BJU Economics Ch 8 pages 146-150

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

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

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