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Wk2 L2 ASX - Market Forces and the Secondary Market
- 1. How the sharemarket works Lesson 2 - Week 2 Accounting YEAR 10 Feb 2015
- 2. GKR Demand and Supply – what are the basics? Feb 2015 Wk2-L1 2
- 3. Today’s Learning Intention: Explore market forces and the secondary sharemarket. Success Criteria: Able to explain – • demand and supply • the purpose of the secondary market Feb 2015Wk2-L1 3
- 4. Key Vocabulary: • demand • supply • equilibrium • complementary Feb 2015Wk2-L1 4
- 5. Market Forces • Demand – how many people want to buy something and how much they are prepared to play. Feb 2015 Wk2-L1 5
- 6. Market Forces • Supply – how many people want to buy something and how much they are willing to pay for it. Feb 2015 Wk2-L1 6
- 7. Activity – Buying Jeans • You are going to buy jeans. What things are you going to consider? • Write down 4 things you will consider when buying jeans. Feb 2015 Wk2-L1 7
- 8. Activity Solution – Buying Jeans Feb 2015 Wk2-L1 8
- 9. Activity – Supplying Jeans • What things is the supplier of the jeans going to consider? • Write down 6 things you think the supplier will consider when making and supplying the jeans. Feb 2015 Wk2-L1 9
- 10. Activity Solution – Supplying Jeans Feb 2015 Wk2-L1 10
- 11. Secondary Market • As soon as a company issues shares as part of its float, those shares can be traded on the Secondary Market at the ASX. Feb 2015 Wk2-L1 11
- 12. How The Sharemarket Works • Buyers and sellers in the sharemarket exchange shares for a particular price. When both buyer and seller agree on a price per share a trade takes place. Feb 2015 Wk2-L1 12
- 13. How The Sharemarket Works • Table 1: Company XYZ Feb 2015 Wk2-L1 13
- 14. How The Sharemarket Works • The price of shares on the secondary sharemarket is determined by demand and supply just like other markets. When the demand for a stock is greater than the number of shares available at a particular price, the price of the stock increases. When there is no demand for a stock at a particular price, the price falls. Feb 2015 Wk2-L1 14
- 15. Equilibrium Point Feb 2015 Wk2-L1 15
- 16. Demand and Supply Game • Play the Demand and Supply Game at http://www.shmoop.com/supply- demand/game.html Feb 2015 Wk2-L1 16
- 17. Handout 1 – Market Forces • Complete the Market Forces Handout Feb 2015 Wk2-L1 17
- 18. Review: 1. Explain the purpose of the secondary market. 2. What two major factors influence the price of a share. 3. Describe a learning strategy you used today. Feb 2015Wk2-L1 18
Editor's Notes
- You can see from the Table 1 in this lesson that there are three buyers and three sellers of shares in XYZ Company. Buyer A is prepared to buy XYZ shares at $1.00 per share. Buyer B and C prefer to pay less so Buyer A has placed the highest “bid”. For a trade to take place there needs to be a seller wishing to sell the shares at $1 per share and that is Seller E.