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Vocab 08
Financial Literacy
| Term | Definition |
|---|---|
| Income Statement | financial document that focuses on a company's revenues and expenses during a period, to measure profitability |
| Dividend | the distribution of corporate profits to its shareholders |
| Market Index | used to measure the movement and performance of market segments. 3 Most Popular in the U.S. : Dow Jones Industrial Average, S&P 500, and Nasdaq |
| S&P 500 | The Standard and Poors index features 500 leading U.S. publicly traded companies |
| Earnings Per Share | Company's profit divided by the # of shares of common stock. Represents companies profitability. |
| Asset | Resource with economic value. Owned by individual or cooperation. In the future it can generate or be traded for cash. |
| Secondary Market | Investors exchange or trade with each other rather than the company. Trades drive price toward actual value. |
| Liability | AKA debt. Sum of money a person or a company owes someone else. |
| Revenue | AKA sales. Money received from normal business operations. |
| Primary Market | stocks and bonds are sold to public for the first time. Sold through I.P.O. (initial price offering). Businesses receive an influx of capital. |
| Stock Sector | large grouping of companies with similar business activities |
| Dow Jones Industrial Average | a market Index that tracks 30 large, publicly owned, blue chip companies trading on the New York Stock Exchange and Nasdaq |
| Balance Sheet | a snapshot of what a company owns and owes. Includes amount invested by shareholders. |
| Capital | anything with value or benefit to the owner. Usually associated with cash for investment purposes... like expansion. |
| P/E Ratio | used by investors to determine the relative value of a company's shares in an apples-to-apples comparison. CURRENT SHARE PRICE / Earnings per share. |
| Equity | amount of money a shareholder (owner) would receive if all assets were sold after paying off liabilities |
| Broker | individual or firm that acts as an intermediary between investors |
| Market Capitalization | AKA Market Cap, total dollar market value of a company's outstanding shares of stock. TOTAL # OF SHARES X Current share price |
| Retained Earnings | amount of net income (profit) left over for the business after paying dividends to shareholders |
| Angel Investor | a high net worth individual. Provides capital (for small startups or entrepreneurs) in exchange for ownership equity |