Business Ownership

Public Company

A company that has issued securities through an initial public offering (IPO) and is traded on at least one stock exchange or in the over the counter market. Although a small percentage of shares may be initially "floated" to the public, the act of becoming a public company allows the market to determine the value of the entire company through daily trading.

Stock

a certificate representing a share of ownership in a company.

Penny Stock

a nickname for extremely low priced stock, usually only a few dollars a share. These stocks are considered highly speculative, which is another way of saying highly risky. They are priced low because they have not yet proven themselves in the market.

Dividend

a payment made by a company to a stockholder to share in the company's profits.

Mutual Fund

a savings fund that uses cash from a pool of savers to buy a wide range of securities, like stocks, bonds, and real estate. This is a way to diversify your investments because you own small units of each of the fund's investments. The fund is managed by professionals and permits small amounts of money to be invested.

Bond

an IOU issued by a corporation or government that confirms you are lending the corporation or government money. Bonds pay interest regularly to lenders. At the end of the term of the bond, the borrower returns to the lender the face value of the bond (the amount the lender invested in the bond).

Board of directors

is a body of elected or appointed members who jointly oversee the activities of a company or organization.

IPO

is the first sale of stock by a formerly private company. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises.

Shareholder

someone who owns stock in a company.

Corporation

the most common form of organizing a business — the organization's total worth is divided into shares of stock, and each share represents a unit of ownership and is sold to stock holders. A corporation is considered a separate entity from the stockholders for legal and tax purposes. Examples of corporations: Pepsi Cola, Intel, The Gap.