Stocks

How are income and growth stock different?

An income stock will pay investors and a growth stock will use cash flow to pay investors back.

What are the advantages of bonds for investors?

The advantages of bonds for investors are in x amount of years the bond will be worth more than what you paid for it.

Are treasury bonds a risky investment? Explain.

A relatively safe investment because you are almost guaranteed your money when the years of purchase is over.

Return

A return is money made above the investment.

Opening Price

Price at which a security opens at 9:30

Capital Gains

Profits made from the sale of an investment

What is a portfolio?

A list of all investments you currently have

Mutual fund

A mutual fund pools savings from many people and invests the money in a variety of different ways.

Blue chips stock

30 most valuable companies on the NYSE, Dow jones only watches those 30

What are the signs of a bull/bear markets?

A bull market is a market that is on the rise and is economically sound, while a bear market is a market that is receding, where most stocks are declining in value.

What is the difference between a bull and a bear market?

A bull market is when the market is thriving, stock prices are rising, many people are investing, a bear market is when the economy is bad, prices will fall.

Which is more liquid, a business or a bond? Explain.

A business is more liquid because when you purchase a bond, that money is not available for you for many years and in a business money is always available

Junk bond

A junk bond is a highly risky bond issued from a failing corporation.

What determines the size of the dividends that corporations pay investors?

Dividends are decided by a companies board and must be approved by investors by voting

EPS

Earnings per share

What key factors/indicators would you employ to decide whether to invest in a stock? How does each influence your decision?

If a company is about to release something it would be a good investment. The history of the stock and its relevance at the time.

How does diversification lower risk for investors?

It lowers risk because you are investing in multiple companies compared to only investing in one stock.

dividend

Money given to you by a company for holding a stock

Capital Loss

Money lost from the sale of an investment

What is the difference between NASDAQ and NYSE?

NYSE = A physical place to exchange stock, NASDAQ = a virtual stock exchange. The main difference between Nasdaq and NYSE is their markets. Nasdaq is a dealer's market, with participants trading through a dealer rather than directly with each other, while NYSE is an auction market, which enables individuals to transact between each other on an auction basis.

Market Cap

Shares outstanding x price, the total value of all a company's shares of stock.

What effects the markets

Supply and Demand changes the markets

What is the DJIA?

The Dow Jones Industrial Average (DJIA) is an index that tracks 30 large, publicly-owned companies trading on the New York Stock Exchange (NYSE) and the NASDAQ

Which is better, The Dow Jones Industrial average or the Standard and Poors 500? Why?

The S&P 500 is better because it shows you the average of 500 stocks and the dow jones industrial average shows you the average of the 30 best stocks. The S&P 500 will be a more accurate representation.

Why would a borrower or save use financial intermediaries rather than work with the financial institutions themselves?

The borrower will have lower risk and will make more money. They make more money not working.

What is the main advantage of mutual funds?

The main advantage of mutual funds and they are low risk and can make you alot of money over time

What risk do investors face if they keep their bond until maturity? if they sell them before maturity?

They face little to no risk if they keep their bond until maturity, if you cash the bond before maturity you will not receive the full amount of many and you will get a early redemption penalty.

Why do corporations sell stock?

They sell stocks because they gain money and dont have to pay back the investors.

How does the US government use funds from the sale of savings bonds?

They use funds from the sale of savings bonds because the buyer is loaning them money for a certain amount of years

Stock Split

a corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares.

Beta

a measure of a stock's volatility in relation to the market.

Prospectus

document issued to possible buyers of a stocks and bonds outlining the financial condition of the company issuing those securities

P/E

relative measure of risk, When over 50 it becomes a risk. Price/earnings

Average volume

the average number of shares traded within a day in a given stock