Unit 2: The Stock Market and Investing

Stocks

A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.

stock market

A general term used to describe all transactions involving the buying and selling of stock shares issued by a company.

Mutual funds are:

An investment that holds a wide range of different investment instruments, providing diversification

Diversification

Spreading out investments to reduce risk

Roth IRA

A personal savings plan; contributions are not tax-deductible; earnings are tax-free

401(k) plan

a tax-deferred investment and savings plan that acts as a personal pension fund for employees

IPO (initial public offering)

The first time a company sells shares of its stock to the public.

long position

Purchase of securities in anticipation of a price increase

short position

Sale of borrowed securities in anticipation of a price decrease

Dividends

payments of cash from a corporation to its stockholders

NASDAQ

The Nasdaq is a global electronic marketplace for buying and trading securities and where many of the world's technology giants—including Apple and Google—are listed.

NYSE (New York Stock Exchange)

a stock exchange based in New York City that is considered the largest equities-based exchange in the world, based on total market capitalization of its listed securities.

bear market

a steady drop or stagnation in the stock market over a period of time

Bull Market

a steady rise in the stock market over a period of time

Market Capitalization

Total market value of equity (a company's value), equal to share price times number of shares outstanding

Equities Traded Fund (EFT)

a type of investment fund and exchange-traded product, i.e. they are traded on stock exchanges. Similar in many ways to mutual funds, except that ETFs are bought and sold from other owners throughout the day on stock exchanges whereas mutual funds are bought and sold from the issuer based on their price at day's end. Holds assets such as stocks, bonds, currencies, futures contracts, and/or commodities such as gold bars and increasingly cryptocurrency futures

Volume

measures the number of shares traded in a stock or contracts traded in futures or options. Can indicate market strength, as rising markets on increasing are typically viewed as strong and healthy. When prices fall on increasing, the trend is gathering strength to the downside.

Ticker Symbol

The abbreviated term that is used to identify a stock for trading purposes

Beta

a measure of a stock's volatility in relation to the overall market

cryptocurrency

A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds.

NFT

Non-Fungible Token, a non-interchangeable unit of data stored on a blockchain, a form of digital ledger, that can be sold and traded

Blockchain

A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly