Understanding IPOs and Stock Markets

A series of flashcards designed to help students review key vocabulary and concepts related to IPOs, stock markets, and trading mechanics.

Initial Public Offering (IPO)

The first sale of stock by a company to the public.

Underwriting Syndicate

A group of investment banks that collaborate to market and sell a company's IPO.

Prospectus

A formal document that provides details about an investment offering for sale to the public.

SEC (Securities and Exchange Commission)

The U.S. government agency that regulates the securities markets and protects investors.

Market Order

An order to buy or sell a security immediately at the current market price.

Limit Order

An order to buy or sell a security at a specific price or better.

Bid Price

The price at which an investor can sell a security.

Ask Price

The price at which an investor can buy a security.

Leverage

The use of borrowed money to increase the potential return on investment.

Margin Call

A demand by a broker for an investor to deposit additional money to cover potential losses.

Market Forces

The economic factors that affect the price and availability of goods and services in a market.

Potential for Profit

The possibility of earning money from an investment due to an increase in value.

Reporting Requirements

Regulations that public companies must follow to disclose financial and operational data.

Volatility

The degree of variation in trading prices over time.

Behavioral Finance

A field of study that combines psychological theory with conventional economics to explain why people might make irrational financial decisions.

Prospective Investors

Individuals or entities interested in purchasing shares or securities of a company.

Institutional Investors

Organizations that invest large sums of money in the financial markets, such as mutual funds, banks, and insurance companies.

Short Selling

The practice of selling securities not owned by the seller, with plans to buy them back later at a lower price.

Flash Crash

A very rapid market decline that occurs due to disruptions, often driven by algorithmic trading.

Price Contingent Order

A type of order that specifies a price limit for buying or selling a security.

Contractual Obligation

A legal commitment to fulfill certain terms specified in a contract, such as honor margin requirements.

Market Capitalization

The total market value of a company's outstanding shares, calculated as share price times total shares outstanding.