Intro to the Stock Market

Answer the following question about the stock market.

What exactly is a stock and why do companies sell stock in the first place?
- Stock is when a company sells shares (ownership) of there corporation or company. Companies sell stock in the first place to raise money for their companies. They might need money to expand, pay off dept, develop new products and for many different reasons.

What is the difference between a public and a private company?
-The difference between a public and a private company is that private companies are privately owned. The private companies don't sell their stock to the public they want to maintain control over their companies and their profits. Public companies sell their stock to the public.

What is the Dow Jones Industrial Average?
-The Dow Jones Industrial Average was invented by Charles Dow in 1896. The DJIA is an average of 30 significant stocks in the United States, which are traded on the New York Sock Exchange and the NASDAQ.

What is a blue chip stock?
- A blue chip is a nickname for a stock that is safe, excellent financial shape and a leader in it's field. Blue chips generally pay dividends and are favorably observed by investors. Two examples of blue chips are Wal- Mart and Coca- Cola.

What is the New York Stock Exchange and the NASDAQ?
- The New York Stock Exchange is a stock exchange based in New York City, New York. It's the largest stock exchange in the world by dollar value of it's listed companies' securities(financial value). The NASDAQ is an American stock exchange. It's the largest electronic screen- based trading market in the United States. It has about 3,200 companies.

What is a mutual fund and how do they operate?
-A mutual fund is an investment company that continually offers new shares and buys existing shares back at the request of the shareholder. They invest in stocks, bonds and other securities(financial value).

What are some of the biggest companies on the stock market, what is the total value of their stock?
-Exxon Mobil(XOM) $384.8 B
Wal-Mart(WMT) $202.4 B
China Mobile Ltd.(CHL) $180.0 B

What is the PE ratio of a stock?
-The PE Ratio (price-to-earning ratio) of stock is a measure of the price paid for a share relative to the annual income or profit. Its the relationship between the stock price and the companies earnings.

What is a stock dividend?
-A stock dividend are payments made by a corporation to its shareholder members.