Section A - Stock market Concepts
a. A Bull Market is a term used to describe long-term growth in the stock market. It is caused by confident investors who spend a lot of money and are willing to take risks. The economy is tends to be going strong and with low unemployment so consumers are more ready to spend, which increases profits of companies, which draws in investors. As the supply of stocks falls, the demand rises, pushing the price up.
b. A Bear market is a term used to describe the opposite, a decline in the stock market. It begins with a sharp drop in the market and then there is usually a period where stocks rise and then they fall again by a lot. In a bear market, investors and consumers lose confidence and so they spend less, which decreases company profits and so stocks fall. Investors want to sell of their stocks before they fall too much.
This only fuels the fire because it makes the share price fall even more.
a. The All Ordinaries Index is a measure of the movement of share value when stocks are sold and bought. It is also used to show the overall performance of the share market, and current trends. It is measured by calculating the Aggregate Market Value (AMV) of selected companies. AMV is calculated by he number of shares on issue multiplied by the current price of the share.
b. London - FTSE 100 Index
Tokyo - Nikkei 225
New York - Dow Jones Indexes
Hong Kong - Hang Seng Indexes
There are two ways an investor can earn an income from shares: Dividends and increases in the share price. Dividends are payments to a shareholder from the company that they have invested in. The company pays the...