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1、StockMarketBasicsHowaCompany“GoesPublic”--Mr.YatesSomeFinancialTermsEarningsperShare:Theamountofprofittowhicheachshareisentitled.GoingPublic:SlangforwhenacompanyisplanninganIPO.IPO:ShortforInitialPublicOffering.AnIPOiswhenacompanysellsstockinitselfforthe
2、firsttime.Termscontinued…MarketCap:Theamountofmoneyyouwouldhavetopayifyouboughtevershareofstockinacompany.(Tocalculatemarketcap,multiplythenumberofsharesbythepricepershare.)ShortforMarketCapitalization.Share:Asharerepresentsaninvestor'sownershipina"share
3、"oftheprofits,losses,andassetsofacompany.Itiscreatedwhenabusinesscarvesitselfintopiecesandsellsthemtoinvestorsinexchangeforcash.TickerSymbol:Ashortgroupoflettersthatrepresentsaparticularstock(e.g.,"CocaCola"isreferredtoas"KO".)Underwriter:Thefinancialins
4、titutionorinvestmentbankthatisdoingallofthepaperworkandorchestratingacompany'sIPO.PurposeoftheStockMarketAlmosteverylargecorporationstartedoutasasmall,mom-and-popoperationandthroughgrowth,becamefinancialgiants.Wal-Mart,DellComputer,andMcDonald’shadcombin
5、edprofitsof$10.34billionthisyear.Wal-Martwasoriginallyasingle-storebusinessinArkansas.StockMarketDellcomputerbeganwithMichaelDellsellingcomputersoutofhiscollegedormroom.McDonald’swasonceasmallrestaurantnoonehadheardof.Howdidtheygrow?Howdidthesesmallcompa
6、niesgrowfromtiny,hometownenterprisestothreeofthelargestbusinessesintheAmericaneconomy?Theyraisedcapitalbysellingstockinthemselves.ExampleofaCompany:NewtoPublicAftergettingmarried,ayoungcoupledecidedtostartabusiness.Itwouldallowthemtoworkforthemselves,asw
7、ellasarrangetheirhoursaroundtheirfamily.Bothhusbandandwifehavealwayshadastronginterestinfurniture,sotheydecidetoopenastoreintheirhometown.Afterborrowingmoneyfromthebank,theynametheircompany“NWFurniture”andgointobusiness.Thefirstfewyears,thecompanymakesli
8、ttleprofitbecausetheearningsareplowedbackintothestore,buyingadditionalinventoryandaddingontothebuildingtoaccommodatetheincreasinglevelofmerchandise.NWFurnitureTenyearslater,thebusinesshasgrownrapidly.Thecouplehasmanagedtop