3. Best companies to work for…
Fortune Magazine
Revenue Profits
1. Wal-Mart Stores 378,799.0 12,731.0
2. Exxon Mobil 372,824.0 40,610.0
3. Chevron 210,783.0 18,688.0
4. General Motors 182,347.0 -38,732.0
5. ConocoPhillips 178,558.0 11,891.0
6. General Electric 176,656.0 22,208.0
7. Ford Motor 172,468.0 -2,723.0
8. Citigroup 159,229.0 3,617.0
9. Bank of America Corp. 119,190.0 14,982.0
10. AT&T 118,928.0 11,951.0
http://money.cnn.com/magazines
/fortune/fortune500/2008/full_list
/index.html
4. What is a Corporation?
• Form of business organization recognized by
law as a separate legal entity having all the
rights of an individual.
90% of all
• Responsible for approximately
business.
6. Corporate Structure
• People who buy stock in a company become
part-owners with certain rights.
2 Types of Stock
Preferred Stock:
Common Stock:
Less risky … less reward
Basic ownership
- Non-voting ownership
- Type of stock purchased on a
stock exchange (risk is involved) - First to receive dividends and
first to get investment back if the
- 1 share of stock = 1 vote
company fails
- Votes used to elect Board of
Directors
- Board of Directors set policies
and goals, and hire a management
team to run the company
7. Strengths of a Corporation
Ease in raising financial capital:
• Sell stock: people who buy stock become part-
owners in the company.
• Sell bonds: the corporation is “borrowing”
money
– Selling bonds is like receiving a loan
Ease in transferring ownership:
• Sell your stock and you are no longer an owner
8. Strengths of a Corporation
Limited
Liability
You only risk the
Unlimited
amount of your
If a stockholder
Life
investment
in the company
dies or sells his
ownership, the
The corporation,
company can
not its owners,
continue
is fully
without him.
responsible for
its debts and
obligations.
9. THE STOCK MARKET
Essential Question
Why do companies publicly trade?
10. • Places where buyers
and sellers meet to
trade securities
• Members pay a
fee to join
• Trade can only take place on the
floor of the exchange
• Examples:
• American Stock Exchange (AMEX)
• Regional Stock Exchanges (Chicago, Philadelphia,
Boston)
• Global Stock Exchanges (Sydney, Tokyo, Hong
Kong)
12. Stock Exchanges
New York Stock Exchange:
• Oldest, largest, most prestigious of all exchanges
in the United States
• Located on Wall Street in New York City
• 1,400 seats (memberships) – some costly 1
million +
• List stocks from approximately 3000 companies
• Companies must meet stringent requirements related
to profitability and size
NASDAQ
• “Over-the-counter” Market
• An electronic marketplace for securities that are
not listed or traded on an organized market
13. Measures of Stock Performance
• Indicators that measure stock
performance
• Examples:
• Dow-Jones Industrial Average
• Standards & Poor’s 5000
• NASDAQ
14. How to Read a Stock Table
52 Wk 52 Wk % Sales
Symbol Dividend P/E High Low Last Change
High Low Yld 100
16.95 15.0 F .44 2.8 15 599 15.85 15.65 15.7 -.04
Highest price to date this Formula for
year? calculating %
yield:
Next day’s opening price? Dividend
Closing Price
16. Food for Thought…
Why is the securities industry so closely
regulated? What is at risk?
17. Anatomy of a Trade
FROM THE MOMENT the opening bell rings at 9:30 a.m. to the closing bell at
4:00 p.m., market professionals are busy buying and selling securities, supported
by 21st century technology that speeds and secures each transaction. It is the
interaction between humans and technology that makes the New York Stock
Exchange conduct business efficiently, ensuring equal opportunity to all
investors. But each transaction must follow a certain path to completion.
DIRECTIONS
To understand the role of the market professionals and how a
stock is traded at the NYSE, place the following steps in
chronological order from the time Amanda Smith, the investor,
decides to buy 100 shares of Great Computer Company stock to
the time the order is executed.
18. 3M Harley Davidson
Abercrombie & Fitch Home Depot
American Eagle IBM
AT&T Johnson & Johnson
Bank of America Kellog’s
Best Buy Lowes
Boeing McDonald’s
Coca-Cola Nike
CVS Caremark PepsiCo
Eastman Kodak Proctor and Gamble
Exxon/Mobil Texas Instruments
FedEx Corporation Under Armor
Ford UPS
Gap Verizon
General Electric Wachovia
General Motors Walt Disney Co.
19. Type Sole Proprietorship Partnership
Characteristics
Formation
Strengths
Weaknesses
20. If you were planning to open your own
business, which form of business
organization would you prefer?
Support your answer with specific
reasons.
Be prepared to share your response with
the class!
21. Pure Monopolistic
Oligopoly Monopoly
Competition Competition
How many firms
are in the Industry?
What degree of
influence do
individual firms
have over price?
Product
Differentiation
Do firms use
advertising and
other types of
“non-price”
competition?
Is it easy or difficult
for new firms to
enter this market?
Examples
(At least 2 more)
22. Group 1 Group 2 Group 3 Group 4 Group 5 Group 6
Group 1 on this computer, Group 2 on the teacher computer,
Groups 3 & 4 on the left side of the pod,
Groups 5 & 6 on the right side of the pod
23. Group 1 Group 2 Group 3 Group 4 Group 5 Group 6
Group 1 on this computer, Group 2 on the teacher computer,
Groups 3 & 4 on the left side of the pod,
Groups 5 & 6 on the right side of the pod
24. Group 1 Group 2 Group 3 Group 4 Group 5 Group 6
Group 1 on this computer, Group 2 on the teacher computer,
Groups 3 & 4 on the left side of the pod,
Groups 5 & 6 on the right side of the pod
