BJU Economics Ch 8 pages 146-150

BJU Economics Ch 8 pages 146-150

The Stock Market

• Stock-shares or portions of ownership in a corporation

• dividends-a distribution of a portion of the corporation’s profits

• Types of Stocks -Common stock

  -Represents true ownership of the firm

  -Last to be paid if the firm fails

  -May receive dividends

• Preferred stock

  -Receive dividends before common shareholders

  -If company fails, receive their portion of leftover revenue before common shareholders

  -No right to vote on matters of importance

Multiple Choice

Shares of stock are portions of the profit of a company.

• True

• False

Multiple Choice

Stockholders can be called to vote on

• electing officials

• hiring/firing a manager

• expanding into new markets

• all of the above

Selling and Buying Stocks

• Selling-Owners may or may not choose to offer their stock for public sale.

  -Initial public offering (IPO)

  -Capital raised by selling stock is used for various business needs.

• Buying-Reasons for buying stock:

  -Make a profit

  -Receive dividend payments

Multiple Choice

If a corporation files for bankruptcy and sells all its assets, who would receive payment last from the proceeds of the sales?

• employees

• preferred shareholders

• common shareholders

Stock Trading

• Stock Broker- person who specializes in buying and selling stock

• Commission- fee paid for their services

• Floor Traders-Active stock traders on the trading floor to execute trades

• "Tape"- shows current prices of stocks on the floor

Multiple Choice

What is the term for a corporation's first sale of a stock?

• common stock

• initial public offering

• preliminary stock option

Multiple Choice

The stock market tape is where stock transactions are posted.

• True

• False