The Stock Exchange
The New York Stock Exchange (NYSE) is the
oldest and most popular organized stock exchange in the United
States. It has 1,400 seats that allow access to the trading floor
and members could pay from $500,000 to $1,000,000 for each seat.
Large brokerage companies may own as many as twenty seats at a time.
The NYSE lists about 2,400 stocks from approximately 1,900 companies.
The companies must meet requirements related to profitability and
size, which virtually guarantee that the companies will be among the
largest, most profitable, publicly held companies in the country.
The next largest exchange, and arguably the
hottest, is NASDAQ. The NASDAQ is a high tech exchange whose listing
include Microsoft, Intel and others. While not all companies on the
NASDAQ are high tech, or even large, it is an effective alternative
to the NYSE.
Another exchange is the American Stock Exchange
(AMEX) also located in New York City. It is much smaller than the
NYSE though, having only 660 seats and 1,000 listed stocks. Overall,
the companies represented on the AMEX tend to be smaller and more
speculative than those listed on the NYSE. There are also regional
stock exchanges that include Chicago, Pacific, Philadelphia, Boston,
and Memphis. Many of these exchanges originally listed corporations
that were either too small or too new to be listed on the NYSE or
AMEX. Today, however, many companies have dual listings on the NYSE
or AMEX and a regional exchange.
Stock Exchanges and the performance of
companies are monitored by what are called stock market indexes. An
index is a way to measure the overall performance of the market. The
most well known index is Dow Jones Industrial Average. “The Dow,” as
it is called is the most popular measurement of stock market
performance for the NYSE, measuring 30 representative stocks. A
point change for the Dow equals a 45 cent change in the total price
of all 30 stocks. Another measure is the Standard & Poor’s 500
(S&P 500) that uses the price changes of 500 representative
stocks on the NYSE, AMEX, and OTC markets. Because the sum of 500
stock prices would be too large, the measurement is given an index