Ch. 1 - The Stock Market Flashcards Preview

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Flashcards in Ch. 1 - The Stock Market Deck (36)
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1

What is an equity?

Ownership of corporation (stocks)

2

Shares

Portions of a stock

3

What is a dividend? Possible benefit?

The portion of corporate profits paid out to holders
- paid 4 times a year

4

What are capital gains? capital loss?

Gain - sell stock higher than bought
Loss - sell stock lower than bought

5

What are the types of stock?
- by dividend
- by vote

By dividend...
1) Income Stock
2) Growth Stock

By vote...
1) Common Stock
2) Preferred Stock

6

What is an income stock?

Pays dividend regularly (Guaranteed payment)

7

What is a growth stock?

Pay few/no dividend. The reason is that the company reinvests $ into the business so value will go up.

8

What is a common stock?

Voting owners of a stock.

9

What is a preferred stock?

Non voting owners but receive dividends first

10

What is a stock split and why?

The division of a single share of stock into more than one share. Due to high stock price potential investors are discouraged, so divide stock to lower price.

11

Why are stocks riskier than bonds?

Though returns are higher, if there is a bankruptcy then bondholders get money back first

12

Stockbroker?

A person who links buyers and sellers of stock

13

Brokerage firm

A business that specializes in trading stocks.

14

Stock exchange?

A market for buying/selling stock

15

What is the New York Stock Exchange (NYSE)?

The US's largest/powerful exchange. Handles only the largest and best known companies.

16

What are blue chips?

Refers the the largest and best known companies of NYSE.

17

What is the OTC market?

Electronic marketplace for stock/bond

18

What is the National Association of Securities Dealers Automated Quotations (NASDAQ)?

The American market for OTC securities.

19

What are futures?

Contracts to buy or sell at a specific date in the future at a price specified today. (grain/livestock)

20

What are options?

Contracts that give investors the choice to buy/sell stock for a specified price for an amount of time

21

What is a call option?

The option to buy shares of stock at a specified time in the future.

22

What is a put option?

The option to sell shares of a stock at a specified time in the future.

23

What is daytrading?

Predict minute-by-minute changes based on computer and do a dozen of trades (risky)

24

What is bull market?

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

25

What is bear market?

A steady drop in the stock market over a period of time

26

What is the Dow?

An index that shows how certain stocks have traded
- 30 largest companies in various industry
- changes to represent stock market overall

27

What is the S&P 500?

An index that shows the price changes of 500 different stocks.
- mainly NYSE

28

What is the Great Crash?

The collapse of the stock market in 1929.

29

What is speculation?

The practice of making high-risk investments with borrowed money in hopes of getting big returns

30

What is IPO?

Initial Public Offering. First high an investment banking to figure out how much $ can be raised. Then file with SEC (Securities and Exchange Commission) the financial statements.