Wk2 L2 ASX - Market Forces and the Secondary Market
Transcript of Wk2 L2 ASX - Market Forces and the Secondary Market
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How the sharemarket works
Lesson 2 - Week 2
Accounting
YEAR 10
Feb 2015
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GKR
Demand and Supply –what are the basics?
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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
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Key Vocabulary:
• demand
• supply
• equilibrium
• complementary
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Market Forces
• Demand – how many people want to buy something and how much they are prepared to play.
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Market Forces
• Supply – how many people want to buy something and how much they are willing to pay for it.
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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.
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Activity Solution – Buying Jeans
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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.
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Activity Solution – Supplying Jeans
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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.
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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.
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How The Sharemarket Works
• Table 1: Company XYZ
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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.
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Equilibrium Point
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Demand and Supply Game
• Play the Demand and Supply Game at http://www.shmoop.com/supply-demand/game.html
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Handout 1 – Market Forces
• Complete the Market Forces Handout
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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.
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