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Investment Fundamentals - Essay Example

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Blue chips are stocks issued by a well-known company with an established record of making money and paying dividends (Teweles & Bradley & Teweles,…
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The index was developed by Charles Dow in 1884. Edward Jones also made major contributors towards the creation of the DJIA. On October 27, 2009 at 1:15 P.M. eastern the Dow Jones Industrial Average was at 9893.81 (Yahoo, 2009). The all time high for the index occurred prior to the start of the current economic global recession. On October 1, 2007 the Dow Jones Industrial peaked at 14,087.55. Many analysts believed that the stock market was inflated at the time which is the primary reason why it went down so much afterwards.

A list of the 30 companies that compose the Dow Jones Industrial Index is illustrated in the table below. The Standard and Poor’s composite index was developed in 1957. The index is composed of 385 industrial stocks, 15 transportation stocks, 56 financial stocks, and 44 utility stocks. The companies that compose the index are generally considered the most prestigious companies in the marketplace. Due to the fact that the S&P 500 includes such a broad base of leading listed and OTC stocks the index is held in high regards by market analyst and institutionalized investors (Teweles, et. al. 1992).

The great thing about this index is that is able to cover a greater scope of industries in comparison with the Dow Jones Industrial Average. The S&P 500 represents stocks across 86 industries. Just as in the DJIA the value of the index is based on points not dollars. As of October 27, 2009 at 1:49 P.M eastern time the S&P 500 was valued at 1063.93 (Yahoo, 2009). The acronym NASDAQ stands for National Association of Securities Dealers Automated Quotations. The NASDAQ is a system for providing a network of competing brokers and dealers electronically with current price quotations to enable them to operate in effect as a stock market without a trading floor (Teweles, et al. 1992). The trading activity that occurs at the NASDAQ is considered over the counter activity (OTC).

Companies that cannot afford to registered

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