U 15 Stocks & Shares Unit 15

Stocks and Shares Dawid Józefczyk & Konrad Włodarczyk

Definitions: ●

Share- British term for a certificate representing part-ownership of company( STOCK in U.S)

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Issue- to offer securities for sale, to financial institutions and the public

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day traders- people who buy and re-sell shares in very short time

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bubble- a period of rapidly rising share prices, followed by a quick collapse ( like dotcom bubble in 2001)

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Stockholders/shareholders- one of the part-owners of comapny, who has bought some of its stock

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institutional investors- financial organizations that own a lot of shares

What is a stock market ? ● A stock market or equity market is a market for the trading of company stock (shares) and derivatives at an agreed price.

● The size of the world stock market was estimated at about $36.6 trillion USD at the beginning of October 2013.

Market Conditions ● Bulls - Bulls Market

● Bears - Bears Market “when the bears replace the bulls”

Stocks and stockholders ●

AGM-> annual general meeting- british term for yearly meeting with the directors to which companies have to invite all shareholders

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Dividend- a share in the annual profits of limited company, payed to stockholders

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Blue chips- stocks in large,stable company with a good reputation

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income stocks- are those that have a history of paying consistently high dividends

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Defensive stocks- their value is not expected to change very much

Why stock markets matter for you?? ●

when the market goes up….

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when the market goes down...

Issuing stocks and shares ● ●

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New companies (start-ups) are not allowed to raise capital by selling stocks and shares to the general public. Offering stock for sale to financial institutions and individual investors is called “going public” as it changes the business from a private company to a public company. The company going public commissions due diligence report from an autiding firm and then issues a prospectus explaining the company’s position, and giving details about the senior managers and financial results from the previous years. After stock have been sold first time they can be traded on the secondary market at the stock exchange on which the company is listed or quoted.

Venture Capital How new private company could become a public company?? (In 6 steps) 1. 2. 3. 4. 5. 6.

An entrepreneur sends a business plan to a venture capital company The venture capital company raises funds from institutions and individuals The venture capital company continues to offer the new business stretegic advice. The start-up is successful and begins to make a profit after a few years the successful private company becomes a public company. The investors sell their shares at a profit!

Stock prices ●

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Stock prices depand on various factors, including the company’s financial situation, the situation of the industry in which the company operates, and the state of the economy in general. They also depand on the belives of investors: whether they think the stock price will rise or fall and whether they think other investors will think this too Many economists argue that the stock market is efficient, so that the stocks are always correctly priced, based on all relevant information.

Stock indexes stock index- a statistical indicator showing changes in the market value of selected group of important stocks on a pirtucular stock market examples: WIG 20 DAX NYSE NASDAQ Nikkei

Understanding market reports ●

To go up: rally, stage another comeback, goes through the roof

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To stay the same: be steady

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To go down: take a beating, to take a tumble, slide

Financial ratios ● ● ● ● ● ●

Ratio - the number obtained when one number is divided by another Working capital - current assets minus current liabilites Gross profit margin - the money it has left after paying for the cost of the goods or services it has sold Earnings per sale (EPS) - informs investors how much of the company’s profit belongs to each share Divident - dividing the company’s net profit by the common stock or ordinary share Quick ratio - liquid assets divided by current liabilities