Student Center | Instructor Center | Information Center | Home 
 
 
Getting Ready For Prime Time
Glossary
Career Corner
PowerWeb
Newsroom
Personal Finance Corner
Global Business Corner
Technology Corner
Video Cases
Taking It To The Net Exercises
e-Commerce Modules
Chapter
Crossword Puzzle
eLearning Session
Learning Objectives
Internet Exercises
Self Quiz
Company Web Links
 
Understanding Business, 6/e
William G. Nickels
James M. McHugh
Susan M. McHugh
Chapter 20: Securities Markets: Financing and Investment Opportunities
 HOME

 
eLearning Session

The PROFILE at the beginning of this chapter is "Getting to Know JONATHAN HOENIG of CAPITALISTPIG." Hoenig, a self-styled "capitalist pig," is spreading the word of financial freedom through capitalism.
  1. THE FUNCTION OF SECURITIES MARKETS. Power Point Presentation

    2. Examine the functions of securities markets and investment bankers.
    1. Securities markets serve TWO MAJOR FUNCTIONS:
      1. To help businesses find LONG-TERM FUNDING.
      2. To give investors a place to BUY AND SELL INVESTMENTS such as stocks and bonds.
    2. Securities markets are divided into TWO MARKETS:
      1. PRIMARY MARKETS handle the sale of NEW SECURITIES.
        1. Corporations only make money on the sale of their securities once, when they are first bought on the primary market.
        2. An INITIAL PUBLIC OFFERING (IPO) Key Term is the first public offering of a corporation’s stock.
        3. After that the secondary market handles the trading of securities between investors.
          4.
        4. However, companies can offer additional shares of stock in the future to raise additional capital.Concept Check CONCEPT CHECK
      2. SECONDARY MARKETS handle the trading of securities between investors; the proceeds of the sale go to the investor selling the stock, not to the corporation.
        3.
    3. THE IMPORTANCE OF LONG-TERM FUNDING.
      4.
      1. Many new companies start without sufficient capital.
      2. Businesses normally prefer to meet long-term financial needs by using retained earnings or by borrowing from a lending institution.
        3.
      3. If such forms are not available, the company may be able to raise capital by issuing corporate bonds or selling stock.
      4. These forms of debt or equity financing are not available to all companies.
        5.
    4. THE ROLE OF INVESTMENT BANKERS.
      1. INVESTMENT BANKERS are specialists in assisting in issuing and selling of new securities.
      2. Investment bankers also UNDERWRITE NEW ISSUES of bonds or stocks, buying the entire bond or stock issue at a discount then selling the issue to investors.
      3. INSTITUTIONAL INVESTORS, large investors such as pension funds, mutual funds, insurance companies, and banks, are a powerful force in securities markets.
  2. DEBT FINANCING THROUGH SELLING BONDS. Power Point Presentation

    3. Compare the advantages and disadvantages of issuing bonds, and identify the classes and features of bonds.
    1. LEARNING THE LANGUAGE OF BONDS.
      2.
      1. A BOND is a corporate certificate indicating that a person has loaned money to a firm.
      2. A company that issues bonds has a legal obligation to make regular interest payments to investors and to repay the entire bond principal.
      3. INTEREST is the payment the issuer of the bond makes to the bondholders to pay for use of the borrowed money.
        1. The BOND INTEREST RATES may be called the bond’s COUPON RATE, a term from when bonds were issued as bearer bonds and the holder was considered the owner. Concept Check CONCEPT CHECK
        2. Today bonds are REGISTERED, and changes in ownership are recorded.
      4. The interest rate paid on a bond varies based on factors such as the going interest rate for bonds.
        5.
      5. Bonds are also rated in terms of their risk by independent firms such as Standard and Poor’s and Moody’s Investor Services.Concept Check CONCEPT CHECK
      6. The DENOMINATION is the amount of debt represented by one bond, usually in multiples of $1,000.
      7. PRINCIPAL is the face value of a bond.
      8. MATURITY DATE is the date the issuer of bond must pay the principal of the bond to the bondholder.
        9.
    2. ADVANTAGES AND DISADVANTAGES OF SELLING BONDS.
      3.
      1. ADVANTAGES OF BONDS INCLUDE:
        1. BONDHOLDERS are creditors, not owners and HAVE NO VOTE on corporate affairs.
        2. Interest paid on bonds is TAX-DEDUCTIBLE.
        3. Bonds are a TEMPORARY SOURCE OF FUNDING; they are eventually repaid and the debt obligation eliminated.
      2. DISADVANTAGES OF BONDS INCLUDE: Power Point Presentation
        1. Bonds are an INCREASE IN DEBT.
        2. Interest on bonds is A LEGAL OBLIGATION.
        3. The face value of the bonds MUST BE REPAID on the maturity date.
          4.
    3. DIFFERENT CLASSES OF BONDS.
      4.
      1. UNSECURED BONDS are not supported by any collateral.
        2.
        1. Unsecured bonds are usually referred to as DEBENTURE BONDS.Key Term
        2. Debenture bonds are issued only by well-respected firms with excellent credit ratings.
          3.
      2. SECURED BONDS are backed by some tangible asset that is pledged to the bondholder if interest or principal is not paid.
      3. MORTGAGE BONDS are secured by company assets such as land and buildings, are the most common form of secured bond.
        4.
    4. SPECIAL BOND FEATURES.
      5.
      1. Companies often establish a sinking fund to ensure that funds are available to repay bondholders on the maturity date.
      2. A SINKING FUND is a bond provision that requires the issuer to pay off, on a periodic basis, some part of the bond issue before its final maturity.
      3. A CALLABLE BOND is a bond that gives the issuer the right to pay off the bond before its maturity.
        1. Call provisions must be included when a bond is issued.
        2. Callable bonds give companies some discretion in their long-term forecasting.
      4. A CONVERTIBLE BOND Key Term is one that can be converted into shares of common stock in the issuing company.
  3. EQUITY FINANCING THROUGH SELLING STOCK.

    4. Compare the advantages and disadvantages of issuing stock and outline the differences between common and preferred stock.
    1. EQUITY FINANCING is the obtaining of funds through the sale of ownership in the corporation.
      2.
    2. LEARNING THE LANGUAGE OF STOCK.Power Point Presentation
      1. STOCKS are shares of ownership in a company.
      2. A STOCK CERTIFICATE is evidence of stock ownership, often held electronically.
      3. PAR VALUE is an arbitrary dollar amount printed on the front of a stock certificate.
        1. Some states require par value as a basis for the state’s incorporation fees.
        2. Most companies issue NO-PAR STOCK.
      4. DIVIDENDS are a part of the firm’s profits that may be distributed to shareholders as either cash payments or additional shares.
        5.
    3. ADVANTAGES AND DISADVANTAGES OF ISSUING STOCK.Concept Check CONCEPT CHECK
      1. ADVANTAGES OF ISSUING STOCK INCLUDE:
        2.
        1. As owners of the business, stockholders investment NEVER HAS TO BE REPAID.
        2. There is NO LEGAL OBLIGATION to pay dividends to stockholders, so profits can be invested back in the business.
        3. Selling stock can IMPROVE THE CONDITION OF THE FIRM’S BALANCE SHEET since no debt is incurred.
          4.
      2. DISADVANTAGES OF ISSUING STOCK INCLUDE:
        1. Stockholders have the RIGHT TO VOTE and can alter the direction of the firm.
        2. Dividends are PAID OUT OF PROFIT AFTER TAXES and are not tax exempt.
        3. Management decision making is often tempered by THE NEED TO KEEP STOCKHOLDERS HAPPY.
    4. ISSUING SHARES OF PREFERRED STOCK.
      5.
      1. PREFERRED STOCK gives its owners preference in the payment of dividends and an earlier claim on assets if the company is liquidated; it does not include voting rights.
        2.
      2. PREFERRED STOCK DIVIDENDS DIFFER FROM COMMON STOCK DIVIDENDS in several waysPower Point Presentation
        1. Preferred stock does not include voting rights in the firm.
        2. The PAR VALUE is the basis for the dividend the firm is willing to pay.
        3. The dividend is FIXED.
        4. If dividends are paid, dividends on preferred stock must be paid in full before any common stock dividends can be paid.
          5.
      3. SIMILARITIES BETWEEN PREFERRED STOCK AND BONDS.
        1. Both have a face (or par) value, and both have a fixed rate of return.
        2. Preferred stock are rated by Standard & Poor and Moody’s just like bonds.
        3. Both increase in market value, but stock generally increases at a higher percentage than bonds.
      4. SPECIAL FEATURES OF PREFERRED STOCK.
        1. Preferred stock can be CALLABLE, meaning a company could require preferred stockholders to sell back their shares.
        2. Preferred stock could also be CONVERTIBLE to shares of common stock.
        3. With CUMULATIVE PREFERRED STOCK the missed dividends can be accumulated if they are not paid.
    5. ISSUING SHARES OF COMMON STOCK.
      1. COMMON STOCK is the MOST BASIC FORM of ownership of firms.
      2. Common stock includes the RIGHTS:
        1. To vote for board of directors and on important issues.
        2. To share in the firm’s profits through dividends if declared by the firm’s board of directors.
        3. Due to the PREEMPTIVE RIGHT, common stockholders have the first right to purchase any new shares of common stock.
  4. STOCK EXCHANGES.Power Point Presentation

    5. Describe the various stock exchanges and how to invest in securities markets, and explain various investment objectives such as long-term growth, income, cash, and protection from inflation.
    1. A STOCK EXCHANGE is an organization whose members can buy and sell (exchange) securities for the public.
      1. Brokerage firms purchase memberships, or SEATS, on the exchanges.
      2. The limited number of seats pushed the average price of a seat on the NYSE to $2.5 million in 1999.
      3. Stock exchanges operate in cities such as Paris, London, Sydney, Buenos Aires, and Tokyo.
      4. Even former communist-bloc countries such as Hungary and Poland have opened stock exchanges.
    2. U.S. EXCHANGES.
      1. The LARGEST STOCK EXCHANGE in the U.S., the NEW YORK STOCK EXCHANGE, was founded in 1792.
        1. The NYSE is a floor-based exchange (trades take place on the floor of the stock exchange.)
        2. The NYSE is often referred to as the Big Board.
      2. The second-largest U.S. exchange is the AMERICAN STOCK EXCHANGE (AMEX), which lists about 1000 common and preferred stocks.
      3. There are SEVERAL REGIONAL EXCHANGES in Chicago, San Francisco, Philadelphia, Boston, Cincinnati, Spokane, and Salt Lake City that deal with regional issues.
    3. THE OVER-THE-COUNTER (OTC) MARKET.
      1. The OVER-THE-COUNTER (OTC) MARKET provides a means to trade stocks not listed on the national securities exchanges.
      2. The nationwide electronic system that communicates OTC trades to brokers is called NATIONAL ASSOCIATION OF SECURITIES DEALERS AUTOMATED QUOTATION SYSTEM (NASDAQ.)
      3. In 1998, a merger between the NASDAQ and American Stock Exchange created the NASDAQ-AMEX Market Group.
      4. Originally, the over-the-counter market dealt with small firms that could not qualify for listing on the two nation exchanges.
      5. Today, firms such as Intel and Microsoft have their stock traded on the OTC market because the trades are done electronically.
      6. The NASDAQ lists approximately 5,600 stock issues, including many technology companies.
      7. The NASDAQ exchange expects to expand operations to Europe.
    4. SECURITIES REGULATIONS.Key Term
      1. SECURITIES The SECURITIES ACT OF 1933 protects investors by requiring full disclosure of financial information by firms selling new stocks or bonds.
      2. The SECURITIES AND EXCHANGE COMMISSION (SEC) Key Term is the federal government agency that has responsibility for regulating the various exchanges.
        1. Companies trading on the national exchanges must register with the SEC and provide annual updates.
        2. Companies must follow established specific guidelines when issuing stock.
      3. A PROSPECTUS, a condensed version of financial information prepared for the SEC, must be sent to potential investors.
      4. INSIDER TRADING involves the use of knowledge or information that a person gains through his or her position that allows him or her to benefit unfairly from fluctuations in stock prices.
        1. The key words are BENEFIT UNFAIRLY.
        2. The term INSIDER has been broadened to include anyone with information about a security not available to the general public.
        3. Penalties for insider trading can include fines or imprisonment.
  5. HOW TO INVEST IN SECURITIES MARKETS.
    1. HOW TO BUY STOCKS OR BONDS.
      1. A STOCKBROKER is a registered representative who works as a market intermediary to buy and sell securities for clients.
      2. PROCEDURE:
        1. An investor contacts a stockbroker and gives the order.
        2. The stockbroker calls a member of the stock exchange who represents the firm for which the broker works.
        3. That member goes to the place where the bond or stock is traded and negotiates a price.
        4. The completed transaction is reported to the broker and then to the investor.
      3. The same procedure is followed if you want to SELL STOCKS AND BONDS.
        1. Today brokers keep most records of bond or stock ownership electronically.
        2. The broker can also be a source of information about what stocks or bonds meet your objectives.
        3. However, you can learn about and follow stocks or bonds on your own.
    2. INVESTING ON-LINE.
      1. Investors can use ON-LINE TRADING SERVICES to buy and sell stocks and bonds.
      2. In 2000, one-fifth of all stockholders had an online-brokerage account.
      3. These trading services are less expensive than regular stockbroker commissions.
      4. They are targeted primarily at investors who are willing to do their own research and make their own investment decisions.
      5. The first step in any investment program is to analyze such factors as desired income, cash requirements, level of risk, and so on.
    3. CHOOSING THE RIGHT INVESTMENT STRATEGY.
      1. INVESTMENT OBJECTIVES change over the course of a person’s life.
        1. A young person can afford more high-risk investment options.
        2. An older person has different objectives, including steady return and additional income.
        3. There is a risk/return trade-off regarding strategies such as growth, income, inflation protection, and liquidity.
      2. You should consider FIVE CRITERIA FOR SELECTING AN INVESTMENT VEHICLE:
        1. INVESTMENT RISK, the chance that an investment and all its yield will be worth less at some future time.
        2. YIELD, the percentage return on an investment, such as interest or dividends.
        3. DURATION, or the length of time assets are committed.
        4. LIQUIDITY, how quickly one can get back invested funds when desired.
        5. TAX CONSEQUENCES, how the investment will affect investors’ tax situation.
  6. INVESTING IN BONDS.

    7. Analyze the opportunities bonds offer as investments.

    1. Bonds are a rather SAFE INVESTMENT.
      1. U.S. GOVERNMENT BONDS are backed by the full faith and credit of the federal government.
      2. MUNICIPAL BONDS offered by local governments often have advantages such as tax-free interest.
    2. If you purchase a corporate bond, you do not have to hold it until maturity because bonds are bought and sold daily on major exchanges.
      1. However, you are not guaranteed to get the FACE VALUE of the bond.
      2. if your bond does not have attractive features, you may be forced to sell your bond at a DISCOUNT, less than the face value.
      3. If your bond is highly valued, you may be able to sell it at a PREMIUM, above the face value.
      4. Bond prices generally fluctuate with current market INTEREST RATES.
    3. Standard & Poor’s and Moody’s Investor Service provide information that RATES various corporate and government bonds as to their degree of RISK to investors.
  7. INVESTING IN STOCK AND MUTUAL FUNDS.Power Point Presentation

    8. Explain the opportunities stocks and mutual funds offer as investments and the advantages of diversifying investments.

    A. STOCK INVESTMENTS provide an opportunity for investors to share in the success of emerging or expanding companies.Concept Check CONCEPT CHECK

      1. As owners, however, stockholders can also lose money if a company does not do well.
        1. The market price of common stock is very dependent on the overall performance of the corporation.
        2. CAPITAL GAINS are the positive difference between the price at which you bought a stock and what you sell it.
        3. Stocks can be subject to a high degree of risk.
      2. Stock investors are often called BULLS and BEARS depending upon their perceptions of the market.
        1. BULLS are investors who believe that stock prices will rise.
        2. BEARS are investors who expect stock prices to decline.
      3. INVESTMENT OPPORTUNITIES IN STOCK.
        1. GROWTH STOCKS are stocks of corporations whose earnings are expected to grow faster that other stocks or the overall economy.
        2. INCOME STOCKS are stocks that offer a high dividend yield (i.e. public utilities.)
        3. BLUE CHIP STOCKS are stocks of high-quality companies that pay regular dividends and generate consistent growth in the company’s stock price.
        4. PENNY STOCKS are stocks that sell for less than $1, and are considered very risky investments.
      4. BUYING STOCK: MARKET AND LIMIT ORDERS.
        1. MARKET ORDERS are instructions to a broker to buy stock at the best price obtainable in the market now.
        2. LIMIT ORDERS are instructions to a broker to purchase stock at a specific price.
    1. STOCK SPLITS.Power Point Presentation
      1. Companies and brokers prefer to have stock purchases conducted in ROUND LOTS, purchases of 100 shares at a time.
      2. Investors often buy stock in ODD LOTS, or purchases of less than 100 shares at a time.
      3. A STOCK SPLIT is the issue of two or more shares for every share of stock outstanding.
      4. The advantage to the company is that it may be ABLE TO SELL MORE SHARES at lower prices.
      5. The advantage to shareholders is that the DEMAND FOR THE STOCK MAY BE GREATER.
        6.
    2. INVESTING IN MUTUAL FUNDS.
      1. A MUTUAL FUND is an organization that buys and stocks and bonds and then sells shares in those securities to the public.
      2. The BENEFIT is that you CAN BUY GET OWNERSHIP OF MANY DIFFERENT COMPANIES that you could not afford to invest in individually—it helps you diversify.
      3. Mutual funds are the BEST WAY FOR SMALL INVESTORS TO BEGIN.
        1. Very conservative funds invest only in government securities or secure corporate bonds.
        2. Others specialize in high-tech firms, foreign companies, precious metals, and Internet companies with greater risk.
        3. Some mutual funds even invest exclusively in socially responsible companies.
      4. You can buy most funds directly and save any fees.
        1. A NO-LOAD FUND is one that charges no commission to buy or sell its shares.
        2. A LOAD FUND would charge a commission to investors to buy into the fund.
        3. OPEN-END FUNDS will accept the investments of any interested investors.
        4. CLOSED-END FUNDS offer a specific number of shares; once issued, no further investors are admitted.
      5. Mutual funds offer the small investor a way to spread the risk of stock ownership.
    3. DIVERSIFYING INVESTMENTS.
      1. DIVERSIFICATION means buying several different investments to spread the risk.
      2. By diversifying investments, the investor decreases the chance of losing everything.
      3. This strategy is often called a PORTFOLIO STRATEGY.
      4. The more investors study the market on their own, the higher the potential for gain.
  8. INVESTING IN HIGHER-RISK INVESTMENTS.

    9. Discuss specific high-risk investments, including junk bonds, buying stock on margin, and commodity trading.
    1. Some investors like safer investments—others want to take more market risk.
    2. INVESTING IN HIGH RISK (JUNK) BONDS.
      1. JUNK BONDS Key Term are high-risk, high-interest bonds.
      2. Standard & Poor’s and Moody’s consider junk bonds as non-investment-grade bonds because of their high risk and high default rates.
      3. If the company can’t pay off the bond, the investor is left with nothing more than paper. In other words, junk.
    3. BUYING STOCK ON MARGIN.
      1. BUYING ON MARGIN is the purchase of stocks by borrowing some of the purchase cost from the broker.
      2. MARGIN is the amount of money the investor must have in the stock; the Federal Reserve sets MARGIN RATES (discussed in detail in Ch. 21.)
      3. Margin debt reached its highest level ever in early 2000.
      4. The downsize is that investors must repay the credit extended, plus interest.
      5. However, a MARGIN CALL requires the investor to come up with more money to cover any losses.
    4. INVESTING IN COMMODITIESConcept Check CONCEPT CHECK
      1. Investors willing to speculate in COMMODITIES hope to profit from the rise and fall of prices of items such as coffee, wheat, pork bellies, petroleum, and other "commodities" that are scheduled for delivery at a given date in time.
        1. Trading in commodities demands skill.
        2. About 75 to 80% of the investors who speculate in commodities lose money in the long run.
      2. Trading in commodities, however, can also be a vehicle for protecting businesspeople, farmers, and others from wide fluctuations in commodity prices.
      3. A COMMODITY EXCHANGE specializes in the buying and selling of precious metals and agricultural goods such as wheat, cattle, sugar, silver, gasoline, and foreign currencies.
        1. The Chicago Board of Trade (CBOT) is the largest commodity exchange.
        2. Commodity exchanges operate like stock exchanges where members of the exchange meet on the exchange’s floor to transact deals.
        3. But all transactions for a specific commodity take place in a specific trading area, or "PIT."
        4. Today more traders are working from computers to sell and buy contracts on global computer networks.
      4. The largest trading futures exchange in the world is the Frankfurt, Germany-based Eurex exchange.
      5. FUTURE MARKETS involve the purchase and sale of goods for delivery some time in the future.
        6.
  9. UNDERSTANDING INFORMATION FROM SECURITIES MARKETS.

    10. Explain securities quotations listed in the financial section of a newspaper, and describe stock market indicators like the Dow Jones Average affect the market.
    1. A wealth of investment information is available in the Wall Street Journal, daily newspapers, and various magazines.
    2. UNDERSTANDING BOND QUOTATIONS.
      1. Government-issued bonds are covered in The Wall Street Journal in a table called TREASURY ISSUES.
      2. These issues are traded on the over-the-counter market.
      3. The PRICE is quoted as a PERCENTAGE OF THE FACE VALUE.
    3. UNDERSTANDING STOCK QUOTATIONS.
      1. The Wall Street Journal lists stock quotations from the New York Stock Exchange, the American Stock Exchange, and the NASDAQ over-the-counter markets.
      2. STOCK QUOTATIONS tell you many things:
        1. Figure 20-7 shows the information on the New York and American Stock Exchanges.
        2. Stocks are quoted in sixteenths of a dollar.
        3. The New York Stock Exchange is shifting from trading stocks in fractions to trading in decimals.
        4. Preferred stocks are identified by the letters PF following the abbreviate company name.
      3. STOCK QUOTES SHOW:
        1. The highest and lowest price the stock has sold for over the past 52 weeks.
        2. The abbreviated company name and the company’s stock symbol.
        3. The last dividend per share paid.
        4. . The stock’s dividend yield (the return expected.)
        5. The P/E ratio (price to earnings ratio.)
        6. Number of shares traded that day in 100s.
        7. The stock’s high. low, and closing price for the day.
        8. The net change in the stock’s price from the previous day.
    4. UNDERSTANDING MUTUAL FUND QUOTATIONS.
      1. Buying into mutual funds is a way to diversify investments at minimum cost.
      2. Figure 20-8 shows The Wall Street Journal’s listing of mutual funds.
      3. The quotation shows:
        1. The funds’ name.
        2. The fund’s NET ASSET VALUE (NAV), the market value of the mutual fund’s portfolio divided by the number of shares outstanding.
        3. The sale price (the net asset value plus charges and fees.)
        4. The net change in the NAV from the previous day’s trading.
        5. It is also simple to change your investment objectives with mutual funds.
      4. It is also simple to change your investment objectives with mutual funds.
    5. STOCK MARKET INDICATORS
      6.
      1. The DOW JONES INDUSTRIAL AVERAGE is the average cost of 30 specific industrial stocks; it is used to give an indication of the direction of the market over time.
        1. Charles Dow began measuring stock averages in 1884 when he added together prices of 12 important stocks and divided the total by 12 to get an average.
        2. The Dow was broadened in 1982 to include 30 stocks.
        3. New stocks are substituted on the Dow when deemed appropriate.
      2. Critics argue that the SAMPLE IS TOO SMALL to get a good statistical representation.
        3.
      3. Many investors prefer to follow stock indexes like the STANDARD & POOR’S 500 that tracks a broader mix.Concept Check CONCEPT CHECK
    6. THE MARKET’S ROLLER-COASTER RIDE.
      7.
      1. The first crash occurred on "Black Tuesday," October 28, 1929, when the stock market lost almost 13% of its value.
      2. The stock market dropped 508 points on October 19, 1987, losing 22% of its value, the largest one-day drop in history.
        1. In just six-and-a-half hours, the market lost a half-trillion dollars.
      3. On October 27, 1997 the Dow fell 554 points due to fears of economic problems in Asian markets.
      4. On Friday, April 14, 2000, the Dow fell 616 points and the NASDAQ 385.
      5. WHAT CAUSED THE CRASHES?
        1. Many reasons can be given, but one of the most common is "PROGRAM TRADING" the process of giving your computer instructions to automatically sell if the price of your stock dips to a certain price.
        2. Many believer that the 1997 market drop would have been much worse had it not been for the market’s "CIRCUIT BREAKERS" that halted trading.
        3. The 1997 plunge was the first test using new "CIRCUIT BREAKERS," rules adopted in the wake of the crash of 1987.
        4. If the market fell 350 points, the circuit breakers would kick on and halt trading for a half hour.
    7. INVESTING IN THE 21st-CENTURY MARKET.
      1. 21st Century markets will probably experience heightened volatility.
      2. In 1997 the Asian crisis created a DOMINO EFFECT on many other countries.
      3. The New York and NASDAQ exchanges are INTENSELY COMPETITIVE.
      4. "DAY TRADERS", who trade online and move rapidly into and out of stocks, can also create volatility.
      5. The basic lessons are to diversify your investments and understand the risks of investing.




Copyright ©2001 The McGraw-Hill Companies.
Any use is subject to the Terms of Use and Privacy Policy.
McGraw-Hill Higher Education is one of the many fine businesses of the The McGraw-Hill Companies.