Investing

Savings

Provides the foundation for financial security.

Investment

An asset or item that is purchsed with the hope that it will generate income or appreciate in the futre

Broker

is a person who is licensed to buy and sell stocks, provide investment advice, and collect a commission on each purchase or sale.

Dividends

A sum of money paid regularly by a company to its shareholders out of its profits.

IPO (Initial Public Offering)

a corporation's first offer to sell stock to the public

ROI (Return On Investment)

The total return on an investment expressed as a percentage of the amount of money invested.

Common Stock

-Represents the ultimate ownership of a firm

-Stockholders directly control the business - shareholders have voting rights

Preferred Stock

stockholders do not have an ownership interest in the firm

-Have a priority to claim dividends over common stockholders

Blue Chip Stock

Stock in a corporation with a national reputation for quality, reliability, and the ability to operate profitably .

Exchange

May be an actual building or a network of computers that serve as a central location where people buy and sell financial products.

NYSE (New York Stock Exchange)

Is an auction market that uses floor traders to make most of its trades. Each stock on the exchange has a specialist; this is a person who oversees and facilitates all of the trades for a particular stock.

Liquidity

Represents the ease in which an asset can be converted to cash.

Bull Market

A_market is when the prices of stock are generally rising.

Bear Market

When prices of stock are generally falling.

Bonds

A form of lending to a company or the government.

Mutual Funds

Pooling of money from many investors to buy a large selections of securities.

NASDAQ

(National Association of Securities Dealers Automated Quotations)

is a virtual market called an "over the counter (OTC) market

-trading is done through a computer and telecommunications network of dealers.

Portfolio

Collection of investments.

Diversification

Spreading of risk among many types of investment.

Dow Jones Industrial Average ("DOW")

An index of 30 blue chip american stocks used to measure the performance the US market.

shorting a stock

Borrowing shares of stock to trade with

buying on margin

borrowing $$ to trade with

Income stock

Type of stock that generally pays dividends

Growth stock

Type of stock that reinvests its money back into the company to grow/expand….normally does not pay dividends

volume

The total shares of stock traded on the most recent trading day

Dow Jones Index

tracks 30 blue chip stocks

liquidity

measures how quickly you can change an asset to cash

share

individual units of ownership

capital gain

sell a stock for more than you paid for it

EPS

Earnings per share-comparison tool used to judge stocks

Balanced mutual fund

A fund that combines a stock component, bond component, and sometimes a money market component in a single portfolio

Back end load

Fee that investors pay when selling mutual fund shares

P/E ratio

A valuation ratio of the company's current share price compared to its per share earnings

Limit Order

An order to buy or sell at a specified price

Market Cap

The total value of a company on the stock market