3.2 Stocks

​3.2 Stocks

​Clifton's new climbing gym business needs $100,000 to get started and I only have $50,000

​I need 50 people to invest $1,000 to makeup the difference and in return they'll own a share of the company

​If Brian bought a share,
he gets part of the profit!

​Since Clifton's Climbing Gym is going to be super successful, the shares will go UP in value. Brian could sell his share he bought for $1,000 for $1,500

​

WHAT ARE STOCKS?

The idea of an investment is to use money to create more money. There are many different types of investments. One type of investment is buying stocks. Stocks come in the form of what are called shares. One share of stock represents part ownership of a company. When you own a share or shares of a company you are called a shareholder. The more shares you own the more you own of the company. For example, if a company has 1,000 shares of stock outstanding and one person owns 100 shares, that person would own 10% of the company.

​A dividend is money paid by a company to its shareholders. Dividends are often paid quarterly. The total amount a company pays on one share of its stock for the entire year (annually) is called the dividend rate.


For instance, if a company like Cat Coffee decides to pay shareholders a dividend of $1 each quarter then for each share a person owns they would earn a dividend rate $4 annually. If the one share of Cat Coffee is worth $100, then the dividend yield, which is the percentage money earned to the value of the stock, would be 4%. In the end, it is more important to look at the dividend yield than the rate when determining if a stock is paying a good or higher dividend. The higher the dividend yield, the better return for the shareholder.  

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WHAT ARE DIVIDENDS?

​WHY DO COMPANIES ISSUE STOCK?

WHY DO PEOPLE BUY STOCK?

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The main reason why companies choose to issue stock is in order to raise money. There are several reasons why a company may need to raise money. First, a company may need more money to expand their business and/or to develop new products. Also, a company may need to raise money in order to deal with a large amount of debt that is hurting their company. A company can raise money by either issuing (selling) some of its stock or by borrowing money from the bank. 

Multiple Choice

What are dividends?

• Money paid by a company to its shareholders
• Shares of stock representing ownership of a company

• The total amount a company pays on one share of its stock annually

• The percentage money earned to the value of the stock

Multiple Select

In what way(s) do stocks transfer wealth back to the investors? Select ALL that apply

• Dividends

• W2 Income

• Coupon Rate Interest

• Increase in Share Price

Multiple Choice

If you buy 10 shares of Jeremy's business at $50/share, how much in total did you pay for them?

• $5

• $50

• $500

• $5000

Multiple Choice

Let's say you buy 10 shares of Jeremy business for $50/share, and it pays a $1/share dividend each quarter. Then you sell all your shares a year later for $60/share.

How much total did you profit from the stock?
(Hint: A quarterly dividend means 4 payouts per year)

• $14

• $100

• $110

• $140

Multiple Choice

Every stock has a "ticker symbol" to identify it.

What is the "ticker" symbol for apple stock? (you can google it)

• aaa pull

• AAPL

• ah. plll

• apl

Multiple Choice

What period of time does this chart cover?

• Today

• 1 year

• 5 years

• The entire time Apple has existed

Multiple Choice

What was the share price of Apple when this screenshot was taken?

• $200

• $233.40

• $210.85

• $234.58

Multiple Choice

Approximately, what was the share price of Apple in January 2019?

• $40

• $60

• $150

• $1

Multiple Choice

What is the highest the share price Apple has reached in the last 52 weeks from the time this screenshot was taken?

• $175

• $200

• $236

• $255

Multiple Choice

If you owned one share of Apple stock between November 1st, 2023 and October 31st, 2024, how much would Apple pay you in total dividends for each share during this one-year timeframe?

(Apple pays dividends quarterly, or every 3 months) The image is found by googling aaple dividend history

• $0.98

• $0.95

• $0.25

• $0.48

Multiple Choice

If I bought 1 share of stock in Apple in 2019 for $64 and sold it on 5 years later in 2024 for $233, about how much would I have profited in that time period? Assume that a share paid a total of $5 in dividends over that time period.

• $179

• $200

• $174

• $255

Multiple Choice

About how much was the entire company of Apple worth at the time of this screenshot? Hint: "Mkt cap" essentially means "how much the entire company is worth."

• 2 million

• 3.7 million

• 2.5 trillion

• 3.55 trillion

Multiple Choice

With a market cap of over $3 trillion, what size company is Apple considered to be?

• Micro Cap

• Small Cap

• Mid Cap

• Large Cap

Multiple Choice

As of today, the median-sized company in the S&P 500 has a mkt cap of 45 billion. Given that, what types of companies mostly make up the S&P 500?

• Micro Cap

• Small Cap

• Mid Cap

• Large Cap

Multiple Choice

If you invested with Vanguard, your homepage could look like this. What button do you think you would click if you wanted to buy a share of Apple stock?

• Trade Vanguard mutual funds

• Trade ETF and stocks

• Trade Options

• My Accounts