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Stock Market
Stock Market Study Guide (Ch. 9)
| Term | Definition |
|---|---|
| Securities | All investments, including stocks, bonds, mutual funds, options, and traded commodities, that are traded (bought and sold) on securities exchanges or the over-the-counter market |
| Private Corporation | A corporation whose shares are owned by a relatively small group of people and are not traded openly in stock markets (aka closely held corporation) |
| Public Corporation | A corporation that sells its shares openly in stock markets where anyone can buy them (aka publicly held corporation) |
| Proxy | A document that transfers a stockholder’s voting rights to someone else |
| Preemptive Right | Gives current stockholders the right to buy any new stock the corporation issues before the stock is offered to the general public |
| Stock Split | A process in which the shares of stock owned by existing stockholders are divided into a large number of shares |
| Blue-chip Stock | A safe investment that generally attracts conservative investors |
| Income Stock | This stock pays higher-than-average dividends compared to other stock issues |
| Growth Stock | This stock is issued by a corporation whose potential earnings may be higher than the average earnings predicted for all the firms in the country |
| Cyclical Stock | This stock has a market value that tends to reflect the state of the economy |
| Defensive Stock | A stock that remains stable during declines in the economy |
| Large Cap Stock | The stock of a corporation that has issued a large number of shares of stock and has a large amount of capitalization |
| Capitalization | The total amount of stocks and bonds issued by a corporation |
| Small Cap Stock | A stock issued by a company with a capitalization of $500 million or less |
| Penny Stock | These stocks sell for between <$1 a share and $10 a share, and are issued by new companies or companies whose sales are very unsteady |
| Bull Market | This type of market occurs when investors are optimistic about the economy and buy stocks |
| Bear Market | This type of market occurs when investors are pessimistic about the economy and sell stocks |
| Primary Market | A market in which an investor purchases securities from a corporation through an investment bank or some other representative of the corporation |
| Initial Public Offering (IPO) | When a company sells stock to the public for the first time |
| Secondary Market | A market for existing financial securities that are currently traded among investors |
| Securities Exchange | A marketplace where brokers who represent investors meet to buy and sell securities |
| Over-the-Counter (OTC) Market | A network of dealers who buy and sell the stocks of corporations that are not listed on a securities exchange |
| Account Executive | A licensed individual who buys or sells securities for clients (aka stockbroker) |
| Portfolio | All the securities held by an investor |
| Commission | A fee charged by a brokerage firm for the buying and/or selling of a security |
| Market Order | A request to buy or sell a stock at the current market value |
| Limit Order | A request to buy or sell a stock at a specified price |
| Round Lot | This is where stocks are traded in 100 shares or multiples of 100 shares |
| Long-Term Technique: Buy-and-Hold | Buying stock and holding onto it for a number of years |
| Long-Term Technique: Dollar Cost Averaging | Buying an equal dollar amount of the same stock at equal intervals |
| Long-Term Technique: Direct Investment/Dividend Reinvestment Plans | Buying stock through companies that sell their stock directly to investors |
| Short-Term Technique: Buying Stock on Margin | Buying stock on margin, meaning that an investor borrows through a brokerage firm part of the money needed to purchase a stock |
| Short-Term Technique: Selling Short | Selling a stock that has been borrowed from a brokerage firm and that must be replaced at a later date |
Created by:
ujhazyl