Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Stock Market > Basics and History of Stock Market > Flashcards

Basics and History of Stock Market Flashcards

Stock market

1
Q

What is stock?

A

an instrument that signifies an ownership position (called equity) in a corporation, and represents a proportional share in the corporation’s assets and profits.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Why is it called stock?

A

This term was used by early Dutch investors when they invested money into ships from the Dutch East India Co. as they were trading around the world.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What does investing in a company mean?

A

It means that you now own stock in the company.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are shares?

A

Units of stock are called “shares” which entitles the owner to a proportion of the corporation’s assets and profits equal to how much stock they own. Shares are basically units of ownership.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Why do companies sell stock?

A
  1. to invest in research
  2. hire more people
  3. create new products
  4. upgrade buildings
  5. improve existing products and services
  6. reduce debt
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the stock market?

A

The Stock Market is a measure of the value of different companies’ stocks and it is a direct reflection of the value of the company.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

When prices of stock rise…

A

their value increases

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

When prices of stock fall…

A

their value decreases

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

The value of stocks is often in what state?

A

fluctuating state

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

The stock market serves as what?

A

an economic indicator - a strong market reveals a strong economy; when the market “tanks”, people begin to worry about the state of the economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What can influence the stock market?

A

external events

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is an exchange?

A

An Exchange can be a physical location like the NYSE in New York City, NY or it can also be entirely online such as the NASDAQ (also located in New York City)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Exchanges brings together whom?

A

Buyers and sellers of stock

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

3 Key points of an exchange:

A
  1. You have to qualify to be sold on the exchange.
  2. The buyer and seller must agree on a price before the purchase.
  3. Exchanges are filled with thousands of different companies
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Oldest existing stock certificate is from what?

A

1606 from a Dutch company involved in the spice industry

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Most stock business revolved around _____ and _____.

A

Shipping and spice trades

17
Q

Seat of economic commerce became whom?

A

London – idea of trading stocks came to U.S. with colonists

18
Q

Who was Alexander Hamilton?

A

1st U.S. treasurer

19
Q

What did Alexander Hamilton believe?

A

believed stock trade was essential to building and maintaining a strong economy

20
Q

What was the first publicly owned company?

A

The Dutch East India Company in 1606

21
Q

Who were the biggest shipping and trade nations?

A

Dutch, British, French

22
Q

Dutch, British and French were the biggest shipping and trade nations during what years?

A

1500s and 1600s

23
Q

The kings and queens of these countries allowed merchants to do what?

A

sell goods and buy from other countries (mainly the east indies)

24
Q

These shipping company owners had lots of money at stake. The voyages to the Indies were dangerous for three major reasons:

A
  1. weather
  2. pirates
  3. poor navigation
25
Q

The boat owners needed a way to reduce the risk so they began to ask for investors to help fund the voyages. What did they get in return?

A

the investors would be given a portion of the proceeds if the trip went well.

26
Q

The New York Stock Exchange was strongly encouraged by?

A

Treasury Secretary Alexander Hamilton

27
Q

Hamilton encouraged people to do what?

A

exchange stock in NYC on the corner of Broad and Wall Streets

28
Q

What happened in 1817?

A

traders organized the New York Stock Exchange at 40 Wall St.

29
Q

When did the stock market crash take place?

A

Tuesday, Oct. 29, 1929

30
Q

What happened during the stock market crash?

A

The Dow Jones Industrial Average had been at an all-time high, but it was becoming clear that the market was going to contract. There was a rush to sell stocks – the ticker machines and phone lines were jamming, which furthered chaos and the desire to sell

31
Q

Who found themselves deeply in debt because the stock market crash?

A

Stock owners who had bought “on margin”

32
Q

Why does the stock market exsit?

A
  1. Allows stock holders to track their investments
  2. Allows prospective stock buys to make informed decisions about different companies
  3. Provides a physical “place” for stock to be exchanged (on the “trading floor”) - done via the internet now
33
Q

What does the stock market provide?

A

Provides a realistic value of stocks in various companies.

34
Q

Measures of Stock Strength: Dow v NASDAQ

A

Dow Jones Industrial Average:
An index that shows how 30 large, publicly owned companies have traded during a standard trading session on the stock market. Most of the 30 companies no longer have anything to do with heavy industry.

National Association of Securities Dealers Automated Quotations:
Has 2,872 listings = 2nd largest trading market in the world. Highest trading volume globally

35
Q

What are the benefits of the stock market?

A
  1. Instant availability
  2. Little possibility of being caught in default
  3. Safeguards in place to protect investors from fraud(by the Securities and Exchange Commission)
  4. Opportunity to own part of a major corporation
  5. Opportunity for economic gain
36
Q

What are the risks involved in the stock market?

A
  1. Ignorance – haven’t studied the market trends or corporation
  2. There is a high level of risk involved – there is no guarantee of investment return
  3. Particularly when people invest in “start-up” companies – could strike it rich, could lose entire investment
  4. “Dotcom” Bubble Bursting
  5. Fees for buying or trading stock
37
Q

What are the top five markets in trillions?

A
  1. NYSE - $9.57
  2. Tokyo - $ 3.10
  3. NASDAQ – $2.77
  4. Euronext (Paris)- $2.26
  5. London S.E. - $2.20
38
Q

Why should people care?

A
  1. RELATES TO EVERYONE’S LIFE
  2. RELATES TO U.S. STRENGTH
  3. INFLUENCES ECONOMY
  4. INFLUENCES YOUR WALLET

Stock Market (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions