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Stock Related Terms
| Question | Answer |
|---|---|
| Investor | Someone who risks funds by purchasing financial products with the hope the investments will increase in value over time. |
| Private Company | A company that is owned by a person, family, or small group of investors that does not sell shares of stock in the company to the public Usually referred to as a proprietorship Most common type of business ownership |
| Public Company | A company that is owned by investors who buy shares of stock, partial ownership of the assets of a business, in the corporation usually through one of the stock exchanges Usually referred to as a corporation |
| Common Stock | Do not guarantee a dividend and have more risk and volatility than preferred shares Common stock holders have the benefit of providing shareholders with the right to vote for the board of directors |
| Preferred Stock | Shares of ownership of a company in which the share holder is guaranteed a dividend if one is declared and whose shares are usually not as volatile as common stock. Preferred stock holders do not have voting rights in company elections and decisions. |
| Bear Market | A period when a market declines |
| Bull Market | A period when a market increases |
| Capital Gain or Loss | The difference between the price at which you buy an investment and the price at which you sell it |
| Diversification | The method of balancing risk by investing in a variety of securities |
| Earnings | A company’s after-tax profits. Commonly expressed as earnings per share, or total earnings divided by shares out- standing |
| Portfolio | A company’s after-tax profits. Commonly expressed as earnings per share, or total earnings divided by shares out- standing |
| Prospectus | The document that describes a securities offering or the operations of a mutual fund, a limited partnership or other investment |
| Buy On Margin | To buy on margin involves a stock investor borrowing money to buy additional shares, and using the purchased shares as collateral for the loan |
| Sell Short | Borrowing a security from a broker and selling it, with the understanding that it must later be bought back (hopefully at a lower price) and returned to the broker |
| Risk | The chance of losing all or part of an investment |
| Volatility | Indicates how much and how quickly the value of an investment, market, or market sector changes |
| Dividend | Part of a company’s profits (earnings) that it pays as money to stockholders |
| Capital | Wealth in the form of money or property owned by a person or business and human resources of economic value |
| Stock | A type of security that signifies ownership in a corporation and represents a claim to a part of the company's profits or losses |
| Corporation | A business that is owned by stockholders and has rights and responsibilities as if it were a person |
| IPO | Initial Public Offering--the initial sale of stock to the public by investment bankers |
| Transaction Cost | Fee paid to stockbroker for each trade he makes |
| Total Annual Return | Annual gains and losses divided by the cost of investment--expressed as a percentage |
| Buy Limit Order | The highest price at which an investor will purchase a specific stock |
| Sell Limit Order | The lowest price at which an investor will sell a specific stock |
Created by:
Nrobinson
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