Stock Market and InvestmentsTerms/Tracking

History1531- stock market emerged, in Antwerp, Belgium. “…the first stock market, sans stock.”1600′s- Britain, France, and the Netherlands all chartered voyages to the East Indies. limited liability companies were formed to raise money from investors, who received a share of profits commensurate with their investment.

HistorySeptember of 1599 – London merchants created corporation which would limit each member’s liability to the amount they personally invested.1600- Queen Elizabeth I approves – East India Trading Company1602- Dutch East India Trading Company-first to issues stocks to public -Amdsterdam Stock Exchange

Facts Wall Street was laid out

behind a 12-foot-high wood stockade across lower Manhattan in 1685. The stockade was built to protect the Dutch settlers from British and Native American attacks.

The New York Stock Exchange (NYSE) began in 1817 as the brokers formed the New York Stock & Exchange Board (NYS&EB), renting rooms at 40 Wall Street

Facts NYSE

The first listed company on the NYSE was the Bank of New York

It is fourth largest in terms of listings behind the Bombay Stock Exchange, the London Stock Exchange, and the NASDAQ.

On December 1st, 2005, the highest price was paid for membership in the NYSE at $4 million.

There are currently 1,366 seats available on the NYSE.

On February 27th, 2007, the NYSE has its largest volume day of record at over 4 billion shares.

Facts Dow Jones Industrial Average

an index that shows how 30 large, publicly owned companies based in the United States have traded during a standard trading session in the stock market

founded on May 26, 1896 General Electric only original left on index

Facts NASDAQ

The NASDAQ was created in 1971 and was the first electronic stock exchange, focusing on the trading of OTC stocks. "over-the-counter" stocks that trade

via a dealer network as opposed to on a centralized exchange.

NASDAQ stands for “National Association of Securities Dealers Automated Quotation.”

The highest price per share stock on the NASDAQ is none other than Google.

http://www.econedlink.org/lessons/index.php?lid=292&type=student

Terms:

Types of Investments

Basic Investment Considerations Risk and Return

Higher return for a riskier investment How much risk are you willing to take?

Investment Objectives Reason for investing

Retirement- long term Vacation fund- easily liquidated Steady stream of income- bonds

Considerations Consistency

Consistent investment generates more wealth than amount invested at one time

Avoid Complexity Stick with what you know #1 rule- if too complicated let it go!

Bonds Long-term investment that pays interest

for a specified number of years Coupon- stated interest Maturity- life of the bond Principal(par value =$amt) amount that

will be repaid to lender at maturityEx. 20- year $1000 bond with 6% interest -- owner receives $30 semianually-- at end of 20 years, owner gets $1000

Bond Prices Bond is a financial asset that will pay

interest 2x year plus final value at maturity

Investor determine their price based on future interest rates, risk, supply demand, etc.

Other Financial Assets Certificate of Deposit (CD)

Common form Loans investors make to financial institutions that

return with interest after specific period of time Jumbo CD’s = $100,000 +

Municipal Bonds State and local gov’ts Finance highways, stadiums, civic improvements Safe, taxing power to pay the interest, tax exempt

Financial Assets Government Savings Bonds

Federal gov’t Low denominations, non-transferable Purchased at a discount and not full value

for several years depending on interest rate

Interest built into redemption price Easy to obtain, no risk

Treasury Notes/Bonds Treasury Notes and Bonds

Fed gov’t borrows funds for more than 1 year = T-Note and Bonds

T-Note: maturities 2-10 years T-Bond: maturities 10-30 years Regarded as safest of all financial assests Have lowest return

Treasury Bills T-bill: short-term obligation with

maturity of 13, 26, 52 weeks in min of $10,000

No interest directly, sold at discount and collects total amount at maturity $10,000 T-bill purchased at $9300 will be

repaid at $10,000. Return of $700 in short-term