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Stock Market Terms
Question | Answer |
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Stock | Shares or units of ownership in a corporation |
Stock Exchange | A place (physical or virtual) where stocks are traded by brokers who represent buyers and sellers |
Stockholder | Anyone who owns stock in a corporation; also known as a shareholder |
Value stocks | Stocks that trade at lower-than-average prices because they have been overlooked or undervalued by investors |
Preferred stock | A basic share of ownership in a corporation that comes with extra privileges but no voting rights |
IPO | (Initial Public Offering) The introduction of a corporation’s stock to the market |
Dividend | A portion of a company’s profits, paid to shareholders, usually quarterly or A cash payment from profits announced by a company’s board of directors and distributed among stockholders. |
Income Stock | belong to companies with a reputation for paying out high dividends. Income companies are usually mature companies that are not growing as rapidly as they once were. |
The Stock Market | a place where investors can trade (buy and sell) their investments in securities that have been issued by another party. |
Portfolio | The group of assets—such as stock, bonds and mutual—held by and investor. |
Risk | The likelihood of losing money. Higher risk means a greater opportunity for high return and a higher potential for loss. |
Mutual Fund | A company owned by investors who pool their savings to invest in a variety of stocks or bonds managed by a professional. |
Capital appreciation | occurs when the stock you own becomes worth more than what you paid for it. |
NASDAQ | An electronic exchange where stocks are traded through an automated network of computers instead of a trading floor. It stands for the National Association of Securities Dealers Automated Quotations System. |
Dow Jones | The best-known measure of stock prices consisting of 30 large, well-known companies in major sectors of the U.S. economy. |
S&P 500 | A popular measure of stock prices consisting of 500 large companies that represent the major sectors of the U.S. economy. One of the most commonly used benchmarks of the overall stock market. |
New York Stock Exchange (NYSE) | The oldest and largest stock exchange in the United States. The New York Stock Exchange is located on Wall Street in New York City and is the largest equities-based exchange in the world |
Market Capitalization | the total value of a company’s outstanding shares. |
EPS (Earnings per Share) | Earnings per share refers to a company's profits divided by its number of shares; it's a basic measure of a company's profitability. |
P/E ratio: | The Price-to-Earnings ratio. This compares a company's market share price to its annual EPS. |
Beta | This number represents a stock's volatility compared to the market. The market's beta is 1.0; a stock that moves up and down more than the market will have a beta higher than 1.0. |