Finanzas

PREFACE
Understanding the stock market – The key to America’s economic growth
More that 51 million Americans own stock directly. Over 100 million participate in the market indirectly, through the investments of their pension funds, insurance companies, universities, and banks. More than 2000 companies have their stock listed in the New York Stock Exchange. These companies are based in all fiftystates and more than a dozen foreign countries.
These companies form the core of our system of private enterprise. They spur jobs and economic growth while creating products and services that improve the quality of peoples’ lives.
So, when you ask the stock market in important, the answer is that, directly or indirectly, it affects most of us.

CHAPTER 1
The New York Stock Exchange: ACapital Ideal For Corporations And Investors

A solo proprietorship is any sort of business owned and operated by one person, advantages or owning your own business. It’s easy to form, and all the profits funnel straight into your pocket. On the other hand, you may find that a one person operation limits the ability of your business to grow.
To team up with a friend, you’ve formed a partnership, abusiness owned by two or more persons. You’ll have to share decision marking power and, once again, your resources are limited to all the cash and expertise the two of you can scrape together.
Capital is the fuel that helps businesses grows, providing for expanded research, new better machinery, larger workforces, and more advertising.
One sour of capital is individuals who have extra money toinvest. For these individuals capital is money they can put to work to earn more money.

MEETING THE CASH CRUNCH
A company faced with growing pains may choose one of several ways to meet the cash crunch.
If the company already turns a healthy profit, it may decide to reinvest. The company’s managers pay off the company’s annual expenses. Then, instead of dividing up the year’s leftoverprofits, the pour that money, called retained earnings, back into the business.
A company can get money by borrowing from a bank. A bank loan can help fuel growth in the short run, but one day, of course, the company will have to pay back the loan, plus a fee called interest, to cover the cost of the borrowing. Also, bank limits the amount of money they are willing to lend according to the ability ofthe company to pay it back. So a company may only be able to borrow a small amount of money from the bank.
To support longer-term growth, the company may turn to another form of borrowing it may issue bonds. A bond is a sort of official I.O.U. Companies issue bonds to investors who lend them money. After a specified amount of time, in many cases as long as thirty years, the bond is said to “mature”at a specific maturity date. The individual then collects his or her original investment from the company, plus interest.
When a corporation’s stock is issued for the first time it is called the primary market. Later when the stock is resold to other investors, it is sold on the secondary market. By going public, the company is transformed from a private business owned by a few people to apublic corporation owned collectively by a large pool of investors, or stockholders.
PUTTING YOUR MONEY TO WORK
A better way to keep your money secure and productive is to invest it. An investment is anything you spend money on in order to make, hopefully, more money.
In order to choose the best investment for you, you have to evaluate you personal investment goals. Some investors are eager to takerisk in hopes of realizing big gains. Some seek a way to shelter their saving from being eroded by inflation, the increased cost of living.
One alternative for investors is to invest their money in corporate bonds, long-term loans to growing companies.
Preferred stock comes with a guarantee that its owner will be the first to receive a share in the company’s profits, a periodic payment known...