Business and Finance Notes



Stock Market Definition & Notes Three Legal Businesses:Sole Proprietorship ~ A one person owned business.Partnership ~ Where two or more people own and operate a business.Corporation ~ A business that is owned by those who invest and purchase stock.Five Main Fields of Business Activity:Extractive ~ Businesses that sell things that come right from the earth.Manufacturing ~ Businesses that take raw materials and make something more useful.Retail ~ Businesses that sell to the final users.Wholesale ~ Businesses that sell to other businesses.Service ~ Businesses that provide benefits to consumers.Definitions:Franchise: The right given to someone to sell a company’s goods or services in a particular area.Stocks ~ Stocks represent an investment in a corporation. Stockholders ~ Individuals that have purchased stock.Broker ~ People who buy and sell stock for the people.Charter ~ A corporate license.Board of Directors ~ Leaders that oversee a corporation.CEO ~ Chief executive officers (main person in charge).NYSE ~ New York Stock Exchange. #1 place where stock is bought and sold.Profit ~ Money that a corporation makes.Dividend ~ A return on investing in stock.Day’s High ~ A stock’s high price for the day.Day’s Low ~ A stock’s low price for the day.Open ~ The day’s beginning value for a particular stock.Close ~ The day’s ending value for a particular Change ~ The difference in a stocks price from one day to the next.Volume ~ The number of shares that have been traded for a stock.52 Wk Hi ~ The stock’s high price for the past year.52 Wk Lo ~ The stock’s low price for the year.Diversification ~ Investing in various stocks and industries to minimize risk. “Don’t put all eggs in 1 basket.”Ticker Symbols ~ Symbols used to represent corporations in the stock market. Ex: WMT = WalmartPrivate Corporation ~ Company that is owned by a few people and not publicly traded on the market. Ex. In-N-Out BurgerPublic Corporation ~ Company that is owned by many people and publicly traded in the stock market Ex. Amazon, NikeBlue Chip ~ Large corporate stocks that do well.Mutual Funds ~ Collection of stocks that help diversify someone’s investment.Wall Street ~ Chief financial center for the United States.Dow Jones Industrial Average ~ A weighted average of 30 blue chip stocks.S&P 500 ~ A sampling of 500 stocks that are widely held and represent the stock market as a whole. NASDAQ ~ The electronic stock market for computerized buying and selling of over 5,000 stocks.AMEX ~ American Stock Exchange ~ Exchange for small and medium sized companies.Bear Market ~ Market condition where the stocks are falling.Bull Market ~ Market condition where stocks are rising.Stock Split ~ An increase in the number of shares in order to lower the stock’s price.Investing Strategies:Day Trading (Scalping) ~ Investors buy and sell multiple stocks on the same day to make money.Value Trading ~ Investors seek to buy stocks that they believe are undervalued (a good deal). Technical Trading ~ Investors trade based on analyzing stock charts and graphs.Momentum Trading ~ Investors trade stocks that are moving in one direction with high volume. Long-term Trading ~ Investors buy and keep stocks for many years. Additional Notes:Sole ProprietorsAdvantagesDisadvantages1. My Profits1. My Losses2. Easy to Start2. High Costs to Get Started3. My Control3. Limited Experience4. Limited LifePartnershipAdvantagesDisadvantages1. Added Capital ($) from Others1. Our Losses2. Easy to Start2. Limited Life3. Combined experience3. Divided ControlCorporationAdvantagesDisadvantages1. Limited Liability1. Regulated Monopoly2. Attract Lots of Money2. Double Taxation3. Spec. Management3. PrivacyBuy an Existing Business?AdvantagesDisadvantages1. Proven History1. Poor Record2. Established Customers2. Poor Location3. Great Location3. Poor Condition4. Trained EmployeesBegin a Business from Scratch?AdvantagesDisadvantages1. Free to make choices1. No past record2. Develop own image2. No customers3. Select location3. Capital needs ($)Purchase a Franchise?AdvantagesDisadvantages1. Low Failure Rate1. Little Control – “their way or the highway”2. Brand-name Recognition2. Persistent Costs – fees, royalties3. Proven Products3. Bad Press from Other Franchises4. Built-in Customers4. High Marketing Costs (National Marketing)5. National Advertising6. On-going SupportWhy Go into Business?1. Make money3. Independence5. Personal Satisfaction2. Spare time4. Flex TimeWhy Businesses Fail?1. Not enough $3. Poorly Managed5. Over/Under Priced2. Lack of Knowledge4. Bad LocationCharacteristics of Successful Entrepreneur1. Risky3. Goal Oriented5. Responsible2. Hard Working4. Innovative/CreativeMake it an Investment not a Gamble?Analyze the History of Stocks4. Focus on the Long Term (Years)Watch/Listen to the Market5. Invest “Extra” Money (3-5% Income)Diversify all Investments6. Buy Low – Sell High ................
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