Economics Chapter 8 Vocabulary

stock

you own shares or a portion of a corporation

common stock

is the most prevalent type of stock that companies offer and represents true ownership of the firm

dividends

a distribution of a portion of the company's profits

preferred stock

receive their dividends before the common shareholders, and should the corporation suffer financial failure, preferred shareholders receive their portion of any leftover revenue just ahead of the common shareholders.

stockbroker

a person who generally works for a brokerage company and who specializes in buying and selling stocks on behalf of his clients

commission

stockbrokers work for a fee

floor traders

stock traders physically present on the trading floor

tape

the market indicates the transaction on these

Initial Public Offering (IPO)

the investment bank then schedules the sale of a certain quantity of stock through the exchange

stock exchanges

merchants traded stocks at locations

New York Stock Exchange (NYSE)

the most well known and reputable stock market in the world

NASDAQ

the most well known and well established stock exchange even though it is less than forty years old. National Association of Securities Dealers Automated Quotations.

American Stock Exchange (AMEX)

a lesser-known but still reputable American stock market

stock index

a group of stocks that analysts use for this purpose

Dow Jones Industrial Average (DJIA)

Charles Dow developed the most well known index

Standard & Poor's 500 (S&P 500)

is a commonly reported investment index

mutual funds

privately managed stock portfolios

Stock Portfolio

a collection of stocks from different individual corporations

speculation

those who actively buy and sell stocks for the purpose of taking advantage of short-term price changes are engaging in a practice

speculative bubble

when stock prices rise in an industry or across the entire market simply because of expectations and they rise in excess of the corporations' true value

Securities and Exchange Commission (SEC)

founded by the government to ensure that corporations provide accurate and current information to the public about their financial situations and their business dealings.