When people buy stock, they are purchasing ownership shares in the business. If the business reflects a profit, stockholders expect to receive an increase in their investment. If the business is not profitable, stockholders can lose their money. In addition, buyers and sellers determine the prices in the financial market. Prices of stocks rise and fall based on supply and demand. If more people want to sell a stock than buy a stock, the supply goes up and the price falls. If more people want to buy a stock than sell, the demand is up so the price goes up. If you have been paying attention to financial news, you might have heard about stocks going up and down. Check out the Tampa Bay Times article below. Based on the information in the text, how do financial markets adjust to new financial news? How are financial markets affected by changes in domestic and international economic conditions and policies?
Financial Literacy Standards
SS.8.FL.5.4 Explain that the price of a financial asset is determined by the interaction of buyers and sellers in a financial market. SS.8.FL.5.3 Discuss that when people buy corporate stock, they are purchasing ownership shares in a business that if the business is profitable, they will expect to receive income in the form of dividends and/or from the increase in the stocks value, that the increase in the value of an asset (like a stock) is called a capital gain, and if the business is not profitable, investors could lose the money they have invested. SS.912.FL.5.3 Discuss that buyers and sellers in financial markets determine prices of financial assets and therefore influence the rates of return on those assets. SS.912.FL.5.7 Describe how financial markets adjust to new financial news and that prices in those markets reflect what is known about those financial assets. SS.912.FL.5.8 Discuss ways that the prices of financial assets are affected by interest rates and explain that the prices of financial assets are also affected by changes in domestic and international economic conditions, monetary policy, and fiscal policy. ...... Comments are closed.
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January 2022
CategoriesAuthorDeborah Kozdras, Ph.D. |