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Stock Market Terms
Some commonly used terms used in the stock market
Question | Answer |
---|---|
Stock Market | A general term used to describe all transactions involving the buying and selling of stock shares issued by a company. |
Stock | A share of ownership in the assets and earnings of a business. |
Stock Certificate | The piece of paper a shareholder receives representing their ownership of a stock. |
Portfolio Diversification | An individual who has a variety of investments tools to decrease risk. |
Rate of Return | The increase or decrease in the original purchase price of an investment. |
Common Stock | Shares or units of ownership in a public corporation. The shareholder has voting rights in the corporation. |
Stock Split | Shares owned by existing stockholders are divided into a larger number of shares. |
Dividends | Distributions of earnings paid to stockholders. |
Preferred Stock | Shares which pay fixed dividends and have precedence over common stock. |
Market Price | The amount a willing buyer will pay a willing seller for a stock. |
Speculative Stock | A very high risk stock from a company with potential for substantial earnings in the future. |
Blue Chip Stock | Stock from nationally recognized companies which dominate the industry often having annual revenue of $1 billion or more. |
Book Value | Net worth of a company. |
Earnings Per Share | How much income a company has available to pay in dividends and reinvest as retained earnings on a per share basis. |
Price/earning Ratio | Relationship between the price of one share of stock and the annual earnings of the company. |
Stock Ticker Symbol | A stock's abbreviated trading symbol name. |
Dividends per Share | Total cash paid to common stockholders per share. |
High Selling Price | Highest selling price of one share of stock from the previous day. |
Low Selling Price | Lowest selling price of one share of stock from the previous day. |
Close | The price of the last share sold for the day. |
Dow Jones Industrial | Oldest indicator of the ups and downs of the stock market. Lists the 30 leading industrial blue chip stocks. |
Standard and Poor’s 500 Index | Tracks the stock market activity for 500 stocks. |
NASDAQ | Monitors fast moving technology and financial services stocks. Usually the companies are smaller and transactions occur over an electronic market. |
Bear Market | The market is doing poorly and investors are not confident in the economy. Investors are not purchasing stocks and are selling what is already owned. |
Bull Market | The market is doing well and investors are optimistic about the economy and purchasing stocks. |
Broker | A person who is licensed to buy and sell stocks and provides investment advice and collects a commission on each purchase or sale. |
New York Stock Exchange | The oldest and largest exchange with the strictest company standards. |
American Stock Exchange | The second largest exchange with less stringent requirements allowing for younger smaller companies to be listed. |
Regional Stock Exchange | Stocks traded to investors who are living in a specific geographical area. |