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Pirlo Speed Sheets Understand any subject within 10 minutes

The Stock Market

The Stock market appears in the news every day. You hear about it every time it reaches a new high or a new low. But what is the stock market? How does it affect people like you and me? What is Stock?. What is the point of having a stock market in the first place?


Millions of subjects for you to understand fast and easily Sheet Number: 2011075

What is the Stock Market? 2 The Stock Market is a public market

20 were company “Stocks” are bought and sold. Business corporations issue stocks in their companies to raise money for a number of reasons. When a large company wants to expand, it needs money, the best way to do this is by issuing stock shares. The money they get from these shares enables their companies to grow and prosper. So the Stock Market is a place where the general public can buy and sell

Why is the stock market so confusing to understand? This speed sheet will explain to you in simple terms the reason why the stock market exists.

shares in various companies. The 3 Stock Market has a very long history, so knowing exactly when it started can be quite difficult to determine. However, the trading of stocks and commodities can be traced back to12th century France. It was here that brokers known as “Courratiers de Change” would manage the debts of agricultural communities on behalf of the banks.

There are now Stock Markets all over the world, with the largest being in the United States , United Kingdom, Canada, Germany, Japan, France, India and China. One of the most famous Stock Exchanges in the world, the New York Stock Exchange (NYSE), began back in 1792. It was here that the “Buttonwood” agreement was signed by 24 stockbrokers opposite 68 Wall Street Under a buttonwood tree. In 1817, after drafting up a set of rules, the


A stock market crash is when the prices of stock falls across a large proportion of the stock market resulting in a huge loss in paper wealth. They are usually brought on by economic events or crowd panicking which can lead to a continuous knock-on effect of investors selling their stocks. The sharp decline of stock prices across the board is usually monitored for several days before it is acknowledge that a stock market crash is taking place.

9 Although they do not happen very

10 Spread across Europe and the

Some of the more common and well known indexes are:

13 biggest listed companies on the UK


1/ Dow Jones 2/ FTSE 3/ NASDAQ 4/Standard & Poors The Stock Market indexes are basically there to give you a quick glance at the performance of different sections of the stock market. Each Index would be a selection of different companies. The performance of the top 100 There are many different types of stock that an investor can invest in. Some of the more common ones are listed below. 1/ 2/ 3/ 4/

Growth Stocks Income Stocks Speculative Stocks Preferred Stocks


Organization changed its name to the “New York Stock & Exchange Board”. The New York Stock Exchange is now located at 11 Wall street in lower Manhattan, New York. USA.

The main function of the Stock Market is to enable companies to raise money, that is it! It is as simple as that, The stock market allows companies to offer shares of their companies to the public to raise money. It is also very attractive to investors too, as they

often, there have been some serious stock market crashes in history. 1929- The Wall St Crash This huge stock market crash known as “Black Thursday” destroyed the economy with many people loosing their entire savings and large amount of companies going bust. Another large crash took place on October 19th 1987 known as”Black Monday”. This crash started in Hong Kong and

stock exchange would be listed on the FTSE 100 Index. Trading in stock market shares can be very rewarding. Stockbrokers are usually used by individuals who wish to buy shares. They buy and sell the shares on behalf of their client in return for a commission. There are basically 2 different ways of trading shares. 1/ Electronically. 2/ On the Stock Exchange floor.

17 Trading in stocks and shares can be

an exciting and lucrative business. Before you set out, it is always best to do a little research on the stock market itself, after all even horse racing fanatics check the odds before they lay their money down. Begin with contacting a good stockbroker who can guide you through the process. Researching the companies whose stock you wish to purchase is probably the most important thing you can do.


Can quickly buy and sell shares in companies. A company wishing to sell shares on the stock market must first go public. Then they issue IPO’s or (Initial Public Offerings). In order to issue stock, they work with an investment banker who sets everything up. The person buying the stock usually does so by using a stockbroker. The stockbroker places the order on your behalf either electronically or directly on the trading floor. The value of stock that an investor purchases either goes up or down based on the demand for it.

A little later on around the middle 4 of the 13th century, bankers in Venice started to trade in government securities. It was not long before banks in the surrounding areas such as Pisa, Genoa and Florence also began the trading process. The First building in the world designed for stock exchange was situated in Antwerp, Belgium. It was here in 1531 that brokers would meet to trade shares.


The more people that buy stock in a company, the higher the price will go. In the opposite way, if stock in a company is not being sold, the price per share will go down. It does not matter if you are talking about a stock market or a supermarket, the same principles of supply and demand apply. 4 stages of the Stock Market 1/ Company decides to sell stock 2/ The Public buy the stock & become shareholders. 3/ The shareholders sell their stock 4/ Stock is sold to other investors.

11 To make sense of the Index


United States. A stock market “Index” is a number that measures the relative value of a group of stocks. As the stocks in this group changes value, the “Index” also changes value. If an “Index” goes up by 4%, it means the total value of the stock which make up the “Index” have gone up by 4% in value. The Indexes are usually measured in “Points”. These “Points” act as a indicator to the overall performance of the stock value within the group or index.

number (Points), you need to compare it to the previous days number. If you are an investor on the stock market and want to measure the performance of your stocks, it is important you keep an eye on the relevant index so you can alter your investment strategy. If your investments are continually falling behind the index, then it is probably time to come up with a new investment plan. Stock Market indexes are used to measure the value of groups of stocks.

Hectic scenes from the trading 15 floor look quite disorganized, however it runs quite simply. This is roughly how it works. 1/ you ask your broker to buy 50 shares in company “X” 2/ Your broker sends the order to their floor clerk on the exchange floor 3/ A floor trader is approached who will sell 50 shares of company “X” to your broker on your behalf. 4/ When a price is agreed, the deal is done.

There are hundreds of stock 16 exchanges around the world which provide facilities to stock brokers to deal in stocks. World Stock exchanges can be affected by many factors. Recessions and wars all come into play and can determine the value of stocks.

18 The Stock Market is a very


important part of our world. It creates wealth and although you may not be directly involved with it, the performance of a stock market can be a symbol of a countries economic strength. The stock prices affect the health of an economy and in turn consumer spending.

The largest stock exchange in the world is the NYSE .

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Understanding the Stock Market in 10 minutes