Finance Chapter 14

Total return

A calculation that includes the annual dollar amount of dividends as well as any increase or decrease in the original purchase price of the investment

Earnings per share

A corporations after tax income divided by the number of outstanding shares of a firms common stock

Proxy

A legal form that lists the issues to be decided at a tockholders meeting and requests that stockholders transfer their voting rights to some individual

Account executive

A licensed individual who buys or sells securities for clients, or stockbroker

Dollar cost averaging

A long term technique used by investors who purchase an equal dollar amount at the same stock of equal intervals,

Secondary market

A market for existing securities that are currently traded among investors

Primary market

A market in which an investor purchases financial securities via investment bank from the issuer of those securities

Direct investment plan

A plan that allows stockholders to purchase stock directly from a corporation without having to use an account executive or brokerage firm

Stock split

A procedure in which the shares of stock owned by existing stockholders are divided up into a large number of shares

Market order

A request to buy or sell a stock at the current market value

Limit order

A request to buy or sell the stock at a specified price or better

Ex-dividend

A situation when a stock trades " without dividend" and the seller is entitled to a dividend payment

Margin

A speculative technique whereby an investor boroows part of the money needed to buy a particular stock

Annualized holding period yield

A yield calculation taht takes into account the total return, original investment, and the time the investment is held

Nasdaq

An electronic marketplace for approximately 3200 different stocks

Day trader

An individual who buys and then later sells stocks and other securities in a very short period of time

Technical analysis

An investment practice based on the asumption that a stock's market value is determined by the forces of supply and demand in the stock market as a whole

Fundamenal analysis

An investment process based on the assumption that a stock's intrinsic or real value is determined by the company's future earnings

Efficient market hypothesis

An investment theory based on the assumption that stock price movements are completely random

Stop-loss order

An order to sell a particular stock at the next availale opportunity after its market price reaches a cpecified amount

book value

Assets- liabilities divided by shares outstanding

Market to book ration

Market value per share divided by book value per share.

Initial public offering

Occurs when a corporation sells stock to the general public for the first time

Selling short

Selling stock that has been borrowed from a brokerage firm and must be replacded at a later date

Record date

The date on which a stockholder must be registered on the corporations books in order to receive dividend payments

Dividend yield

The generated by an investment divided by the investments current price per share

Common Stock

The most basic form of ownership for a corporation

Dividend payout

The percetage of a firms earnings paid to stockholders in cash

Price-earnings ratio

The price of a share of common stock divided by the corporations earnings per share of stock

Option

The right to buy or sell a stock at a predetermined price during a specified period of time

specialist

buys or sells a particular stock in an effort to maintain an orderly market