assets
things that are owned by individuals or businesses that can be converted into cash such as money in bank accounts, accounts receivable, land, buildings, fixtures and machinery
bear market
stock prices are falling, investors are pessimistic
blue chip stocks
equity in high-priced common stocks that have been strong, profitable stocks for a long period of time.
bonds
certificates of ownership of a portion of a debt that is due to be paid by a government or corporation to an individual; usually bearing a fixed rate of interest
bull market
stock prices are rising, investors are optimistic
capital gains
money is made (a profit) by selling an asset like a home or stocks
capital formation
the process through which companies obtain money to expand their business through stocks and bonds
common stock
shares of ownership in a corporation that give stockholders voting rights and a portion of future profits (after holders of preferred stock are paid)
dividend
the money from profits of a company that is paid to the stockholders
dow jones industrial average (DJIA)
a measure of stock market prices based on thirty leading companies of the New York stock exchange
diversification
to buy a variety of stocks or other investments to spread risk
dividend
a share of a companies profits paid to stockholders
fraud risk
the risk that an investment has been misrepresented
financial risk
the risk that a business or government will not be able to return your money
growth stock
a stock that often pays no dividend, but the stockholder gains if the price of stock increases (growth)
initial public offering
the first time a corporations stock is offered for sale to the public
market price risk
the risk that the price of an investment will go down because of supply and demand
limit order
an order to purchase stocks at a specified price
liquidity
an investment that is easily converted into cash
load or load fund
a fund that charges a fee in order to purchase
market order
an order to purchase stocks at the current price
mutual fund
a selection of stocks that is owned by many stockholders and managed by a professional stock manager. it allows people to pool their money with other people to buy a variety of stocks
NASDAQ
a computerized network that provides prices and trading for more then 5,000 stocks which are often high tech stocks
net asset value (NAV)
the investment valu of each share of a mutual fund, or the price per share that you can buy a fund
new york stock exchange (NYSE)
the largest stock exchange, located in New York
no-load or no-load mutual fund
a fund that charges no fee for the purchase of shares in the fund
odd lot
stocks are usually purchased in multiples of 100 shares, called a round lot. a small investor may buy a single share of stock or some number of shares less then 100. doing this means the investor has purchased an odd lot
over-the-counter market (OTC)
a network of dealers that connected by a computer system. there is no centralized trading floor. The stocks often represent new, startup companies, and the stock prices are relatively low
portfolio
the group of stocks you own
price-earning ratio (P/E)
the price of stock divided by the earnings the company made for the last year. listed in most stock quotes, it is used to determine how cheap or expensive a stock is compared to other stocks
round lot
stocks are usually purchased in groups of 100 shares
securities and exchange commission
the government agency, established in 1934, that protects investors in stocks and bonds
standard and poor's 500 (S&P 500)
a measure of stock prices based on 500 of the largest companies
stock
an ownership share or shares of ownership in a corporation
stockbroker
a professional who is licensed to buy and sell stocks
stock certificate
a piece of paper that shows ownership of one or more shares of stock in a corporation
stock split
when a company divides its stock into smaller, more economical shares. if a stock splits 2 for 1, it means the stockholders get 2 shares for every one they own. the purpose of this is to lower the price of stock to attract stock buyers
value stock
a stock that tends to pay dividends more frequently and usually has a strategy of slower growth
coupon
the interest payment on a coupon bond
coupon bond
a bond that pays out interest at fixed intervals (usually six months) over the time the bond is held by the investor
municipal bond
a bond issued by state or local government
zero-coupon bond
a bond whose purchase price is below face value. one payment is ,made at maturity that includes the principal plus accumulated interest
u.s. savings bond
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