VOCABULARY

You are about to begin a game simulating the activity in the STOCK MARKET. You and the others in your class are going to find out about one of the most important institutions in our economy--the Stock Market.

INVESTORS When a company is just getting started, it needs to raise money to buy materials, build factories, and hire workers. The managers of the company may raise the needed money by selling part ownership in the company to investors. These persons have money that they are willing to invest in the company. in exchange they share in the company's profits. The more money an investor puts into a company, the greater his share of the ownership and the greater his share of the profits.

STOCKS The money a company raises from investors is called stock. The company's stock is divided into shares that can be bought and sold. The company gives a buyer, the investor, a STOCK CERTIFICATE that not only tells how many shares he owns but also proves that he owns them.

CHANGING VALUE The value of these shares of stock will vary from day to day. If a company is profitable and the stockholders are earning money on their investment, other people may want to buy some of the stock so that they, too, can get a share of the profits. people may offer to pay more for the stock than its original price. In suck a case the value of a the stock has gone up. but sometimes the company is not making money for its investors. Other times stockholders think that the company will not be as profitable in the future. Then the stockholders may decide to sell their shares of stock. If people are not interested in buying that particular stock, the selling price normally goes down. Thus, the value of the stock has gone down.

BUYING AND SELLING People decide to buy or sell stock based on a number of considerations regarding the future. News stories can affect the way people see the value of their stocks. If a new invention is announced that will make the company more profitable in the future, people will want to buy stock in the company. As a result, the value of its stock may go up. If people hear rumors or have suspicions about the management of the company, they may fear that their investment is not safe. Then they may try to sell their stock. People may also fear what the future holds for them. They could be frustrated by inflation, war, new government policies, lack of raw materials, or high cost of labor. At such times they may even want to sell profitable stocks. By such actions they may drive down stocks' value.

STOCK MARKET The place where buyers and sellers get together is called the stock market. Since it would be difficult and confusing for everyone to go to the stock market, people go instead to a stock broker. This man or woman will do the buying and selling for them. The broker charges a fee for this service. It is called a commission, and it is a percentage of the cost of the stock bought or sold.

During this simulation you will see how daily events change the values of stocks. you will learn how to read the stock market prices that are listed in the newspaper, how real stocks are bought and sold, and how money is make or lost in the process.

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