Investing Terms

Annual Report
A document published by public corporations on a yearly basis to provide stockholders with financial data that informs them of the company’s performance.
Cash or any item of value owned by an individual or corporation that could be converted to cash. Examples are stocks, bonds, mutual funds and real estate.
Asset Allocation
An investment strategy that divides investments among cash, stock, bonds, mutual funds and real estate to achieve the highest investment return while minimizing risk.
A bond is simply an IOU. It certifies that you have loaned money to a government or a corporation. Bonds provide steady income. When you invest in a bond you can expect to receive regular, fixed interest payments for as long as you hold the bond – unless the issuer goes broke.
Bear Market
A market in which prices are falling.
Blue Chip
Very solid and reliable companies with long histories of consistent growth and stability.
The term comes from the blue chips used in poker-always the most valuable chips.
Bull Market
A market in which prices are rising.
The difference between the last trade and the previous day’s price.
A fee charged by a broker or agent for buying or selling stocks, bonds or mutual funds.
Common Stock
This stock is the most frequently issued class of stock. It usually provides voting rights, but only pays a dividend after dividends to preferred stockholders have been paid.
Simply put, earning interest on interest. It is a strategy of reinvesting your dividends every year. By leaving your money invested and letting its returns compound, you're allowing your dollars to earn interest off of its own interest.
Cyclical Stock
A stock whose price is affected by the ups and downs of the economy.
Day Trading
The purchase and sale of a security on the same day. The goal of day trading is to make a profit from the difference between the buying price and the selling price. Day trading can be risky.
Days Range
The spread between the high and low prices traded during a period of time.

Defensive Stock
A stock that tends to remain stable under difficult economic conditions. Defensive stocks include food, tobacco, oil, and utilities.
A portfolio strategy designed to reduce risk by investing in a variety of investments, such as stocks, bonds, mutual funds and real estate.
A sum of money from a company’s profits paid regularly (typically quarterly) to its shareholders.
Dollar Cost Averaging
A plan which enables investors to accumulate shares of stock or a mutual fund by purchasing shares on a regular basis with a fixed dollar amount. For example: $100 is invested in Pepsi every month for 10 months. The goal of this strategy is that more shares will be purchased when prices are low and fewer shares will be purchased when prices are high.
Dow  Jones Industrial Average
Sometimes referred to as the Dow, it is the best-known and most widely followed market indicator in the world. It tracks the performance of 30 blue chip US stocks.
52-Week High
The highest price for a stock during the past year.
52-Week Low
The lowest price for a stock during the past year.
Financial Planner
An investment professional who helps individuals set and achieve their long-term financial goals.
Fortune 500
An annual list, published by Fortune magazine, of the 500 largest companies by revenue in the United States.
Growth Stock
Generally young companies with growth potential. These companies usually reinvest most of their profits back into the business to expand and strengthen it. As a result they do not pay dividends.
The highest price paid for a stock during the previous day.
Income Stock
A stock that is purchased primarily for income, which is paid out in the form of dividends.

This is the rate at which prices rise and purchasing power falls. It is why something that cost $1 in 1990 cost $2.37 in 2013.
Initial Public Offering
The first offering of a company’s stock to the public.

An employee, director or any other person who has access to confidential, nonpublic information about a company.

Insider Trading
The buying or selling of securities by someone who has access to confidential, nonpublic information about a company.
Stock of the largest companies.
The last price paid for a stock at the end of the previous day.
The lowest price paid for a stock during the previous day.
Mid -Cap
Stock of medium sized companies.
Mutual Fund
A collection of stocks, bonds or other securities purchased by a group of investors and managed by a professional investment company.
The first electronic stock market to use computers and telecommunications to trade shares rather than a traditional trading floor.
New York Stock Exchange Euronext
The oldest and largest stock exchange in the U.S., located on Wall Street in New York City. The NYSE is responsible for setting policy, supervising member activities, listing securities, overseeing the transfer of member seats, and evaluating applicants. Sometimes known as the "Big Board". It merged with Euronext in 2007 to form the NYSE Euronext.
NYSE Amex Equities
A New York stock exchange listing smaller companies than those listed on the larger New York Stock Exchange. It was established in 1908 as the New York Curb Market and in 1953 was renamed as the American Stock Exchange. It was acquired by NYSE Euronext on October 1, 2008, and is now known as NYSE Amex Equities.
The price at which a stock is sold when the market opens.
Price/Earnings Ratio (P/E)
A measure of the relative value of a stock when compared to other stocks. The formula used to determine the P/E is: The price of a share of stock divided by the company’s earnings per share for the year.
Penny Stock
A nickname for extremely low priced stock, usually only a few dollars a share. These stocks are considered highly risky. They are priced low because they have not yet proven themselves in the market.
A collection of investments all owned by the same individual or organization. These investments often include stocks, bonds, and mutual funds.
Preferred Stock
A stock that shows ownership in a corporation and gives the holder a claim, prior to the claim of common stockholders, on earnings and also generally on assets in the event of bankruptcy.

Purchasing Power
A phrase used to describe the quantity of goods or services that a dollar can buy. A decrease in purchasing power is called inflation.
The total amount of money received by a company for goods sold or services provided during a certain time period.
The probability that the money made on an investment will be lower than the investor's expectations. All investments have some level unpredictability.
Securities And Exchange Commission
The primary federal regulatory agency for the securities industry, whose responsibility is to promote full disclosure and to protect investors against fraudulent and manipulative practices.
A financial asset such as a stock, bond or mutual fund.
Security Analyst
A person who specializes in evaluating information regarding stocks and bonds.
Short Selling
A strategy that involves selling borrowed shares in the expectation that the price will fall and they can be bought back at a lower price later (thus making a profit).
Stock of smaller companies.
This is a strategy used by companies to divide stock in order to lower its price so that more people will invest in it. In a two-to-one split, 100 shares of $70 per-share stock become 200 shares of $35 per-share stock. In a three-to-one split, 90 shares at $60 a share become 270 shares at $20 a share.
Standard and Poor's 500 Index (S&P 500)
A stock market index that tracks the 500 most widely held stocks on the NYSE and is used as an indicator of stock market trends.
A share of a company held by an individual or group that entitles the shareholders to partial ownership of the corporation.
A licensed professional who advises individuals about investments; also helps investors buy and sell stocks, bonds, mutual funds, etc. The broker earns a fee for this help, called a commission, usually a percentage of the transaction.
Stockholder (Shareholder)
The owner of shares of stock.

Stock Symbol
A unique series of letters assigned to a security for trading purposes. Often an abbreviation of the company’s name. Example: PEP is the symbol for Pepsi.
Refers to the increase in the market price of a security over the preceding transaction.
Represents the total number of securities traded during a certain period of time.
The income one receives from an investment referred to as Rate of Return.

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