AP Economics, Stock Market Review

Bear Market

A Market exists in an economy that is receding, where most stocks are declining in value. Source: https://www.investopedia.com/insights/digging-deeper-bull-and-bear-markets/#:~:text=Bull%20Market%20vs.-,Bear%20Market,stocks%20are%20declining%20in%20value.&text=In%20the%20case%20of%20equity,the%20prices%20of%20companies'%20shares.

Bull Market

A market that is on the rise and where the economy is sound. Source: https://www.investopedia.com/insights/digging-deeper-bull-and-bear-markets/#:~:text=Bull%20Market%20vs.-,Bear%20Market,stocks%20are%20declining%20in%20value.&text=In%20the%20case%20of%20equity,the%20prices%20of%20companies'%20shares.

Common Stock

A security that represents ownership in a corporation. Holders of this stock elect the board of directors and vote on corporate policies. This form of equity ownership typically yields higher rates of return long term. However, in the event of liquidation, these shareholders have rights to a company's assets only after bondholders, preferred shareholders, and other debt holders are paid in full. Source: https://www.investopedia.com/terms/c/commonstock.asp

Volatility

A statistical measure of the dispersion of returns for a given security or market index. In most cases, the higher the volatility, the riskier the security. It is often measured as either the standard deviation or variance between returns from that same security or market index. Source: https://www.investopedia.com/terms/v/volatility.asp

Capital Gain

An increase in a capital asset's value and is considered to be realized when the asset is sold. Source: https://www.investopedia.com/terms/c/capitalgain.asp

Stock Performance Indexes (examples)

An index that measures the price performance of a basket of securities using a standardized metric and methodology. Examples are Standard & Poor's 500 and the Dow Jones Industrial Average Sources: https://www.investopedia.com/terms/i/index.asp#:~:text=An%20index%20measures%20the%20price,evaluate%20an%20investment's%20performance%20against.

Stock Exchanges (examples)

Examples are the New York Stock Exchange (NYSE), Nasdaq, and the Chicago Board Options Exchange (CBOE). Source: https://www.investopedia.com/terms/s/stockmarket.asp

Risk

Is defined in financial terms as the chance that an outcome or investment's actual gains will differ from an expected outcome or return. This can include the possibility of losing some or all of an original investment. It is usually assessed by considering historical behaviors and outcomes. Standard deviation is a common metric. Source: https://www.investopedia.com/terms/r/risk.asp

Risk Tolerance

Is the degree of variability in investment returns that an investor is willing to withstand in their financial planning...Those with a higher net worth and more disposable income can also typically afford to take greater risks with their investments. Source: https://www.investopedia.com/terms/r/risktolerance.asp#:~:text=Risk%20tolerance%20is%20the%20degree,withstand%20in%20their%20financial%20planning.&text=Those%20with%20a%20higher%20net,greater%20risks%20with%20their%20investments.

Brokerage Firm

Its main duty is to act as a middleman that connects buyers and sellers to facilitate a transaction. The firm may divide the commission. Source: https://www.investopedia.com/terms/b/brokerage-company.asp#:~:text=What%20Is%20a%20Brokerage%20Company,sellers%20to%20facilitate%20a%20transaction.&text=In%20this%20case%2C%20both%20brokerage,firm%2C%20or%20simply%20a%20brokerage.

Dividend

Refers to a reward, cash or otherwise, that a company gives to its shareholders. They can be issued in various forms, such as case payment, stocks or any other form...it is usually a part of the profit that the company shares with its shareholders. Source: https://economictimes.indiatimes.com/definition/Dividend

Market Capitalization

Refers to the total dollar market value of a company's outstanding shares of stock. Commonly referred to as "market cap," it is calculated by multiplying the total number of a company's outstanding shares by the current market price of one share. Share: https://www.investopedia.com/terms/m/marketcapitalization.asp

Beta Number

The measure of a stock's volatility in relation to the overall market. If the stock moves less than the market, the stock's beta is less than 1.0. High-beta stocks are supposed to be riskier but provide higher return potential; low-beta stocks pose less risk but also lower returns. Source: https://www.investopedia.com/investing/beta-know-risk/#:~:text=Beta%20is%20a%20measure%20of,relation%20to%20the%20overall%20market.&text=If%20a%20stock%20moves%20less,risk%20but%20also%20lower%20returns.

Influences on Stock Price

The price of a stock will go up and down in relation to a number of different factors, including changes within the economy as a whole, changes within industries, political events, war, and environmental changes. Source: https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/stock-price/#:~:text=The%20price%20of%20a%20stock,%2C%20war%2C%20and%20environmental%20changes.

P/E Ratio

The ratio for valuing a company that measures its current share price relative to its per-share earning (EPS). The ratios are used by investors and analysts to determine the relative value of a company's shares in an apples-to-apples comparison. It can also be used to compare a company against its own historical record or to compare aggregate markets against one another or over time. Source: https://www.investopedia.com/terms/p/price-earningsratio.asp

Preferred Stock

This type of stock has a higher claim to dividends or asset distribution than common stockholders. Source: https://www.investopedia.com/terms/p/preferredstock.asp