Financial Literacy Stock Market
Employees of banks/ credit unions
are licensed to sell stocks that are approved by the to bank/ credit union
Selling Short
selling a stock that has been borrowed from brokerage firm and must be replaced at later date
Profit margin
show profit as a percentage (positive number)
Stop Order
An order to sell at the next available time a stock reaches are certain point.
Securities Exchange
An way for stocks, bonds, etc. to be traded by brokers
Federal Reserve System (FRS)
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Internal Revenue Service (IRS)
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U.S. Department of Treasury
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U.S. Financial Literacy and Education Commission
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Benefits of Direct Investing
1). No taxes 2). No brokerage fees 3). you are in control -1). You are stuck to that one company
Round Lot
100 or more shares
SOX: Sarbanes-Oxley Act
2002; outrage of scandals; created new standards for public companies and accounting firms
Buy and Hold
A market timing strategy where you hold a stock for a long period of time to reduce costs: dividend, price, splits
Over-the-counter Market
A network of dealers that buy and sell stocks of usually private companies
Stock Split
A ratio where the company gives out a ration of stock
Limit Order
An order to buy/sell an order at a specific price
Market Order
An order to buy/sell at market price at end of day
Discretionary Order
Allows the broker to do what he/she sees fit
Direct Investing
Allows you to buy stock directly from company
Discount Broker
Broker with limited services; costs less than a full-service broker; words at firms
National Credit Union Administration (NCUA)
Charters federal credit unions and insures saving deposits in federal credit unions
Initial Public Offering
IPO; company first offers their stock; used to raise money
Odd lot
Fewer than 100 shares
Full-service brokers
Give advice about all your financial goals Charge commission Consider all info that you provide
Financial Planners
Give you advice on your financial goals (CD's, retirement, college, debt)
Sources of Information:
Magazines, Newspapers, newsletters, annual reports, internet
Churning
Making money by just making useless trades
Auction Market
Market in which the highest bidder gets the stock
Securities and Exchange Commission (SEC)
Oversees trading and insures that the markets are fair and orderly
Annual Report
Report given out by the company describing their financial state
Oversight
Supervision to help protect investors from unlawful actions
Stockbroker
a person who gives advice as to which stocks/ securities to buy and sell
New income/ profit
money earned after expenses
Revenue
Total money earned
Secondary Market
Trading by brokers on behalf of their clients; common stocks are traded
Primary Market
Where a companies IPo first comes out
Buying on Margin
Where you borrow part of the money needed to buy a stock
Discount Broker
Works with a firm Lower commission rater Gives free reports; NO ADVICE
Online Broker
You make your own decisions Lowest commission rate Free research reports (some)
Current Ration
a companies ability to pay its current debts from assets
Stock Dividend
dividend paid in the form of new shares
Federal Deposit Insurance Corporation (FDIC)
insures your deposits in banks/ allows consumers to safely invest
National Association of Security Dealers (NASD)
nonprofit organization that monitors trading on NASDAQ
Blog
online place wehre you can find short articles about any given subject
P/E ration
price, earnings ration (Low= safe; high= fast growth)
Number of Employees
reflects growth vs. downsizing
Pension Benefit Guaranty Corporation (PBGC)
responsible for giving out pensions to those retired workers
Current stock price
the price at which investors are willing to pay for partial ownership of the company
Market Cap
the total value of a company in the stock market
