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Investing in Stocks

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Investing in Stocks Common Stock Advantages Voting Rights Proxy Usually cheaper than preferred Disadvantages More risky last to get money Not guaranteed a ... – PowerPoint PPT presentation

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Title: Investing in Stocks


1
Chapter 12
  • Investing in Stocks

2
Types of Stock
  • Common Stock
  • Advantages
  • Voting Rights Proxy
  • Usually cheaper than preferred
  • Disadvantages
  • More risky last to get money
  • Not guaranteed a dividend

3
Types of Stock
  • Preferred Stock
  • Advantages
  • First to get money if company goes under
  • Guaranteed a dividend first
  • Disadvantages
  • No voting rights
  • More expensive than common

4
Stock Values the Return on an Investment
  • Terms
  • Stock Certificate
  • Par Value stated on certificate
  • Market Value what you pay
  • Undervalued stocks vs Overvalued
  • Return how much money you make from an
    investment
  • Factors that affect price
  • The company
  • Interest rates lower the better for stocks
  • The market

5
The Securities Market
  • Bull and Bear Markets
  • Bull Market
  • Rising stock prices
  • Feeling of investor optimism
  • Bear Market
  • Period of falling stock prices 15 or more
  • Investors are pessimistic about overall economy.
  • Securities Exchanges
  • NYSE largest, 1.1 million publicly owned shares
    9 million in capital
  • American Stock Exchange smaller, 250,000 shares
    2.5 million in capital
  • NASDAQ medium size, mostly tech. companies

6
The Securities Market
  • Over-the-Counter Market
  • Network of brokers who buy and sell securities
    not listed on exchanges
  • Trades down by phone or internet

7
Investment Strategies
  • Short-Term Techniques
  • Playing the market.
  • Buying on Margin
  • Borrowing from your broker
  • Leverage use less of your own money buy more
    stocks with less money.
  • Selling Short
  • Selling stocks borrowed from a broker that must
    be replaced at a later time.

8
Investment Strategies
  • Long-Term Techniques
  • Buy and Hold
  • Dollar-Cost Averaging
  • Purchase of an equal dollar amount of the same
    stock at regular intervals.
  • Helps to avoid the situation of buying high and
    selling low.

9
Stock Listings
  • Columns
  • 52 Wk High and Low
  • Stock name abbrev. pf or s
  • Div Dividend stated as dollar per share
  • Yld Yield stated as a --annual
    dividend/closing price
  • P/E ratio price/earnings ratio
  • Sales in 100s
  • Highest, lowest, and closing price
  • Net change
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