Stock Market Vocab

Broker

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

Limit Order

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

At the Market

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

Primary Markets

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

Auction Market

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.

Stock Exchange

one of the organized stock markets with a centralized trading floor. In this market, auction type trading allows traders to sell stocks to the highest bidder or buy stocks from the lowest supplier.

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.

Benefits of Trade

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

Commission

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

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 cents.

Bid Price

the price that buyers are willing to pay for a particular stock at a given time.

Asked (Offer) Price

the price that sellers are willing to accept for a particular stock at a given time.

Market

the process through which buyers and sellers exchange with one another.

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.

Secondary Markets

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

Specialists

a broker on 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 they 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.

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. This market allows people to buy and sells stocks quickly and easily. This market is often called the secondary stock market.

Floor Broker

a member of a brokerage house who completes a customers buy or sell order on the floor of a stock exchange.

Customer

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

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 date lines. More than 5,000 companies list on NASDAQ's computerized market. NASDAQ is not an exchange because it does not have a central floor.

NYSE

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

Clerk

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

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 has 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 have 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.

Pink Sheet Market

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