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K Net chg This means net change . It is the difference, in dollars , between the closing price of a security on the day’s trading, and the previous day’s closing price. The arrow indicates whether the price was up or down . Put on your investor thinking caps: If a stock closed at $10.50 on Tuesday and $11.25 on Wednesday, what is the net chg? Answer: .75 L Market Cap This means market capitalization , which is the total value of the company’s outstanding shares . Market cap is calculated by multiplying the company’s outstanding shares by the current share price. Companies are either small cap, middle cap (called “mid caps”), or large cap . Some investors prefer to invest in large cap stocks; some prefer mid or small caps, or a portfolio with a balance between the three. These classifications provide analysts and investors with yet another way to group and compare share values of companies. • Large cap companies average over $10 billion in outstanding share value. They tend to be older more mature companies with stable share prices, like Microsoft and Merck. • Mid caps average about $2 billion - $10 billion in outstanding share value. Some mid-caps you might recognize are American Eagle Outfitters and GNC. • Small caps have about $250 million - $2 billion in outstanding share value. They are smaller, risker companies without the market history of many of the large or mid caps. Some small caps you might recognize are Ancestry.com and Lumber Liquidators. Engage students in a discussion: Put on your investor thinking caps. What could take a small cap into the mid- cap range, or a mid-cap into the large cap range? Answer: an increase in share value. Market caps are not set in stone. Obviously, as share values rise or fall, market cap numbers change. Another way a company might move into a high-cap is by issuing more shares. Recall that corporations reserve in their by-laws the right to issue more shares to raise capital. Another way to analyze value: Fun with Fundamentals Many people devote their lives to learning how to accurately value stock. For some analysts and investors, the technical date contained in a stock table provides sufficient data to determine a basic value. For others, elements of value run deeper. They prefer to arrive at value by analyzing a stock’s fundamentals , which includes information not found on a stock table. If you watch, listen to, or read financial news there are frequent references to a stock’s fundamentals . What are those? SLIDE 15K PRODUCT PREVIEW
Lesson 15 | Walk’n on Wall Street 290
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