Section #1: Basic Knowledge (Stocks)

Stock/Share

A piece of ownership of a company

Example: 50% company stock = 50% of company ownership

Ticker Symbol

Short code or abbreviation that represents company’s stock

Example: AAPL = Apple

Exchange

The marketplace where companies and investors trade

Example: NYSE = New York Stock Exchange

List the nine exchanges in the United States?

1. NYSE = New York Stock Exchange

2. NASDAQ = National Association of Security

3. AMEX/NYSE American = American Stock

4. BATS = Better Alternative Trading System

5. CBOE = Chicago Board Options Exchange

6. OTC = Over the Counter Market

7. IEX = Investor Exchange

8. NYSE Arca = New York Stock Exchange Archipelago

9. MIAX = Miami International Securtities Exchange

Market Index

A group of stocks that represent a section of the market 

Example: S&P 500 = top 500 US companies 

Bull Market

A trend when stock prices are generally rising

Bear Market

A trend when stock prices are generally falling

Correction

A temporary decline of 10% or more in price from the recent highs

Volatility

A measurement of how much & how fast prices move up & down

Example: Low Volatility, Moderate Volatility & High Volatility

Low Volatility

Steady, slow & predictable pace

Example: Utility & Blue-Chip Stocks ($50 →$51→$52→$53)

Moderate Volatility

Balanced, controlled & leveled pace

Example: S&P 500 ($100→$104→$98→$103)

High Volatility

Wild, dramatic & sporadic pace

Example: Crypto & Penny Stocks ($100→$115→$85→$120)

Volume

The amount (number) of shares traded during a period (credibility of majority of investors interested in a stock at a certain time)

Example: Low Volume, High Volume & Spike (Turning Point)

Low Volume

Easily moved by small traders (risky)

Example: A company usually trades 50,000 shares a day, one investor buys 10,000 shares which possibly pushes price to rise (thinly traded, low liquidity)

High Volume

Majority are trading — buying & selling large amounts (credible)

Example: A company usually trades 50,000 shares a day, the company is at 100,000 shares today

Spike (Turning Point) 

Shift in demand or sentiment (attitude or mood)

Example: A company normally trades 1 million trades per day, it suddenly has traded 5 million shares

Liquidity

How easily assets can be traded (bought/sold) without affecting price

Example: Low Liquidity and High Liquidity 

Low Liquidity

Hard to trade without losing

Example: A company only trades 5,000 shares a day, I try to sell 1,000 shares; price could drop fairly low since there aren’t enough buyers

High Liquidity

Easy to enter & exit at current price

Example: A company trades millions of shares per day, I can sell 1,000 shares anytime without completely losing or losing at all

Market Cap (Market Capitalization)

The total value of all a company’s outstanding shares (currently owned) of stock (market cap = share price x total shares outstanding)

Example: Small (high risk) = $500 million, medium (medium/high risk) = $25 billion & large (low risk) = $3 trillion

Dividend

Payments a company makes to shareholders from profits

Example: Cash (own 100 shares, company pays $0.50/share dividend = $50) or additional shares (own 100 shares, company pays 5%/share dividend = 105 shares total)

Dividend Yield

The percentage of annual dividend divided by stock price (shows return from dividend) 

Example: Stock priced at $50, annual dividend is $2 ($2 divided by $50) which is 4%

Stock Split

A company divides existing shares into more shares to lower price per share (stock quantity fluctuates but investment stays the same)

Example: I own 100 shares at $200/share = $20k, company splits 2:1 ratio, I now have 200 shares at $100/share = $20k

Reverse Split

A company combines shares to increase price per share (stock quantity fluctuates but investment stays the same)

Example: I own 100 shares at $5/share = $500, company reverses 1:2 ratio, I now have 50 shares at $10/share = $500

IPO 

Initial Public Offering: The first time a company sells shares to the public 

Example: IPO price $38/share — raises capital

Portfolio

A collection of all the investments owned 

Example: 40% stocks, 30% bonds, 20% ETF & 10% cash

Diversification

Spreading investments across different assets to reduce risk

Example: stocks, bonds, etf’s & cash

Index Fund

Investment fund that tracks market index (automatically invest in all or most) of the companies in that index 

Example: S&P 500 Index tracks 500 of largest US companies such as VFIAX - Vanguard & SPY - SPDR S&P 500 ETF)

ETF

(Exchange-Trade Fund): Investment fund trades like a stock & holds a basket of assets (stocks, bonds, commodities)

Example: Stock etf’s, sector etf’s, bond etf’s, commodity etf’s

Mutual Fund

A professionally managed group of investments you can buy into

Ex: You invest $$500 in a Vanguard mutual fund, and that money is spread across hundreds of companies — Apple, Walmart, Google — automatically

Blue-Chip Stock

A stock from a big, stable, successful company (like Apple or Coca Cola)

Ex: Johnson & Johnson — it’s been around for decades, pays steady dividends, and rarely crashes compared to smaller companies

Penny Stock

A very cheap stock (under $5), usually riskier and less stable

Ex: You see a stock called XYZ Mining Co. selling for $0.75 per share. It could double fast — or lose all value — because it’s highly speculative 

Capital Gain

The profit you make when selling something for more than you paid

Ex: You bought Tesla stock at $200, and sell it at $250. Your capital gain = $50 per share

Capital Loss

When you sell for less than you paid — your loss

Ex: You bought Amazon stock at $150 but sold it at $120. Your capital loss = $30 per share

Broker/Brokerage 

The app or company that helps you trade (buy/sell) stocks like 

Ex: You open a RobinhHood account to buy Apple Stock. Robinhood acts as your broker, connecting you to the stock exchange

Commission

A small fee some brokers charge for making trade

Ex: You buy 10 shares of Google through an older brokerage, and they charge $5 commission per trade

Market Hours

When the stock market is officially open — 9:30AM - 4:00PM EST.

Ex: You can only trade live prices for most stocks between Monday through Friday at these hours (excluding holidays)

After-Hour/Pre-Market

Trading that happens before or after normal hours

Ex: Apple releases earnings at 5PM (after market closes). You can still trade shares after-hours, but prices can swing wildly due to lower volume

Sector

A category of companies in the same business area (investors use sectors to diversify portfolio)

Ex: Tech sector — Apple or Microsoft, Healthcare sector: Johnson & Johnson

Earnings Report

A company’s “report card” showing its profits or losses every 3 months

Ex: Amazon releases its Q2 earnings report, showing $12 billion in profit — stock prices jump because results were better than expected

VIX 

Volatility Index: A measure of how nervous or calm investors are — also called the “fear index” 

Ex: When global news causes panic, VIX jumps up, showing fear in the market. If VIX is calm (low), investors are confident.

Securities

Any tradable financial item, like stocks, bonds, or options

Ex: Apple stock - equity security, US treasury bond - debt secutiry

Public Company

A company whose stock anyone can buy

Ex: Nike is public — you can buy shares (NKE) on the NYSE

Private Company

A company owned by a few people, not traded publicly

Ex: Chick-fil-A is private — you can’t buy its stock on an exchange

ROI

Return on Investment: how much profit you made compared to what you invested

Ex: You invest $1,000 in a stock and later sell it for $1,2000. Your ROI = ($200 divided by $1,000) x 100 = 20% return

Inflation

When prices rise and money loses buying power (your money buys less over time)

Ex: A gallon of milk costs $2.50 in 2015, but $4.00 in 2025.

Recession

A period when the economy slows down and spending drops

Ex: During the 2008 financial crisis, people lost jobs, companies stopped hiring, and stock prices fell — major recession

Interest Rate

The cost of borrowing money or what you earn for saving it

Ex: You take out $10k loan with a 5% interest rate → you owe $500 in interest yearly; You put money in a savings account paying 3% interest → you earn $30 per $1k each year.