The Stock Exchange

Notes by Patricio

Equities- stocks that represent ownership shares in corporations.

Stockbroker- person who buys or sells securities for investors.

Stock exchange- A place where buyers and sellers meet to trade stocks.

Mutual fund- company that sells stocks in itself and uses the proceeds to buy stocks and bonds issued by other companies.

401(k)- tax deferred investment and savings pan that acts as a personal fund for employers.

Investors can purchase stocks through stockbrokers on exchanges, through mutual funds or 401(k) plans. There are different markets where people can buy or trade stocks. An over-the-counter market (OTC) is an electronic market place for securities not listed on organized exchanges such as the NYSE. The most important one is the NASDAQ, the world’s largest electronic market. For any concern that the investors might have, 2 popular indicators can be consulted, DJIA and S&P500. Usually when the indicators go up, the general stocks go up and when they go down, stocks go down. Investors use different terms to describe the markets. A‘‘bull market’’ is a strong market with prices moving up for several months or years in a row and a ‘‘bear market’’, is a market with the prices of equities falling sharply for several months or years in a row.