3.11 Stock Exchange

Why do PLCs sell shares?

raise capital

Define market capitalisation

value of all shares issued by company

Stock Exchange
> place where i__, firms, govt buy & sell shares
> in NZ: New Zealand’s E__, NZX
> e__ functioning of stock ex = ↑business & c__ confidence = ↑investment opportunities in economy

indiv, exchange, efficient, consumer

Consumer c__: economic i__ showing o__ of consumers of country’s e__
> vital source of e__ info as most economic activity is private
> main way to measure: monthly s__ of households

confidence, indicator, optimism, economy, economic, survey

Economic e__: consumer c__ = __(high/low)
> consumers spend m__ than they do at other times on bigger, more e__ items

expansion, confidence, high, more, expensive

↓consumer c__ = consumers ↓certain abt f__ situation = ↓$$ spent = ↓p__ = slowdown = r__

confidence, financial, production, recession

Functions of the Stock Exchange
1. r__ share capital
> via s__ shares on stock exchange
2. facilitate g__
> existing firms release & sell more s__ = raise capital = fund growth
> allows taking over/m__ w/ other companies

raising, selling, growth, shares, merging

Hostile take over/merger: firm buys enough s__ to c__ another

shares, control

Functions of the Stock Exchange
3. Facilitate sale of g__ b__
> govt bond: govt l__ $$ from you to help their spending plans
> u get no o__ but u get i__
> can be sold to o__ firms in stock exchange

govt bonds, loans, ownership, interest, other

Functions of the Stock Exchange
4. Price m__ for trading shares
> m__ f__ determine price
> D comes from consumer c__, rumour, company p__
> b__: profitable market; b__: market losing money

mechanism, market forces, confidence, performance, bullish, bearish

Functions of the Stock Exchange
5. S__ of transaction
> all trans. on ex. are r__ w/ laws of country
> safe = ↑consumer c__

safety, regulated, confidence

P__ capital: capital raised via s__ of shares

permanent, sale

Types of Stock
1. P__ Stock (preference shares)
> holders receive share of p__, __(before/after) holders of other types
> dividend received is usually fixed %
> holders can’t vote at AGM

preferred, profit, before

Types of Stock
2. C__ Stock (ordinary shares)
> Receive d__ from profits __(before/after) preference shareholders
> if none remain = no payment
> has __ vote per share at AGM (more power)
> m__ shareholder: person w/ most o__ shares in company

common, dividend, after, 1, majority, ordinary

Types of Stock
3. G__ stock (bonds)
> usually repaid at end of term

govt

Buying Shares
TRADITIONAL
1. b__
2. i__ in funds
> managed by company, ur $$ pooled w/ everybody elses

MODERN
1. S__ (app)

broker, invest, sharsies