The Stock Market

What is a Stock?Name used to describe money raised by a joint

stock company or corporation, or a government.

Who Owns the Company?Shareholders: any person or organization that

buy and hold shares in a joint stock company.

What is Market Capitalization?

The market value of all shares or equity issued by a company.

Why Buy Stocks?As an investment, hoping stock prices will rise

over time.

Shareholders are entitled to a share of any profits made by the companies they own. The profit is called a dividend.

The more shares a stockholder holds, the more dividend he/ she receives.

Permanent CapitalMoney raised from the issue and sale of shares

is NOT a loan.

Shareholders have to sell their shares to get their money back.

Where to Buy/ Sell Shares?

New York Stock Exchange (NYSE)

National Association of Securities Dealers Automated Quotations (NASDAQ)

Tokyo Stock Exchange

London Stock Exchange

Shanghai Stock Exchange

Hong Kong Stock Exchange

Major stock exchanges: as at 31 December 2011

What is a Floatation?Involves a new company issuing shares for the

first time for sale through a stock exchange.

What is a Bond?Governments can raise money to finance public

expenditure through the sale of government loan stocks or bonds.

Functions of a Stock Exchange

A business organization that enables individuals, companies and governments to buy and sell shares on the global stock market.

Most important source of finance for most companies.

Functions of a Stock Exchange

It brings together buyers and sellers of new and second-hand stocks.

It provides up to the minute information on the market prices of different stocks and quantities traded.

It supervises the conduct of firms of brokers that buy and sell shares on behalf of investors.

Functions of a Stock Exchange

Most trading in stocks and shares is now conducted electronically.

The NASDAQ was the first electronic stock exchange, founded in 1971.

http://www.nasdaq.com