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    Financial Management Stocks

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    Melody Christy G. Hambre
    This document discusses different types of stocks and why companies issue them. It describes stocks as a type of security that represents partial ownership in a company. Companies issue stocks to raise capital that can be used to pay off debt, launch new products or services, expand operations, or build new facilities. There are two main types of stocks: common stocks, which entitle owners to vote and receive dividends, and preferred stocks, whose owners usually don't vote but receive dividend payments before common stockholders. Stocks can also be categorized as growth stocks, income stocks, value stocks, blue-chip stocks, and by the size of the company as large-cap, mid-cap, or small-cap stocks.

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    © All Rights Reserved
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    Financial Management Stocks

    Uploaded by

    Melody Christy G. Hambre
    26 views17 pages
    This document discusses different types of stocks and why companies issue them. It describes stocks as a type of security that represents partial ownership in a company. Companies issue stocks to raise capital that can be used to pay off debt, launch new products or services, expand operations, or build new facilities. There are two main types of stocks: common stocks, which entitle owners to vote and receive dividends, and preferred stocks, whose owners usually don't vote but receive dividend payments before common stockholders. Stocks can also be categorized as growth stocks, income stocks, value stocks, blue-chip stocks, and by the size of the company as large-cap, mid-cap, or small-cap stocks.

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    This document discusses different types of stocks and why companies issue them. It describes stocks as a type of security that represents partial ownership in a company. Companies issue stocks to raise capital that can be used to pay off debt, launch new products or services, expand operations, or build new facilities. There are two main types of stocks: common stocks, which entitle owners to vote and receive dividends, and preferred stocks, whose owners usually don't vote but receive dividend payments before common stockholders. Stocks can also be categorized as growth stocks, income stocks, value stocks, blue-chip stocks, and by the size of the company as large-cap, mid-cap, or small-cap stocks.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    26 views17 pages

    Financial Management Stocks

    Uploaded by

    Melody Christy G. Hambre
    This document discusses different types of stocks and why companies issue them. It describes stocks as a type of security that represents partial ownership in a company. Companies issue stocks to raise capital that can be used to pay off debt, launch new products or services, expand operations, or build new facilities. There are two main types of stocks: common stocks, which entitle owners to vote and receive dividends, and preferred stocks, whose owners usually don't vote but receive dividend payments before common stockholders. Stocks can also be categorized as growth stocks, income stocks, value stocks, blue-chip stocks, and by the size of the company as large-cap, mid-cap, or small-cap stocks.

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    You are on page 1of 17

    INVESTING

    IN STOCKS
    Financial Management
    MAJOR ASSET
    CLASSES, IN • Cash - A cash bank deposit is the simplest, most easily
    ASCENDING ORDER understandable investment asset—and the safest.
    OF RISK, ON THE • Bonds - is a debt instrument representing a loan made by an
    INVESTMENT RISK investor to a borrower.
    LADDER • Mutual Funds - is a type of investment where more than one
    investor pools their money together in order to purchase
    securities. 
    MAJOR ASSET • Exchange Traded Funds (ETFs) - ETFs are similar to
    CLASSES, IN mutual funds, but they trade throughout the day, on
    ASCENDING ORDER a stock exchange.
    OF RISK, ON THE
    INVESTMENT RISK • Stocks – (will be further discussed)
    LADDER • Alternative Investments - Real estate, Hedge
    funds and Private equity funds, Commodities
    WHAT ARE
    STOCKS?

    • Stocks are a type of


    security that gives
    stockholders a share
    of ownership in a
    company. Stocks
    also are called
    “equities.”
    WHY DO PEOPLE BUY
    STOCKS?
    Investors buy stocks for various reasons.
    Here are some of them:

    • Capital appreciation, which occurs when a stock rises in


    price
    • Dividend payments, which come when the company
    distributes some of its earnings to stockholders
    • Ability to vote shares and influence the company
    STOCK VS. NON-STOCK
    CORPORATIONS
    Stock Corporations  Non-Stock Corporation
    Are for-profit organizations that A corporation that does not issue
    issue shares of stock to shares of stock. It can be formed
    shareholders (also known as as either a for-profit or non-
    stockholders) to raise capital, profit corporation. Since the
    with each share representing Non-Stock Corporation has no
    partial ownership of the shareholders, it is owned by its
    corporation and granting members – meaning a member-
    shareholders certain ownership owned corporation that does not
    rights that shape company issue shares of stock.
    policies.
    WHY DO COMPANIES
    ISSUE STOCK?

    Companies issue stock to get


    money for various things, which
    may include:
    • Paying off debt
    • Launching new products
    • Expanding into new markets or
    regions
    • Enlarging facilities or building new
    ones
    WHAT KINDS OF STOCKS ARE THERE?
    There are two main kinds of stocks, Common Stock and Preferred Stock.
    COMMON ST
    OCK
    -entitles owners to vote at
    shareholder meetings and
    receive dividends.
    PREFERRED
    STOCK

    - stockholders usually don’t


    have voting rights but they
    receive dividend payments
    before common stockholders
    do and have priority over
    common stockholders if the
    company goes bankrupt and
    its assets are liquidated.
    Common and preferred stocks
    may fall into one or more of the
    following categories:
    Common and preferred stocks
    may fall into one or more of the
    following categories:

    • Growth stocks - have


    earnings growing at a faster
    rate than the market
    average. They rarely pay
    dividends and investors buy
    them in the hope of capital
    appreciation. A start-up
    technology company is
    likely to be a growth stock.
    Common and preferred stocks
    may fall into one or more of the
    following categories:

    • Income stocks - pay


    dividends consistently.
    Investors buy them for
    the income they
    generate. An
    established utility
    company is likely to be
    an income stock.
    Common and preferred stocks
    may fall into one or more of the
    following categories:

    • Value stocks - have a low price-to-


    earnings (PE) ratio, meaning they
    are cheaper to buy than stocks
    with a higher PE. Value stocks may
    be growth or income stocks, and
    their low PE ratio may reflect the
    fact that they have fallen out of
    favor with investors for some
    reason. People buy value stocks in
    the hope that the market has
    overreacted, and that the stock’s
    price will rebound.
    Common and preferred stocks
    may fall into one or more of the
    following categories:

    • Blue-chip stocks - are


    shares in large, well-
    known companies
    with a solid history of
    growth. They generally
    pay dividends.
    WHAT KINDS OF STOCKS ARE
    THERE? (cont.)
    • Another way to categorize stocks is by the size of the company, as
    shown in its market capitalization.
    • There are large-cap, mid-cap, and small-cap stocks.
    • Shares in very small companies are sometimes called “microcap”
    stocks.
    • The very lowest priced stocks are known as “penny stocks.” These
    companies may have little or no earnings. Penny stocks do not pay
    dividends and are highly speculative.
    Sources:
    • https://www.investopedia.com/articles/basics/11/3-s-simple-investin
    g.asp
    • https://www.investor.gov/introduction-investing/investing-basics/inv
    estment-products/stocks
    • https://www.advantage-de.com/information-center/types-of-busines
    s-entities/non-stock-corporation/
    • https://www.thebalance.com/stock-investing-for-the-individual-invest
    or-3306182
    • https://www.thebalance.com/major-types-of-risk-for-stock-investors-
    3141315
    • https://www.investor.gov/introduction-investing/investing-basics/inv
    estment-products/stocks

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