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Trivia question: Who founded the first English colony, and thus the United States?
The Virginia Company (a corporation!)
1. Characteristics of a Corporation (ch 8 sec 3) a) What is a corporation? Who owns it, who runs it? b) Why do corporations sell stock?
2. Characteristics of a Corporation (ch 8 sec) Give three advantages and three disadvantages to the corporate form of business.
3. Trading Stock (ch 11 sec 3) a) What are the 3 major stock exchanges in the US and how is each unique? b) Describe the Dow Jones average. What is it and what is its job.
4. The Stock Market (ch 11 sec 3 a) How do stock buyers make money? Give both ways. b)What are the two major types of stock and how are they unique?
Stocks and the Stock Market
Corporations are businesses owned by stockholders. AT&T has 2. 5 million stockholders.
Stockholders elect a board of directors to run the company.
Corporations raise capital for expansion by selling shares of ownership, or stock.
In exchange for a share of ownership, investors’ money will be used to buy needed buildings;
purchase a modern fleet of trucks;
buy sugar-drizzling machinery;
and the latest in modern employee uniforms!
Selling stock enabled Apple Computer to go from this…
…now their products are everywhere!
The saga of CEO Steven Jobs
How many shares are there? • Google: 250, 000 shares • General Electric: 10, 000, 000 shares.
*Once shares of stock are issued, they are bought and sold like any item of value, their price or value determined by supply and demand. Since supply typically doesn’t change, demand drives the price.
How do you make ca$h money from stocks? • Buy, then sell later (same day or decades) for hopefully higher price: ‘buy low, sell high’. Example: Kohl’s Department Store. If you bought $5000 worth ($1. 95 per share) in 1992 and held on to it…
you could have sold it ten years later for $167820 ($65. 45 per share)!
You can also make money without selling if your stock issues a dividend. • This occurs when company divides their profits among shareholders. • Each share you own gets an equal dividend amount, ranging from 1 cent a share to $3 or more a share. • Most companies do not issue dividends.
There are two major stock exchanges in the US.
The NASDAQ: Newer, more technologically driven companies.
The New York Stock Exchange (on Wall Street): Mostly larger, older companies.
Stocks are traded on the stock exchange. To buy, you use a licensed broker, either in person or online, for a fee. Their person on the stock exchange floor will do the deal.
Daily performance of the stock market is measured by the Dow Jones Average.
The 30 companies of the Dow Jones are intended to be representative of the market as a whole, so that observers can have as accurate a picture of the market’s daily performance as possible. If you were in charge of the Dow, which companies would you place on the average?
Pick FIVE of the following companies to be on the Dow. Explain your reasoning for picking these companies. Then pick a sixth of your choosing. Altria Group (Marlboro/KRAFT) General Motors (Chevy, Cadillac, etc) Nike Bank of America Exxon/Mobil Apple Computer Sears Holdings (Kmart, Sears) Ford Motor Company Wal-Mart Chevron/Texaco Polo/Ralph Lauren Microsoft Corp. Boeing Aircraft Wells Fargo Bank Coca-Cola Brands Yum! Brands Pepsi. Co Cracker Barrel Kellogg One of your own!