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. |