MGMT 105 1st Edition Lecture 31Outline of Last Lecture I. Visiting Executive Series – Money Wise AggiesOutline of Current Lecture II. Visiting Executive Series Speaker: Ryan Isaacs, Private Bank- Time Value of Money: principle that invested money grows, over time by earning interest or other form of return- Compound Growth: compounding of interest over time- Stock: portion of ownership of a corporation- Common Stock: most basic form of ownership including voting rights on major issues in a company- Market Value: current price of a share of stock in the stock market- Dividend: payment to shareholders, on a per-share basis, out of the company’s earnings - Blue-Chip Stock: common stock issued by a well-established and respected economyo Example: Verizon ; GE- Mutual Fund: company that pools cash investments from individuals and organizations to purchase a portfolio of stocks, bonds, and other securitieso Examples: Vanguard ; Fidelity ; BlackRock ; PIMCO (bond mutual fund)- Exchange Traded Fund (EFT): bundle of stocks that are in an index that tracks the overall movement of a market but, unlike a mutual fund, can be traded like a stock- Securities: stocks, bonds, and mutual funds representing secured, or asset-based, claims by investors against issues- Bond: represents a financial claim of money owed by a company to a bondholdero Example: almost like loans that have to be paid back- Primary Securities Market: new stocks and bonds are bought and sold- Secondary Securities Market: existing (not new) stocks and bonds are sold to the public- Securities and Exchange Commission (SEC): government agency that regulates U.S. securities markets- Investment Bank: financial institution that specializes in issuing and reselling new securities- Stock Exchange: an organization of individuals to provide an institutional auction setting in whichstocks can be bought and sold- National Association of Securities Dealers Automated Quotation (NASDAQ) System: world’s oldest electronic stock exchange- World’s largest stock exchange: New York Stock Exchange (largest cash equity exchange)- Stock Broker: individual or organization that receives and executes buy and sell orders- Market Index: measure the performance of a large group of stocks or track the price changes of a stock market- Bull Market: period of rising stock prices lasting 12 months or longer, featuring investor confidence for future gains and motivation to buy(currently in this)- Bear Market: period of falling stock prices marked by negative investor sentiments with motivation to sell ahead of anticipated losses- Dow Jones Industrial Average (DIJA): oldest and most widely cited market index- S&P 500: market index of U.S. equities based on the performance of 500 large-cap stocks- Risk-Return (Risk-Reward) Relationship: safer investments tend to offer lower returns, whereas riskier investments tend to offer high returns (rewards)- Initial Public Offering (IPO): first sale of a company’s stock to the general public- Insider Trading: illegal practice of using special knowledge about a firm for profit or