Investing Your Money focuses on key concepts in financial investments, including stocks, shares, and market dynamics. This unit covers essential terminology such as ordinary and preference shares, stock exchanges, and market indices. It also explains investor types like bulls and bears, and concepts like market crashes and liquidations. Designed for students in International Relations, this resource provides a foundational understanding of investment principles crucial for economic studies.

Key Points

  • Explains the difference between ordinary and preference shares in investment.
  • Covers key terms such as stock markets, equities, and flotation processes.
  • Describes types of investors including bulls, bears, and stags.
  • Discusses market conditions like bull and bear markets and their implications.
cinthia
6 pages
Language:English
Type:Study Guide
Accounting
cinthia
6 pages
Language:English
Type:Study Guide
Accounting
75
/ 6
BLOCK 1. AN ECONOMIC WORLD
UNIT 2. INVESTING YOUR MONEY
Grado en Relaciones Internacionales
Inglés II
STOCKS AND SHARES
STOCKS AND
SHARES
Stocks and shares are certificates representing part ownership of a company.
• Stockholders / Shareholders: they own them
• Stock Markets / Stock exchanges: the places where the stocks and shares of listed
companies are bought and sold.
EQUITIES
They are also used to describe stocks and shares.
MORE
EXPRESSIONS
• To go public: change from a private company to a publi limited company (PLC) by selling
shares to outside investors for the first time.
• Due dilligence: a detailed examination of a company and its financial situation.
• Prospectus: a document inviting the public to buy shared, stating the terms of sale and
giving information about the company.
• Financial results: details about sales, costs, debts, profits, loses, etc.
• Flotation: an offer of a company’s shares to investors (financial institutions and the
general public).
• To underwrite: to guarantee to buy the shares if there are not enough other buyers.
STOCKS AND SHARES
ORDINARY AND
PREFERENCE
SHARES
• Ordinary share: when a company has only type of share (also called equities).
• Preference share: some companies have these shares by which their shareholders
receive a fixed dividend that must be paid before holders of ordinary shares receive a
dividend.
GOING INTO
LIQUIDATION
When a company has to sell all its assets (i.e. posessions of a company) to repay part of its
debts.
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End of Document
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FAQs

What are ordinary and preference shares?
Ordinary shares represent ownership in a company and provide shareholders with voting rights and dividends. Preference shares, on the other hand, offer fixed dividends that must be paid before ordinary shareholders receive any dividends. This distinction is crucial for investors when considering the risk and return associated with different types of shares.
What is a stock market crash?
A stock market crash occurs when stock prices fall sharply within a short period, leading to widespread panic among investors. Historical examples include Black Monday, when the Dow Jones Industrial Average dropped significantly. Understanding the triggers and consequences of such crashes is vital for investors to navigate market volatility.
What are the roles of bulls and bears in the stock market?
Bulls are investors who anticipate that stock prices will rise, often leading to increased buying activity. Conversely, bears expect prices to fall, which can result in selling pressure. The interplay between these two types of investors shapes market trends and can influence overall market sentiment.
How do stock indexes measure market performance?
Stock indexes, such as the Dow Jones, track the performance of a selected group of stocks, providing a snapshot of market trends. They reflect changes in average stock prices and help investors gauge the overall health of the stock market. A rising index indicates a bull market, while a declining index suggests a bear market.

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