Here are some common stock market terms you may occur:
- Stock: A type of security that represents a company's ownership.
- Share: A unit of ownership in a company.
- Market Capitalization: The total worth of a company’s outstanding stock shares.
- Index: A group of stocks' performance, such as the S&P 500 or the Dow Jones Industrial Average.
- Bull market: A market in which stock prices rise and investors are optimistic.
- Bear market: A market in which stock prices fall and investors are pessimistic.
- Volatility: The degree to which the price of a stock or other security varies over time.
- Dividend: A percentage of a company’s profit distributed to its shareholders.
- P/E ratio: The price to earning ratio compares the stock price of a company to its earnings per share.
- Penny stocks: Stocks of small companies with low market capitalization that are frequently traded at a low price per share.
- Day trading: The practise of buying and selling stocks on the same day, usually to capitalise on minor price fluctuations.
- Broker: A person or company who purchases and sells stocks on behalf of investors.
- Margin: The amount of money borrowed from a broker by an investor to purchase stocks.
- Portfolio: An individual's or organization's collection of stocks, bonds, and other investments.
- Asset allocation: The process of allocating a portfolio's assets, such as stocks, bonds, and cash, in order to achieve a specific investment goal.
- Stop-loss order: A trading strategy that sells a stock automatically if its price falls below a certain level.
- Yield: An investment's income expressed as a percentage of its price.
- Capital gain: The profit made from selling an investment for a higher price than it was decided to buy for.
- Equity: The difference between the value of a company's assets and its liabilities, or the value of an investor's ownership in a company.
- Growth stocks: Stocks of companies that are expected to grow faster than the market as a whole.
- Value stocks: Stocks of companies that are undervalued according to financial metrics.
- Exchange-Traded Fund (ETF): An investment fund that, like stocks, trades on stock exchanges and holds assets such as stocks, bonds, or commodities.
- Mutual Fund: An investment fund that pools money from multiple investors to invest in stocks, bonds, and other assets.
- Market Order: A type of trade order that instructs a broker to buy or sell a stock at the current market price.
- Limit Order: A type of trade order that instructs the buyer or seller to buy or sell a stock at a specific price or better.
- Volatility Index (VIX): A measure of the market's volatility expectation based on options trading.
- Market Correction: A 10% drop in the market from a recent high.
- Stock Split: A corporate action that raises the number of outstanding shares while decreasing the price per share proportionally.
- Earnings per share: (EPS) is the net income of a company divided by the number of outstanding shares.
- Beta: A measure of a stock's volatility in comparison to the market as a whole.
- Dividend Yield: A measure of dividend income as a percentage of stock price.
- 52-Week High/Low: The highest and lowest price at which a stock has traded in the previous 52 weeks.
- Blue Sky Law: State securities regulations that protect investors from fraud.
- After-Hours Trading: Trading that occurs after regular stock market hour.
- Blue chip stocks: Stocks of large, well-established corporations with a history of stability and growth.
- An initial public offering: (IPO) is when a private company goes public by selling stock to the general public.
1. Bid: The highest amount of money a buyer is willing to pay for a stock.2. Ask: The lowest price that a seller will accept for a stock.
Before investing in the stock market, it's critical to understand these terms and their meanings.
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