Micro Stock Market Terms
Certificates of Deposit
A bank account that pays a fixed rate of interest while keeping your funds on deposit for a set period of time
Mutual Funds
A company that compiles money from many investors and invests in securities like stocks and bonds
Blue Chip Stocks
A huge company with a good reputation. -typically large, well-established, and financially sound companies
Beta
A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.
Income Stocks
An equity security that pays regular, often steadily increasing dividends
Chicago Mercantile Exchange (CME)
An organized exchange that offers futures and options trading services in industry segments such as stock market, real estate, and commodities
Junk Bond
Bonds that carry a higher risk of default than bonds, issued by corporations and government
Growth Stocks
Company that generates positive cash flow, revenue, and earnings increase at a faster rate than the average company
DJIA
Dow Jones Industrial Average, an index that tracks 30 large, publicly-owned companies trading on the NYSE and NASDAQ
Yield
Earnings generated on an investment over a period of time
Hedge Fund
Fund that compiles capital from investors and invests in a variety of assets
Bonds Ratings
Grade assigned to bonds indicating credit quality
IPO
Initial Public Offering, process by which a private company goes public
NASDAQ
National Association of Securities Dealers Automated Quotations, electronic exchange
NYSE
New York Stock Exchange, the largest equities based exchange in the world
Stop Loss Order
Order placed with a broker to sell a security when it reaches a certain price
OTC
Over-the-counter, the process of how securities are traded for companies that aren't listed on a formal exchange
SEC
Securities and Exchange Commission, a US agency that oversees securities transactions and mutual fund trading to prevent fraud and deception
Spread
The difference between the offer price and the bid price.
Dividend
The portion of corporate profits paid out to stockholders
Dollar Cost Averaging (DCA)
The technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price
Commodity
a basic good in commerce that's interchangeable
Penny Stocks
a common stock valued at less than one dollar, and therefore highly speculative.
Bear Market
a market in which prices are falling, encouraging selling.
Bull Market
a market in which share prices are rising, encouraging buying.
Rule of 72
a quick formula for computing how long it will take to double money invested at a given interest rate -divide annual rate of return by 72
Volume
amount of security traded during a given period of time
Moving Average
an indicator in analysis that helps smooth out price action by filtering out short term price changes
Pink Sheets
companies that aren't listed on major exchanges
Options
contracts that give investors the right to buy or sell stock and other financial assets at a particular price until a specified future date
Futures
contracts that obligate parties to transact an asset at a predetermined date and price
Bid
price a market maker or broker is willing to pay for a security
Capital Gains
profit from the sale of an investment
Preferred Stock
shares of ownership in a public company that gives stockholders a portion of future profits, but no voting rights
Day Trading
the buying and selling of securities on the same day, often online, on the basis of small, short-term price fluctuations.
Buying on Margin
the initial or down payment made to the broker for the asset being purchased
P/E Ratio
the measure of the share price relative to the annual net income earned by the firm per share
Common Stock
the most basic form of ownership, including voting rights on major issues, in a company
Arbitrage
the simultaneous purchase and sale of an asset to profit from a difference in the price
Annual Report
yearly summary of a firm's financial information, products, and growth plans for owners and potential investors