Stock Market
Stock Market
it is a financial market where shares of companies are bought and sold by investors. Investors buy stocks hoping to make profits if the share price goes up. Companies issue stocks when they want to raise money to fund their business activities or pay dividends to shareholders.
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| What is stock market |
Stock Exchange
An exchange is a place where securities (shares) are bought and sold. There are many exchanges, each specializing in different types of securities. Examples of stock exchanges are the New York Stock Exchange and NASDAQ OMX PHLX.
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Shareholders
Individuals who own shares in a company are called shareholders. When a company issues shares, those individuals become shareholders.
Dividends
A dividend is a payment made by a corporation to its shareholders out of earnings. Most publicly traded corporations declare and pay dividends quarterly.
Earnings
Profits earned by a company are called earnings. In general, businesses have two major categories of earnings: operating earnings and net income. Operating earnings are revenues less costs incurred in producing and selling goods and services. Net income is what remains after subtracting expenses.
Brokerage firm
A brokerage firm buys and sells stocks on behalf of clients. Many brokers offer free trades to attract customers.
Index Fund
An index fund tracks the performance of certain markets. For example, the S&P 500 is an index fund that tracks the performance of the largest U.S. companies listed on the NYSE and Nasdaq stock exchanges.
Mutual Funds
A mutual fund is a pool of money investors contribute for investment purposes. A mutual fund manager then invests the funds in various investments including stocks, bonds, commodities, etc.
ETF
An exchange-traded fund is similar to an index fund except that it's not passively managed by a third party; instead, it actively manages the portfolio and seeks to outperform the benchmark.
Types of investing
Passive Investing
Passive investing involves buying an index fund or ETF rather than choosing individual equities.
Active Investing
Active investing involves researching individual equities and deciding whether to invest in them.
Capitalization
Capitalization refers to the total value of a company's outstanding shares.
Market Cap
Market capitalization is the total value of a stock. Market cap is calculated by multiplying the number of outstanding shares times the current share price.
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| What is stock market |
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| What is stock market |
Beta
Beta is a measure of how much security moves relative to the market. If beta is 1, the security moves exactly in line with the market. If beta approaches 0, the security moves independently of the market.