Chapter 8 Terms Flashcards
the most prevalent type of stock that companies offer and represents true ownership of the firm
Common stock
a distribution of a portion of the corporation’s profits
Dividends
type of stock in which shareholders receive their dividends before the common shareholders
Preferred stock
a person who generally works for a brokerage company and who specializes in buying and selling stocks on behalf of his clients
Stockbroker
the fee stockbrokers work for
Commission
physically present on the trading floor to execute requested trades (aka stock traders)
Floor traders
what the market indicates the transaction on
Tape
what the investment bank then schedules the sale of a certain quantity of stock through the exchange in
Initial public offering (IPO)
where merchants originally traded stocks
Stock exchanges
the most well- known and reputable stock market in the world
New York Stock Exchange (NYSE)
has become a well-established stock exchange even though it is less than forty years old
NASDAQ
lesser known but still reputable American market
American Stock Exchange (Amex)
a group of stocks that analysts use for the purpose of analyzing stock trends
Stock index
the most well- known index
Dow Jones Industrial Average (DJIA)
a commonly reported investment index
Standard and Poor’s 500 (S&P 500)
privately managed stock portfolios
Mutual funds
a collection of stocks from different individual corporations
Stock portfolio
when people actively buy and sell stocks for the purpose of taking advantage of short-term price changes
Speculation
stock prices rise in an industry or across the entire market simply because of expectations and they rise in excess of the corporations’ true value
Speculative bubble
founded in 1934 to ensure that corporations provide accurate and current information to the public about their financial situations and their business dealings
Securities and Exchange Commission (SEC)
shares, or a portion, of a corporation
Stock
