86 24.64 25.73 - 2.40
Hi: The stock's highest price the last day this stock traded.
Low: The stock's lowest price the last day this stock traded.
Last: The stock's last traded price. Also sometimes called
closing price.
Change: The amount of change of the stock's closing price
and the prior trading day's closing price. A "-" represents a
negative change.
Important Stock Info!
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There are 2 major stock exchanges in the U.S., they are:
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The New York Stock Exchange (NYSE), nicknamed the "Big Board,"
is a New York City- based stock exchange.
The NASDAQ (National Association of Securities Dealers
Automated Quotations) is an electronic stock exchange.
The Dow 30 (Dow Jones Industrial Average) is the most widely
recognized stock market indicator in the United States.

It shows how 30 large, publicly traded companies did in a given
trading day.
Rewards

Can turn your initial
investment into a large
profit.
Risks
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Unpredictable swings in
prices.
Could lose some or all
of money invested.
Bull vs. Bear Market
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A bull market is a market with increasing investor
confidence; often begins before the general
economy shows clear signs of recovery.
A bear market is a general decline in the stock
market over a period of time; transition from high
investor optimism to widespread investor fear.
Types of Stocks
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Common stock is the primary form
of ownership in a corporation.
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All corporations must issue, and many
just issue, common stock.
Preferred stock gives its holders
certain privileges that common
stockholders don’t have.

Dividends and shares are paid to
preferred stockholders before paid to
common stockholders.
Blue-Chip vs. Speculative Stocks
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Blue-chip stocks are stocks in large, well-established
companies with a good track record of profitability
and success.
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Apple, McDonald’s, Google, Ford, Wal-Mart.
Speculative stocks, or growth funds, are stocks in
relatively new firms that don’t have an established
track record of success.
Mutual Funds

A mutual fund is a fund created by an investment
company that raises money from many
shareholders and invests it in a variety of stocks.
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Diversification allows for reduced risk; spreads risk.
If a person holds shares in a mutual fund, they are holding
shares of stock in all the companies included in the fund.
Funds managers select stocks.
Partner Activity!
List the characteristics of a
perfect stock?