Stock Market

Total Cost Of Purchase

(Number of shares*Price of stock)+Broker's fee

Total Received of Sale

(Number of shares*Price of stock)-Brokers fee

New Issues Market

A market in which a corporation sells new stock to raise money for start-up or expansion. This market is often called the primary stock market.

Stock Market

A market in which the public trades stocks that someone already owns. The market allows people to buy and sell stocks quickly and easily. Example are the New York Stock Exchange and the American Stock Exchange. This market is often called the secondary stock market.

Floor Broker

A member of a brokerage house who completes a customer's buy or sell order on the floor of a stock exchange.

Clerk

A member of a brokerage house who transfers orders and information between stockbrokers in an office and floor brokers at a stock exchange

Customer

A person who buys the product or service offered by a business.

Market-Maker

A stock trader who agrees to buy and sell, or "make a market" in a company's stock. The trader uses his or her firm's money to purchase stock so he or she have shares available for people to buy. A market-maker also must agree to purchase stock back when investors want to sell. Market-makers buy and sell Nasdaq and OTC stocks. Smaller companies usually ave only a few market-makers while large companies have dozens.

Price (of a stock)

An amount agreed on between a buyer and a seller to exchange a stock certificate.

Gain

An increase above the original purchase price in the money received from the sale of a stock.

Broker

An individual or business that specializes in bringing together buyers and sellers of stocks

At the Market

An order to buy and sell stock at the best price currently available.

Limit Order

An order to buy or sell a stock at a certain (or better) price. A buyer's limit order of $20 would be completed only if each share can be bought for $20 or less.

Pink Sheet Market

Another name for the OTC market. The "pink sheets" are lists of OTC stocks, and the prices at which dealers are offering to buy and sell them. These lists are printed on pink paper and distributed early every morning o the trading community.

IPO

Initial Public Offering. The first time a private company issues stock on the stock market.

Market

The process through which buyers and sellers exchange with one another

Preferred Stock

"PF" appears immediately after a company's name. Preferred stocks have "preferred treatment" when compared to common stocks.

Broker's Commission

2% or .02 of purchase and sale. Stockbrokers charge a fee for their services. This fee is called a commission. Brokers earn a commission for each transaction (purchase or sale) they execute. Fees vary, but in The Stock Market Game, it is 2%.

Specialest

A broker or an exchange who trades in certain stocks at a specific location (post) on the trading floor. Each specialist has an assigned post where all trading of particular stocks occur. Specialists quote the current prices of stocks traded at their posts and the complete limit orders.

Stockbroker

A broker who accepts orders to buy and sell stock and then transfers those orders to other people who complete them.

Investment Banker

A business that gives a corporation advice on how to raise money and also sells new issues of stocks and bonds.

Loss

A decrease from the original purchase price in the money received from the sale of a stock.

Stock Exchange

One of the organized stock markets with a centralized trading floor. In this market, auction-type trading allows trader to sell stocks to the highest bidder or buy stocks from the lowest supplier. These markets consist of the New York Stock Exchange and the American Stock Exchange, both of which are located in NYC. Also included are the regional stock exchanges found outside of NYC. These are Boston, Cincinnati, Intermountian (Salt Lake City) Midwest (Chicago), Pacific (LA and San Francisco), Philadelphia (Philadelphia and Miami, and Spokane stock exchanges.

Listed Stock

Stocks that have been approved and listed for trading by one of the organized stock exchanges or markets. These stocks must meet specific financial and other requirements to qualify. Unlisted stocks are those that trade over the counter and do not need to meet certain standards.

Amex

The American Stock Exchange, which is one of the organized stock markets in New York City.

Nasdaq

The Nasdaq Stock Market is an electronic marketplace where buyers and sellers get together via computer and hundreds of thousands of miles of high-speed data lines. More than 5,000 companies list on Nasdaq's computerized market. Nasdaq is not an exchange because it doesn't have a central floor.

NYSE

The New York Stock Exchange, which is one of the organized stock markets in New York City.

Benefits of Trade

The advantages obtained by buyers and sellers when they trade a stock.

Equilibrium

The price of a stock at which buyer wants to buy the same number of shares as sellers want to sell. This price is also called the Market-Clearing Price.

Bid Price

The price that buyers are willing to pay fr a particular stock at a given time.

Risk

The chance of losing money. Risk is the opposite of safety.

Stock Split

The division of a stock into a larger number of lower-priced shares.

Commision

The fee a broker and/or stockbroker collects for helping people buy and sell a stock.

Asked (or offer) Price

The price that sellers are willing to accept for a particular stock and a given time.

Quotes

The highest price bid by a buyer and the lowest price asked by a seller for a stock at a given time. Quotes are usually expressed in dollars and fractions of a dollar. For example, at one time a share of Apple Computer was quoted at 27 3/4, which means $27.75.

Over The Counter Market (OTC)

The over-the-counter market lacks the central trading floors of the stock exchanges. Like Nasdaq, brokers and dealers trade with one another by using computers and telephones, but unlike Nasdaq, OTC stocks do not have to meet listing standards. OTC stocks are usually small, and not frequently traded.

Costs of Trade

The time and money buyers and sellers spend to find one another and arrange trades.

Auction Market

The type of market found in organized stock exchanges. As in an auction, stocks are sold to the person willing to pay the highest price and purchased from the person willing to sell for the lowest price.

Primary Markets

Those markets in which stocks are offered for sale for the first time.

Secondary Markets

Those markets in which stocks can be bought and sold once they are approved for public sale.