| Term | Definition |
|---|
| American Stock Exchange | An open auction market similar to the NYSE where buyers and sellers compete in a centralized marketplace. It lists small to medium cap stocks of younger or smaller companies. |
| Assets | Any possessions that has value in an exchange. |
| Average Daily Share Volume | The number of shares traded per day, averaged over a period of time, usually one year. |
| Bear Market | A market where the dominating trend is one of falling prices. |
| Bid | The price a prospective buyer is prepared to pay at a particular time for trading a unit of a given security. |
| Bond | A long-term promissory note in which the issuer agrees to pay the owner the amount of the face value on a future date and to pay interest at a specified rate at regular intervals. |
| Bull Market | A market where the dominating trend is one of rising prices |
| Capital Gains Distribution | Payments to mutual fund shareholders of profits from the sale of securities in a fund's portfolio. Usually made annually. |
| Common Stock | A securities holding that affords the possessor to have ownership in the company which provides benefits such as voting rights and dividend sharing. IN the event of liquidation, the firhts of common stock holdrs come after all other holders, such as bond, debt, and preferred stock |
| Day Trading | the practice of buying and selling a security on the same day |
| Diversification | The acquisition of a group of assets in which returns on the assets are not directly related over time. INtended to reduce the risk inherent in particular securities. |
| Dividend | Distribution of earnings to shareholders, prorated by the class of security and paid in the form of money, stock, scrip, or rarely company products or property. Amount is decided by the Board of Directors and is usually paid quarterly. Mutual fund dividends are paid out of income, usually on a quarterly basis from the fund's investments. |
| Dow Jones Industrial Average (DJIA) | A price-weighted average of thirty actively traded blue chip stocks, primarily industrials but including American Express Co. and American Telephone and Telegraph Co. Calculated by adding the closing prices of the component stocks and using a divisor that is adjusted for slits and stock dividends equal to ten percent or more of market value of an issue. |
| Dow Theory | A theory which is based on the belief that fluctuations in the stock market are both a reflection of current business trends as well as a predictor of future business trends |
| Earnings per share (EPS) | The portion of a company's profit allocated to each outstanding share of common stock. Net income for a period of time is divided by the total number of shares outstanding during that period. |
| Insider Trading | Illegal. People are privy to inside information that others are not aware of. |
| Initial Public offering (IPO) | the first issue and sale of stock by a company to the public. |
| Long Position | A long position is when you buy a stock anticipating the price to rise. |
| Margin | The amount of money that a customer must deposit with a broker to secure a loan from that broker. or the amount of money that must be deposited to protect the buyer and the seller from default. |
| Market Value | The Market Price. the price at which buyers and sellers trade similar items in an open marketplace. (current market price of a security as indicated by the latest trend record) |
| Maturity Date | The date on which the principal amount of a bond is to be paid in full |
| Money Market Fund | Open-ended mutual fund that invests in commercial paper, bankers acceptances, repurchase agreements, government securities, certificates of deposit, and other highly liquid and safe securities, and pays money market rates of interest. Fund's net asset value remains constant one dollar a share, only the interest rate goes up or down. |
| Mutual Fund | Fund operated by an investment company that raises money from shareholders and invests it in stocks, bonds |
| NASDAQ | National Association of Securities Dealers Automated Quotations. |
| NASDAQ Composite Index | Measures all NASDAQ domestic and non-US based common stocks listed on the NASDAQ stock Market. THe index is Market-value weighted. Each company's security affects the index in proportion to its market value. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the index. |
| Net Income | Income after all expenses and taxes have been deducted, and used in calculating a variety of profitability and stock performance measures. |
| New York Stock Exchange | The largest and oldest securities exchange in the US. |
| P/E ratio (price/earnings) | A ratio derived by dividing the market price of a company by the earnings per share. This gages the value of the stock relative to market conditions. |
| Portfolio | All of the different investments owned by the same individual or organization |
| Portfolio Value | The total ending cash minus loans, plus the market value of long positions, minus the value of short positions, plus interest earned, minus interest charged. |
| Preferred stock | A stock holding which provides a specific dividend that is paid before any dividends are paid to common stock holders. In the event of liquidation, their right come before common stock holders, but after other holders, such as bond and debt. |
| Quarterly Report | A report, which public companies are required to file quarterly with the SEC (securities exchange commission), that provides unaudited financial information and other selected material. |
| Annual Report | Same report as quarterly report sent annually. |
| Return of Capital | A distribution of cash resulting from depreciation tax savings, the sale of a capital asset or of securities in a portfolio, or any other transaction unrelated to retained earnings. |
| Securities | For financial markets these are the many types of financial instruments which are traded in financial markets. (bonds/shares) |
| Shares | A part ownership of a company. |
| Short Position | A short position or short selling, means to sell a stock which you to not actually own, so you may profit from its potential decline in price. Shares of the stock are borrowed by your broker and then sold in the open market. Resulting funds are deposited in your account. Hope: that you can buy them back later at a lower price to return them to their rightful owner. Gain profit if successful. |
| Split | THe division of the outstanding number of shares into a higher number of shares. The market price per share drops proportionately. Done to make a stock with a very high price more accessible to small investors. Current owners of the stock maintain the same equity by receeving the proportionate number of additional shares. |
| Standard and Poor's 500 (S&P500) | A european style capitalization weighted index of five hundred stocks that are traded on the NEw York Stock Exchange, American Stock Exchange, and NASDAQ national market. Each company's influence on index performance is directly proportional to its relative market value. It is this characteristic that makes the S&P 500 such a valuable tool for measuring the performance of actual portfolios. |
| Stock Dividend | Payment of a corporate dividend in the form of stock rather than cash. the stock dividend may be additional shares in the company, or it may be shares in a subsidiary being spun off to shareholders. Stock dividends are often used to conserve cash needed to operate the business. (not taxed until sold) |
| Ticker Symbol | A unique four- or five-letter symbol assigned to a security. If a fifth letter appears, it identifies the issue as other than a single issue of common stock of capital stock. |
| Volatility | The degree of price fluctuations for a given asset, rate or index, usually expressed as a variance or standard deviation. |
| Volume | The sum total of shares that have traded in the security for which you have requested a quote for either the current or most recent trading day on its primary trading marketplace. |
| Yield | In general, a return on an investor's capital investment. For bonds, the coupon rate of interest divided by the purchase price, called current yield. Also, the rate of return on a bond, taking into account the total of annual interest payments, the purchase price, the redemption value, and the amount of time remaining until maturity. |
| undervalued | A security which has a price that is below its perceived value |
| overvalued | a security which has a price that is over its perceived value. |
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