LAP: QS-040LAP: QS-040

ObjectivesObjectives

Explain how stock prices move in the Explain how stock prices move in the stock market.stock market.

Discuss causes of stock price fluctuations.Discuss causes of stock price fluctuations.

Explain how stock prices move in the Explain how stock prices move in the stock market.stock market.

ObjectiveObjective

Stock PricesStock Prices

• Can fluctuate in the Can fluctuate in the short termshort term

• Not a concern for Not a concern for long-term investorslong-term investors

How the Stock Market WorksHow the Stock Market Works

• ExpectationsExpectations

• Supply and demandSupply and demand

• ““Bull” and “bear”Bull” and “bear”

A Stock’s PriceA Stock’s Price

• What buyers are willing to payWhat buyers are willing to pay

• Ask price = lowest sell priceAsk price = lowest sell price

• Buy price = highest buy/bid priceBuy price = highest buy/bid price

• Some prices are volatile.Some prices are volatile.

One Share

$2.50

One Share$2.83

Discuss causes of stockDiscuss causes of stockprice fluctuations.price fluctuations.

ObjectiveObjective

Stock Price InfluencesStock Price Influences

• Company

• Communication

• Industry

• Economy

• World events

By category:

Company InfluencesCompany Influences

• Earnings projectionsEarnings projections

• Executive managementExecutive management

• New productsNew products

• Business-model changesBusiness-model changes

Communication InfluencesCommunication Influences

• InvestorsInvestors

• AnalystsAnalysts

• IndexesIndexes

S&P 500S&P 500

Industry InfluencesIndustry Influences

• TrendsTrends

Upward = improvement Upward = improvement

Downward = problemsDownward = problems

• CompetitorsCompetitors

• Inflation and recessionInflation and recession

• Cyclical stocksCyclical stocks

• Economic indicatorsEconomic indicators

GDPGDP

InflationInflation

Interest ratesInterest rates

Unemployment ratesUnemployment rates

Federal government’s budgetFederal government’s budget

• Government actions Government actions

Economic InfluencesEconomic Influences

• NaturalNatural

World Event InfluencesWorld Event Influences

TsunamiTsunami

HurricanesHurricanes

• PoliticalPolitical

September 11thSeptember 11th 9

• What’s the difference?What’s the difference?

EarningsEarnings

Earnings expectationsEarnings expectations

• Should you judge based Should you judge based on expectations?on expectations?

• Quarterly reports: Quarterly reports: Are they important to Are they important to long-term investors?long-term investors?

Hoping for the BestHoping for the Best

Quick CaseQuick Case

MarkED

Acknowledgments

Original DevelopersChristopher C. Burke, Mary C. Hollaway, MarkED

Version 1.0

Copyright © 2007MarkED Resource Center

Copyright:

All photographic digital images on this CD are owned by the aforementioned photographic resources or their licensors and are protected by the United States copyright laws, international treaty provisions, and applicable laws. No title to or intellectual property rights to the images on this CD are transferred to you. These sources retain all rights and are not to be used, digitally copied, transferred, or manipulated in any way. To do so is a violation of federal copyright laws.