| Corporation | A legal entity separate from it’s shareholders. |
| Going Public | When a company first issues stock. |
| IPO | Initial Public Offering |
| Share of Stock | A unit of ownership in a corporation. |
| Round Lot | 100 shares or multiples of 100 shares. |
| Odd Lot | Fewer than 100 shares of a particular stock. |
| Comission | What shareholders pay when they buy or sell stock. |
| Board of Directors | A group of people elected by the shareholders to manage a corporation. |
| Annual Report | A description of a company’s business and financial well being. |
| Stock Split | Occurs when a company increases shares outstanding but lowers the selling prices in direct proportion. (Makes stock prices look lower and more appealing to shareholders.) |
| Dividend Income | One way to make money through owning stock. Profits of the business distributed among shareholders. |
| Capital Gain | One way to make money through owning stock. When an investor sells their stock for more than they originally paid. |
| Common Stock | The owner shares directly in the success or failure of a business. |
| Preferred Stock | Dividends are fixed regardless of how company is doing, usually the par value. |
| Cumulative Preferred Stock | Company can hold off paying dividend but pay it and the new dividend amount next period all together. |
| Convertible Preferred Stock | Can be exchanged at the stockholder’s option for a specific number of shares of common stock. |
| Income Stock | Have a consistent history of paying high dividends. |
| Growth Stock | Stocks in companies that use their profit to reinvest in the company. No dividends usually but good for capital gain. |
| Blue Chip Stock | Companies are large, well established, and financially solid,. Maintain fairly stable price during ups and downs of the market. Pay small but regular dividends. |
| Penny Stock | Stocks that have a traded value of under $5 per share. |
| Defensive Stock | Shares that remain stable and pay dividends during economic decline. |
| Cyclical Stock | Shares do well when economy is stable and poorly during recessions. |
| Market Capitalization | Total dollar market value of all a company’s oustanding shares. |
| Earnings Per Share | The corporation’s after-tax earnings divided by the number of shares outstanding. A measure of the company’s profitability. |
| Price Earnings Ratio | Ratio of a company’s current share price compared to it’s per-share earnings. Shows how much investors are willing to pay per dollar of earnings. (Lower number = more UNDERvalued.) |
| PEG Ratio | Ratio that shows the relationship between the price earnings ratio and earnings growth. tells a much more complete story that P/E on its own. (Lower number = more UNDERvalued.) |
| Rate of Return | Tells the investor the percentage gain or loss based on an asset based upon his purchase price. |
| New York Stock Exchange (NYSE) | Established May 17, 1792. Largest stock exchange in US. 2007 became publicly traded company. “Big Board” |
| American Stock Exchange (AMEX) | Curb exchange before 1921. |
| Philadelphia Stock Exchange (PHLX) | First stock exchange in north america. |
| Chicago Board of Options (CBOE) | Standardized listing options in 1973 revolutionized options trading. |
| National Association of Securities Dealers Automated Quotation (NASDAQ) | owned and operated by NASD. Worlds first electronic stock market. |
| Ticker Tape | Constantly keeps up to date prices of SECURITIES. (Stock) Invented in 1867. Used to be on paper. |
| Market Order | A request to buy or sell stock at the current market value. |
| Limit Order | A request to buy or sell stock at a specified price or better. |
| Stop Order (Stop-Loss Order) | An order to buy or sell a particular stock at the next available opportunity after its market price reaches a certain specific amount. |
| Index | Average of stocks to see how stocks are performing overall and help investors gauge the market. |
| Securities and Exchange Commission (SEC) | Government agency established in 1934 to monitor stock exchanges. |
| Dr. Ben Bernanke | Chairman of the Federal Reserve Bank |
| Gross National Product (GNP) | Total value of the goods/services produced by a nation during a specific period of time– usually a year. |
| Recession | Happens when there is a decline in spending. (Total downturn in economic activity.) FR lowers prime rate to increase spending and decrease savings. |
| Inflation | Happens when there is a rise in spending. FR increases prim rate to decrease spending and increasing savings. |
| Playing the Market (Speculator) | Buying and selling stocks for quick profits. |
| Buying on Margin | Borrowing money from your broker to buy stock if you open a margin account and sign a contract called a margin agreement. |
| Selling Short | Selling borrowed stock from a broker that must be replaced at a later time. Then wait till stock drops, buy the borrowed shares and give back to broker. |
| Trading In Options | An option that gives you the right to buy or sell stock at a predetermined price during a specific period of time. |
| Buy and Hold | When an investor buys a stock and holds on to it for a long period of time. |
| Dollar-cost averaging | Involves the systematic purchase of an equal dollar amount of the same stock at regular intervals. |
| Direct Investment | Investors buy stock directly from the company |
| Dividend Reinvestment Program (DRIP) | When dividends are automatically used to buy new shares of stock including fractional shares, a method that avoids a broker fee. |
