Investing Test Flashcards
Company
A business or an association usually formed to manufacture or supply products or services for profit.
Corporation
A company legally separate from stockholders who own it and the managers who run it.
Brand
A trademark or distinctive name identifying a product or a company setting it aside from rival products or company.
Common Stock
Shares of a company that do not guarantee a dividend and have more risk and volatility than preferred shares. Common stock holders have the benefit of providing shareholders with the right to vote for the board of directors as well as on issues that come before the board at the annual meeting of
shareholders.
Earnings
revenue - expenses
Investor
Someone who risks funds by purchasing financial products with the hope the investments will increase in value over time.
IPO
Initial Public Offering; the initial sale of stock to the public by investment bankers.
Preferred Stock
Shares of ownership of a company in which the share holder is guaranteed a dividend if one is declared and whose shares are usually not as volatile as common stock. Preferred stock holders do not have voting rights in company elections and decisions.
Private Company
A company that is owned by a person, family, or small group of investors that does not sell shares of stock in the company to the public.
Public Company
A company that is owned by investors who buy shares of stock, partial ownership of the assets of a business, in the corporation usually through one of the stock exchanges.
Risk
The chance of losing all or part of an investment.
Stock
A type of security that signifies ownership in a corporation and represents a claim to a part of the company’s profits or losses.
Tombstone Ad
An announcement appearing in financial publications such as The Wall Street Journal announcing a company’s Initial Public Offering (IPO.)
Underwriter
Typically an investment banker, buys an entire new securities issue from the company or government offering it, and resells the issue as individual stocks or bonds to the public.
Volatility
Indicates how much and how quickly the value of an investment, market, or market sector changes.
Dividend
Part of a company’s profits (earnings) paid periodically to stockholders.
P/E Ratio
Stands for price-to-earnings ratio. The P/E is the relationship between a company’s earnings and its share price. It is calculated by dividing the current price per share by the earnings per share.
Share
A share is a unit of ownership in a corporation or mutual fund.
Volume
The number of shares traded in a company’s stock.
Diversification
An investment strategy in which you spread your investment dollars among industry sectors.