UNIT VI STUDY GUIDE
Security Markets, Managing
Information, and Technology
Course Learning Outcomes for Unit VI
Upon completion of this unit, students should be able to:
6. Identify effective business practices toward managing information and technology.
Reading Assignment
Chapter 10:
Financial Markets: Allocating Financial Resources
Chapter 16:
Managing Information Technology: Finding New Ways to Learn and Link
Click here to access the Chapter 10 presentation. Click here to access a PDF version of this presentation.
Click here to access the Chapter 16 presentation. Click here to access a PDF version of this presentation.
Unit Lesson
Chapter 10: Financial Markets: Allocating Financial Resources
Chapter 10 covers the three basic types of securities, as well as common stocks and the rights shareholders
have with this type of security. Another area of interest is how corporations bring their stocks to the market,
which is a primary market, and how they are traded on the secondary market. The government and private
organizations protect shareholders by using regulations in the security market. There are several strategies
investors use when they invest in securities. This chapter also discusses the common strategies and the
reasoning for selecting the best security to fit the investor’s goals.
The three basic types of securities are (1) common stock, (2) preferred stock, and (3) bonds.
1. Common stock is the shareholders’ ownership of a corporation. The shareholders have certain rights:
the right to vote, the right for dividends, and capital gains. The right to vote allows a vote per share of
common stock for important issues the board of directors identifies, such as electing board members,
mergers, and changes to the corporate bylaws. Shareholders are entitled to dividends if and when the
board of directors declared dividends. Dividends are never guaranteed. In the real world, retirees and
individual investors use the dividends as part of their income. There is no guarantee for dividend
income, but a good measure is analyzing the dividend history of a company. The last common benefit
is capital gains, which provides an opportunity to increase the worth of the stock.
2. Preferred stock is a basic security. This type of stock gets preferential treatment; for example, if the
firm goes bankrupt, preferred stock holders have a claim against assets and are paid first. The
preferred stock also has a defined dividend that is not guaranteed.
3. Bonds are a form of an IOU that is issued by corporations and government. Bonds become due
based on their maturity. Bonds can be bought and sold on the open market.
There are two types of security markets: (1) the primary market and (2) the secondary market.
1. The primary market is used to bring a stock to market. This usually happens when a corporation
decides to raise capital. The term initial public offering (IPO) is used when the very first shares come
to market. An example is UPS. This was a privately held corporation for 92 years. In 1999, UPS
BBA 2010, Introduction to Business
1
offered an IPO. This change affected the current UPS shareholders. The
most
important
change
UNIT
x STUDY
GUIDE
occurs in the secondary market, where the price per share is now based
on the market conditions
Title
and the investor preference. UPS now would need to meet and surpass the market expectations for
earnings in order to attract investors to purchase UPS stock. This was new for UPS. Before, the
board of directors placed a price on the stock strictly based on profits. Outside market concerns were
never an issue.
2. The secondary market is where common stocks and bonds are bought and sold. These transactions
take place by using a security exchange. The two most common exchanges are the New York Stock
Exchange and the NASDAQ. Another common trading place for small corporations is the Over-theCounter market.
There are different ways for people to invest their money. This is where good planning needs to take place.
What are the goals? Are they to bring in additional income, increase the value, grow investments, or buy and
hold investments? Another part of the plan is to identify short and long term goals. How much money is there
to invest? How long can the money stay invested, and what is the tolerance? Another concern is tax
implications.
Many investors use a diversification practice, which means spreading out the risk. Mutual funds meet the
diversification goal. Mutual funds are investments that pool the money from a large number of investors and
invest in a variety of stocks, bonds, government securities, and other assets. Investors have different options
from which to choose based on their tolerance level. The advantage of using mutual funds is that it is a good
way to diversify and is not costly. Mutual funds diversify a portfolio, which, under normal circumstances, would
be out of the investor’s investment range. Mutual funds are professionally managed. Even though there are
self-managed mutual funds available, the choices for investment are very large. Examples include large cap
funds, small cap funds, energy sectors, financial sectors, technology sectors, and health care sectors.
Another advantage is that mutual funds have good liquidity. They usually can be traded with the money
accessible in three business days. Many investors use the exchange traded funds (ETFs). This is another
way to reduce the risk factor. ETF funds are made up of a market basket. An advantage the ETFs have over
mutual funds is that they are bought and sold exactly like stocks.
Chapter 16: Managing Information and Technology: Finding New Ways to Learn and Link
Chapter 16 addresses technology and how technology is constantly changing the way we do business. To
understand how technology impacts our personal and business lives, it is important to have the basic
understanding of a computer, software, and networks. The computer has hardware. These are physical
components used to collect, input, store, and process data to be distributed as information. Examples include
hard drives, printers, keyboards, modems, and routers.
Software gives the computer instructions. There are two types of software:
1. Systems software is the operating system. An example would be Microsoft Windows.
2. Application software provides the user with the desired task. Examples are Microsoft Word, Excel,
and PowerPoint.
In today’s world, networks are used to share information and communicate. The Internet is the largest
network in the world. The World Wide Web provides information and service for business, education, and
personal needs. When employees work from their home, they have access to their company’s server. This is
an intranet connection that only specific employees have access to, depending on their job. The extranet is
controlled by the company and limits the usage to suppliers and customers. An example would be a company
that allows people to shop and buy their products.
The “cloud” is a form of computing that goes beyond the company’s firewall to store data and run applications.
The main advantage in using cloud computing is that it does not take up space on the hard drive. The cloud
accesses a vast array of computing recourses without a big expense. It creates an easy way to share files
and programs. A good example of cloud usage is the New York Times using Amazon’s cloud to offer
subscribers the ability to locate and view articles from over seven decades.
BBA 2010, Introduction to Business
2
Technology allows for better decision making. The data compiled by companies
arexstored
in a
database and
UNIT
STUDY
GUIDE
are stored in files of relative data in an organized logical system. After the firmTitle
creates the database, it is then
converted into information that is available to help make better decisions. For example, before a sales
employee makes his/her sales call, he/she can simply review a customer’s profile and make a plan for
success.
It is clear to see that investing has many tools that can be used to make better choices. There are risk factors
that go along with investing. The key is to have a set goal to work toward and to obtain your needs.
Depending on where a person is in life, age and other variables determine different needs.
Having a better understanding of computers, software, and networks helps us in the real world. Technology
aids in our decision making processes. As discussed, technology can be used when investing. There are
many software programs that can enhance investing decisions, as well as websites that are used to trade
stocks.
BBA 2010, Introduction to Business
3
UNIT VI STUDY GUIDE
Security Markets, Managing
Information, and Technology
Course Learning Outcomes for Unit VI
Upon completion of this unit, students should be able to:
6. Identify effective business practices toward managing information and technology.
Reading Assignment
Chapter 10:
Financial Markets: Allocating Financial Resources
Chapter 16:
Managing Information Technology: Finding New Ways to Learn and Link
Click here to access the Chapter 10 presentation. Click here to access a PDF version of this presentation.
Click here to access the Chapter 16 presentation. Click here to access a PDF version of this presentation.
Unit Lesson
Chapter 10: Financial Markets: Allocating Financial Resources
Chapter 10 covers the three basic types of securities, as well as common stocks and the rights shareholders
have with this type of security. Another area of interest is how corporations bring their stocks to the market,
which is a primary market, and how they are traded on the secondary market. The government and private
organizations protect shareholders by using regulations in the security market. There are several strategies
investors use when they invest in securities. This chapter also discusses the common strategies and the
reasoning for selecting the best security to fit the investor’s goals.
The three basic types of securities are (1) common stock, (2) preferred stock, and (3) bonds.
1. Common stock is the shareholders’ ownership of a corporation. The shareholders have certain rights:
the right to vote, the right for dividends, and capital gains. The right to vote allows a vote per share of
common stock for important issues the board of directors identifies, such as electing board members,
mergers, and changes to the corporate bylaws. Shareholders are entitled to dividends if and when the
board of directors declared dividends. Dividends are never guaranteed. In the real world, retirees and
individual investors use the dividends as part of their income. There is no guarantee for dividend
income, but a good measure is analyzing the dividend history of a company. The last common benefit
is capital gains, which provides an opportunity to increase the worth of the stock.
2. Preferred stock is a basic security. This type of stock gets preferential treatment; for example, if the
firm goes bankrupt, preferred stock holders have a claim against assets and are paid first. The
preferred stock also has a defined dividend that is not guaranteed.
3. Bonds are a form of an IOU that is issued by corporations and government. Bonds become due
based on their maturity. Bonds can be bought and sold on the open market.
There are two types of security markets: (1) the primary market and (2) the secondary market.
1. The primary market is used to bring a stock to market. This usually happens when a corporation
decides to raise capital. The term initial public offering (IPO) is used when the very first shares come
to market. An example is UPS. This was a privately held corporation for 92 years. In 1999, UPS
BBA 2010, Introduction to Business
1
offered an IPO. This change affected the current UPS shareholders. The
most
important
change
UNIT
x STUDY
GUIDE
occurs in the secondary market, where the price per share is now based
on the market conditions
Title
and the investor preference. UPS now would need to meet and surpass the market expectations for
earnings in order to attract investors to purchase UPS stock. This was new for UPS. Before, the
board of directors placed a price on the stock strictly based on profits. Outside market concerns were
never an issue.
2. The secondary market is where common stocks and bonds are bought and sold. These transactions
take place by using a security exchange. The two most common exchanges are the New York Stock
Exchange and the NASDAQ. Another common trading place for small corporations is the Over-theCounter market.
There are different ways for people to invest their money. This is where good planning needs to take place.
What are the goals? Are they to bring in additional income, increase the value, grow investments, or buy and
hold investments? Another part of the plan is to identify short and long term goals. How much money is there
to invest? How long can the money stay invested, and what is the tolerance? Another concern is tax
implications.
Many investors use a diversification practice, which means spreading out the risk. Mutual funds meet the
diversification goal. Mutual funds are investments that pool the money from a large number of investors and
invest in a variety of stocks, bonds, government securities, and other assets. Investors have different options
from which to choose based on their tolerance level. The advantage of using mutual funds is that it is a good
way to diversify and is not costly. Mutual funds diversify a portfolio, which, under normal circumstances, would
be out of the investor’s investment range. Mutual funds are professionally managed. Even though there are
self-managed mutual funds available, the choices for investment are very large. Examples include large cap
funds, small cap funds, energy sectors, financial sectors, technology sectors, and health care sectors.
Another advantage is that mutual funds have good liquidity. They usually can be traded with the money
accessible in three business days. Many investors use the exchange traded funds (ETFs). This is another
way to reduce the risk factor. ETF funds are made up of a market basket. An advantage the ETFs have over
mutual funds is that they are bought and sold exactly like stocks.
Chapter 16: Managing Information and Technology: Finding New Ways to Learn and Link
Chapter 16 addresses technology and how technology is constantly changing the way we do business. To
understand how technology impacts our personal and business lives, it is important to have the basic
understanding of a computer, software, and networks. The computer has hardware. These are physical
components used to collect, input, store, and process data to be distributed as information. Examples include
hard drives, printers, keyboards, modems, and routers.
Software gives the computer instructions. There are two types of software:
1. Systems software is the operating system. An example would be Microsoft Windows.
2. Application software provides the user with the desired task. Examples are Microsoft Word, Excel,
and PowerPoint.
In today’s world, networks are used to share information and communicate. The Internet is the largest
network in the world. The World Wide Web provides information and service for business, education, and
personal needs. When employees work from their home, they have access to their company’s server. This is
an intranet connection that only specific employees have access to, depending on their job. The extranet is
controlled by the company and limits the usage to suppliers and customers. An example would be a company
that allows people to shop and buy their products.
The “cloud” is a form of computing that goes beyond the company’s firewall to store data and run applications.
The main advantage in using cloud computing is that it does not take up space on the hard drive. The cloud
accesses a vast array of computing recourses without a big expense. It creates an easy way to share files
and programs. A good example of cloud usage is the New York Times using Amazon’s cloud to offer
subscribers the ability to locate and view articles from over seven decades.
BBA 2010, Introduction to Business
2
Technology allows for better decision making. The data compiled by companies
arexstored
in a
database and
UNIT
STUDY
GUIDE
are stored in files of relative data in an organized logical system. After the firmTitle
creates the database, it is then
converted into information that is available to help make better decisions. For example, before a sales
employee makes his/her sales call, he/she can simply review a customer’s profile and make a plan for
success.
It is clear to see that investing has many tools that can be used to make better choices. There are risk factors
that go along with investing. The key is to have a set goal to work toward and to obtain your needs.
Depending on where a person is in life, age and other variables determine different needs.
Having a better understanding of computers, software, and networks helps us in the real world. Technology
aids in our decision making processes. As discussed, technology can be used when investing. There are
many software programs that can enhance investing decisions, as well as websites that are used to trade
stocks.
BBA 2010, Introduction to Business
3
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