Stock Market Study Guide

Parent Companies

Parent companies consist of multiple chains. Often the parent company will have a variety of different types of chains. (Some people may use the term "Group" as a synonym for Parent Company.)

Security Exchange Commission

SEC created to regulate stock market Established to regulate the commerce in stocks, bonds, and other securities.

Strategy

Short Selling Buy Low Sell High

investment diversification

Spreading out investment to reduce risk

NASDAQ

Stock Exchange Mon.-Fri. 9-5 National Association of Securities Dealers Automated Quotations an electronic stock-trading system that links brokerage firms

NYSE

Stock Exchange Mon.-Fri. 9-5 New York Stock Exchange the largest stock exchange in the world

Short Selling

Stradegy selling stock borrowed from a broker that must be replaced at a later time make money when sale price drops

Economic Choice

a decision to buy one thing instead of another

College Fund

529 b

bonds

A certificate issued by a government or private company which promises to pay back with interest the money borrowed from the buyer of the certificate: The city issued bonds to raise money for putting in new sewers. Least Risky-older people

investment portfolio

A collection of assets that provides diversification for an investor.

publicly traded companies

A company that issues shares of ownership, or stocks, that are traded on the open market

stock market

A general term used to describe all transactions involving the buying and selling of stock shares issued by a company.

stock exchange

A place where shares in a company or business enterprise are bought and sold.

mutual funds

A pool of money used by a company to purchase a variety of stocks, bonds or money market instruments. Provides diversification and professional management for investors.

Ticker Symbol

A short abbreviation used to identify a stock. It can have letters or numbers.

stocks

A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings. Risky-younger people invest

Trade-off

An exchange of one thing in return for another; especially relinquishment of one benefit or advantage for another regarded as more desirable.

stock index

An instrument used to measure and report the change in prices of a set of stocks

Investing

Committing money in the hope that it will make more money over time.

Initial Public Offering

IPO The first time a corporation issues stock to the public

individual retirement plan

IRA a self-funded retirement plan that allows you to contribute a limited yearly sum toward your retirement

ROTH

IRA-: An individual retirement plan that bears many similarities to the traditional IRA, but contributions are not tax deductible and qualified distributions are tax free. taxed going in-when withdraw it is not taxed no employer contribution

401 K

IRA-an employer-sponsored retirement plan in which the employee, and usually the employer, make payments into a fund that the employee manages taxed when you withdraw at 59.5 years old employer contribution

shareholders

Investors who purchase shares of stock in a corporation.

commodities

economic goods or products before they are processed and/or given a brand name, such as a product of agriculture medium risk

shares

equal portions of a corporation's stock

Purposes of Investing

make money, retirement, college, etc.

securities

monitors the stock market and enforces laws regulating the sale of stocks and bonds

privately owned companies

not on the stock market

Opportunity Cost

the loss of potential gain from other alternatives when one alternative is chosen.