What is an Exchange?

Auction market

(Sometimes known as open outcry) is the way the major exchanges, such as the New York Stock Exchange (NYSE) and the Chicago Mercantile Exchange (CME), have traditionally handled buying and selling.

Common stock

Gives shareholders voting rights but no guarantee of dividend payments.

Shareholder

If you own stock in a corporation, you are a _________________ of that corporation.

Mid cap Stock

Issued by a corporation whose market capitalization falls in a range between $2 billion and $10 billion. Investors tend to buy these stocks for their growth potential.

Small Cap Stock

Shares of publicly traded corporations with a total market capitalization of less than $2.3 billion. That number is not used uniformly, however, and you may find them defined as below $1.5 billion. These tend to be issued by young, potentially fast-growing companies. Over the long term — though not in every period — these as a group have produced stronger returns than any other investment category.

Blue Chip Stock

The common stock of a large, well-regarded US company. The companies in that informal category are collectively known as ________ companies. They have a long-established record of earning profits and paying dividends regardless of the economic climate.

Bid Price

The price a market maker or broker offers to pay for a security.

Listing Requirement

The standards a corporation must meet to have its stock or bonds traded on a particular exchange. Exchanges set their own. Among the criteria are a corporation's pretax earnings, a minimum market value, and a minimum number of existing shares.

Large Cap

The stock of companies with market capitalizations typically of $10 billion or more. Generally considered less volatile than stock in smaller companies, in part because the bigger companies may have larger reserves to carry them through economic downturns.

Market Capitalization

This is the market value of a company's stock.

Initial public offering (IPO)

When a company reaches a certain stage in its growth, it may decide to issue stock, or go public, with _________________. The goal may be to raise capital, to provide liquidity for the existing shareholders, or a number of other reasons. In most cases, the company works with an investment bank, which underwrites the offering. That means marketing the shares being offered to the public at a set price with the expectation of making a profit.

Stock Exchange

Where brokers gather to buy and sell stocks and other securities. The term is also used more broadly to include electronic trading that takes place over computer and telephone lines. In fact, in many markets around the world, all stock trading is handled electronically.

Stock

_____________ is an equity investment that represents part ownership in a corporation and entitles you to part of that corporation's earnings and assets.

Brokers

Acting for buyers & compete against each other on the exchange floor, as brokers acting for sellers do, to get the best price.

Preferred stock

Provides no voting rights but usually guarantees a dividend payment.