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Stocks & Shares > Key Words > Flashcards

Key Words Flashcards

1
Q

What is a Stock?

A

A stock represents a SHARE in the ownership of a company, including a claim on the company’s EARNINGS and ASSETS.

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2
Q

What is a Share?

A

A share represents a unit of EQUITY in a company.

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3
Q

What is a Shareholder?

A

An owner of SHARES in a company.

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4
Q

What is a Stock Exchange?

A

A market in which SECURITIES are bought and sold.

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5
Q

What is a Public Company?

A

A company whos SHARES are traded freely on a STOCK EXCHANGE.

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6
Q

What is a Bull Market?

A

A market in which SHARE prices are RISING.

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7
Q

What is a Bear Market?

A

A market in which SHARE prices are FALLING.

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8
Q

What is Volatility?

A

When a market or SECURITY experiences periods of unpredictable, and sometimes sharp, price movements - INDEXES which FLUCTUATE in the market.

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9
Q

What is Volume?

A

The total number of SHARES or CONTRACTS exchanged between buyers and sellers of a SECURITY during trading hours on a given day.

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10
Q

What is Capital?

A

The physical or financial resources used to produce VALUE in an economy.

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11
Q

What is Liquidity?

A

The ease with which an ASSET or SECURITY can be converted into ready cash without affecting its MARKET PRICE.

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12
Q

What is a Bubble?

A

An economic cycle that is characterised by the RAPID escalation of MARKET VALUE, particularly in the price of ASSETS.

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13
Q

What is an IPO?

A

Initial Public Offering

When a private company becomes public by selling its SHARES on a STOCK EXCHANGE.

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14
Q

What are Dividends?

A

A SHARE of profits and retained earnings that a company pays out to its SHAREHOLDERS and owners.

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15
Q

What are Blue-chip Stocks?

A

Big companies known for being VALUABLE, STABLE and ESTABLISHED.

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16
Q

What is FOREX?

A

The Foreign Exchange

The global marketplace for the trading of one nations currency for another.

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17
Q

What is a Portfolio?

A

A collection of financial investments like STOCKS, BONDS, COMMODITIES, CASH, and CASH EQUIVALENTS, including CLOSED END FUNDS and ETFS.

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18
Q

What are Holdings?

A

The contents of an INVESTMENT PORTFOLIO held by an individual or entity.

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19
Q

What are Interests?

A

The MONETARY charge for borrowing investments.

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20
Q

What are Bonds?

A

A DEBT SECURITY.

A loan from an investor to a borrower such as a company or government.

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21
Q

What is a Security?

A

A wide array of investments, such as STOCKS, BONDS, NOTES, DEBENTURES, LIMITED PARTNERSHIP INTERESTS, oil and gas interests, and INVESTMENT CONTRACTS.

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22
Q

What is a Broker?

A

Individuals who buy and sell STOCKS, SHARES and SECURTIES for retail and institutional clients through a STOCK EXCHANGE or OTC in return for a fee.

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23
Q

What is an Asset?

A

A resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit.

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24
Q

What is a Commodity?

A

A good sold for production or consumption just as it was found in nature.

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25
Q

What is Yield?

A

How much income an investment generates, separate from the principle.

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26
Q

What is P/E Ratio?

A

Price to Earnings Ratio

Measures a companys SHARE PRICE relative to its EPS.

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27
Q

What is an Index?

A

A method to track the performance of a group of ASSETS in a standardised way.

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28
Q

What are Futures?

A

A type of derivative contract agreement to buy or sell a specific COMMODITY, ASSET or SECURITY at a set future date for a set price.

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29
Q

What are Options?

A

A form of derivative financial instrument in which two parties contractually agree to transact an ASSET at a specified price before a future date.

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30
Q

What are Call Options?

A

A contract between a buyer and seller to purchase a certain STOCK at a certain price up until a defined expiration date.

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31
Q

What are Put Options?

A

Gives the holder the right, but not the obligation, to sell a STOCK at a certain price in the future.

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32
Q

What are ETFs?

A

Exchange-Traded Funds

Funds that trade on an EXCHANGE, generally tracking a specific INDEX.

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33
Q

What are Passive ETFs?

A

Seek to replicate the performance of a specific BENCHMARK INDEX or ASSET class without requiring active decision-making.

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34
Q

What are Active ETFs?

A

A portfolio manager/team who adjusts the investments within a fund as desired while not being subject to the rules of tracking an INDEX.

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35
Q

What is Liability?

A

What a person or company owes as of the date of the BALANCE SHEET.

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36
Q

What are Penny Stocks?

A

A small companys SHARES that typically trade for lower than £5 a per share.

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37
Q

What are Market Caps?

A

A measurement of a companys size; the total value of a companys outstanding SHARES of STOCK (Inclues public, restricted and insider shares).

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38
Q

What is Leverage?

A

Using debt (borrowed funds) to amplify returns from an investment or project.

39
Q

What is a Balance Sheet?

A

A financial statement that reports a companys ASSETS, LIABILITIES and SHAREHOLDER EQUITY.

40
Q

What is Inflation?

A

Measures how much more EXPENSIVE a set of goods and services has become over a certain period.

41
Q

What is a Bid?

A

The highest price a buyer will pay to buy a specified number of SHARES of a STOCK at any given time.

42
Q

What is a Ask?

A

The LOWEST price a seller will sell the STOCK

43
Q

What is Bid/Ask Spread?

A

The DIFFERENCE between the highest price that a buyer is willing to pay for an ASSET and the lowest that a seller is willing to accept.

44
Q

What is a Limit Order?

A

An order to buy or sell a STOCK with a restriction on the maximum price to be paid (with a BUY LIMIT) or the minimum price to be received (with a SELL LIMIT).

45
Q

What is a Stop-loss Order?

A

An order placed with a BROKER to buy or sell a specific STOCK once it reaches a certain price.

46
Q

What is a Market Order?

A

An order to buy or sell a STOCK at the markets best available price.

47
Q

What is a Day Order?

A

A stipulation placed on an order to a BROKER to execute a trade at a specific price that expires at the end of the trading day if not completed.

48
Q

What is Averaging Down?

A

A strategy to buy MORE of an ASSET as its price FALLS, resulting in lower overall average purchase price.

49
Q

What is Fading?

A

A trading technique in which a trader assumes that a RAPID upward movement is overdone and takes a SHORT position on a possible reversal.

50
Q

What is a Hedge Fund?

A

Financial partnerships that employ various strategies in an effort to MAXIMISE returns for their investors.

51
Q

What are Mutual Funds?

A

A type of investment that pools money from many people to invest in a variety of ASSETS like STOCKS, BONDS or other SECURITIES.

52
Q

What is Control Stock?

A

EQUITY SHARES owned by MAJOR SHAREHOLDERS of a publicly traded company.

53
Q

What is a Holding Company?

A

A parent company that is created to buy and control the ownership interests of other companies.

54
Q

What are Subsidiaries?

A

A company that belongs to another company, usually the PARENT or HOLDING company.

55
Q

What is an Index Fund?

A

A PORTFOLIO of STOCKS or BONDS designed to mimic the composition and performance of a financial markets index.

56
Q

What is Day Trading?

A

Buying and selling SECURITIES RAPIDLY - often in less than a day.

57
Q

What is Swing Trading?

A

Taking trades that last a couple of days up to several months in order to PROFIT from an anticipated price movem

58
Q

What is Intrinsic Value?

A

A measure of what an ASSET is worth.

59
Q

What is Book Value?

A

The value of a business according to its books or accounts, as reflected on its FINANCIAL STATEMENTS.

60
Q

What is Price-to-Book Ratio?

A

The companies currrent STOCK price per SHARE divided by its book value per share (BVPS).

61
Q

What is Value Investing?

A

Practitioners aim to identify STOCKS whose prices don’t reflect what they’re really worth.

62
Q

What is Growth Investing?

A

The process of investing in companies l, industries, or sectors that are currently GROWING and are expected to continue their expansion over a substantial period of time.

63
Q

What are Earnings-per-Share?

A

A measure of a companys PROFITABILITY l, calculated by dividing quarterly or annual income by the number of outstanding STOCK SHARES.

64
Q

What is Technical Analysis?

A

The study of historical MARKET DATA, including price and volume.

65
Q

What is Fundamental Analysis?

A

A method of assessing the INTRINSIC VALUE of a SECURITY by analysing various MACROECONOMIC and MICROECONOMIC factors.

66
Q

What is Efficient Market Hypothesis?

A

Argues that markets are efficient, leaving no room to make EXCESS profits by investing since everything is already fairly and accurately priced.

67
Q

What is Supply and Demand?

A

Supply is the markets ability to PRODUCE a good or service.
Demand is the markets DESIRE to purchase the good or service.

68
Q

What is Insider Trading?

A

Buying or selling a publicly traded companys STOCK by someone with NON-PUBLIC material information about that company.

69
Q

What is a Ticker Symbol?

A

A unique combination of letters and numbers that represent a particular STOCK or SECURITY listed on an exchange.

70
Q

What is Compound Interest?

A

INTEREST that applies not only to the initial principle of an investment or loan, but also to the ACCUMULATED INTEREST from previous periods.

71
Q

What is a Profit Margin?

A

A common measure to the degree to which a company or a particular business activity makes money.

72
Q

What is ‘Return on Investments’?

A

A metric used to understand the PROFITABILITY of an investment.

73
Q

What is Equity?

A

The VALUE that would be returned to a companies SHAREHOLDERS if all the ASSETS were LIQUIDATED and all the companys debts were paid off.

74
Q

What is a Float?

A

Duplicate money present in the banking system during the time between a deposit being made in the recipients account and the money being deducted from the senders account.

75
Q

What is Trade?

A

The voluntary exchange of goods or services between different economic actors.

76
Q

What is a Secondary Offering?

A

When an investor sells their SHARES to the public on the SECONDARY MARKET after an IPO.

77
Q

What is Common Stock?

A

A type of tradable ASSET or SECURITY that equates to ownership in a company (the type of stock most people buy).

78
Q

What is the Secondary Market?

A

Where the SECURITIES are traded after the company has sold its offering on the primary market.

79
Q

What are Macroeconomics?

A

The branch if economics that deals with the STRUCTURE, PERFORMANCE, BEHAVIOUR and DECISION MAKING of the whole, or aggregate, economy.

80
Q

What are Microeconomics?

A

The study of INDIVIDUALS, HOUSEHOLDS and FIRMS behaviour in decision making and allocation of resources.

81
Q

What is a Sell Limit?

A

The MINIMUM price to be received.

82
Q

What is a Buy Limit?

A

The MAXIMUM price to be paid.

83
Q

What is a Benchmark?

A

A standard or measure that can be used to analyse the allocation, risk and return of a given portfolio.

84
Q

What is Yield Rate?

A

How much income an investment generates, separate from the principle.

85
Q

What is Over-the-Counter (OTC)?

A

A decentralized market in which market participants trade STOCKS, COMMODITIES, CURRENCIES etc directly between two parties (no central exchange or broker).

86
Q

What are Closed End Funds?

A

A type of MUTUAL FUND that issues a fixed number of SHARES through one IPO to raise capital for its initial investments.

87
Q

What are Notes?

A

A debt security obligating repayment of a loan, at a predetermined INTEREST RATE, within a defined time frame.

88
Q

What are Debentures?

A

A marketing SECURITY that businesses can issue to obtain long-term financing without needing to put up COLLATERAL or DILUTE their EQUITY.

89
Q

What are Investment Contracts?

A

A legal document between two parties where one party invests money with the interest of receiving a return.

90
Q

What is Dilution?

A

The REDUCTION in the percentage of existing SHAREHOLDERS ownership in a company when it issues new SHARES of STOCK.

91
Q

What is Collateral?

A

An item of value that a lender can seize from a borrower if they fail to repay a loan according to the agreed terms.

92
Q

What is an Aggregate?

A

Variables that measure the total economic activity for a nation state or a region (the main economic aggregate is GDP).

93
Q

What is GDP?

A

Gross Domestic Product - the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.

94
Q

What is the Principle?

A

The baseline sum in financial transactions.

Stocks & Shares (2 decks)

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