MVC Flashcards
Stock
Represents ownership in a company. Your ownership in the company is determined by the amount of shares you own divided by the amount of outstanding shares. The goal is to buy shares and eventually sell them for a greater value which equates to profits.
Bid
A bid is an offer made by an investor, trader, or dealer in an effort to buy a security, commodity, or currency.
Ask
The ask is the price a SELLER is willing to accept for a security, which is often referred to as the offer price.
Bullish
This is a positive sentiment. Analysts and investors believe the stock market overall will move higher and stocks will appreciate in value.
Bearish
This is negative sentiment. Analysts and investors believe the stock market overall will move lower and stocks will depreciate in value.
Mutual Fund
A fund that contains a various amount of shares for the purpose of diversity. Many mutual funds are actively managed in which allocation can be changed at the manager’s discretion. An expense ration applies which is paid to the manager and administration of the fund.
Bond
Shares of bond represents what is owed to you. IT can also be referred to as fixed income. With a bond, this is a loan to a company or entity in which you are paid back your principal plus interest that is determined at the time of purchase.
Market capitalization
This is calculated by multiplying the amount of outstanding shares time the price of the stock. Typically larger companies have a capitalization greater than a billion dollars.
Asset allocation
How are your assets are divided up between stocks, bonds, cash, and alternatives (options, commodities, etc). More risky portfolios will have greater amount of stocks. Less risk means more bonds or cash.
ETF (Exchange Traded Fund)
A fund that often mirrors a selected index. This isn’t actively managed and therefore has a much lower expense ratio than a mutual fund.
Index
S&P 500 (Standard & Poor’s), NASDAQ, Dow Jones. These are popular indexes which are a group of stocks of various characteristics. These characteristics may include size of the company, industry, etc.
Options
An options contract offers the buyer the opportunity to buy or sell—depending on the type of contract they hold—the underlying asset.
Options contracts usually represent 100 shares of the company, and the buyer will pay a premium fee for each contract. For example, if an option has a premium of 35 cents per contract, buying one option would cost $35 ($0.35 x 100 = $35). The premium is partially based on the strike price—the price for buying or selling the security until the expiration date.
Put Options
allow the holder to SELL the asset at a stated price within a specific time-frame.
Call Options
allow the holder to BUY the asset at a stated price within a specific time-frame.
Prospectus
This is an information guide that is available for any ETF and mutual fund you purchase. This has information that includes the fund’s manager, allocation, objective of the fund, expense ration, and more.
Capital gain/loss
This is determined when you sell shares of a stock or fund. You calculate this by subtracting the price the asset was purchased from the price it was sold at. If it is a positive number, that is a capital gain. If it is a negative number, that is a capital loss.
Annual Report
A report prepared by a company that’s intended to impress shareholders. It contains tons of information about the company, from its cash flow to its management strategy. When you read an annual report, you’re judging the company’s financial situation.
Bear Market
The stock market being in a downward trend
Blue Chip Stocks
The stocks behind large, industry-leading companies. They offer a stable record of significant dividend payments and have a reputation of sound fiscal management. Like Apple, Amazon, Walmart, Google.etc.
Bull Market
When the stock market as a whole is in a prolonged period of increasing stock prices.
Broker
A person who buys or sells an investment for you in exchange for a fee (a commission).
Close
The NYSE and Nasdaq close at 4 p.m., with after-hours trading continuing until 8 p.m. The close simply refers to the time at which a stock exchange closes to trading.
Day Trading
The practice of buying and selling within the same trading day, before the close of the markets on that day, is called day trading.
Exchange
A place in which different investments are traded. The most well-known exchanges in the United States are the New York Stock Exchange (NYSE) and Nasdaq.
Execution
When an order to buy or sell has been completed, the trader has executed the transaction. If you put in an order to sell 100 shares, this means that all 100 shares have been sold.
High
A high refers to a market milestone in which a stock or index reaches a greater price point than previously
Initial Public Offering (IPO)
An IPO is the first sale or offering of stock by a company to the public. It happens when a company decides to go public rather than remain solely owned by private or inside investors.
Low
It represents a lower price point for a stock or index.
Margin
A margin account lets a person borrow money (take out a loan, essentially) from a broker to purchase an investment. The difference between the amount of the loan and the price of the securities is called the margin.
Open
In the United States, the stock market opens at 9:30 a.m.
Order
An investor’s bid to buy or sell a certain amount of stock or option contracts constitutes an order. You have to put an order in to buy or sell 100 shares of stock, for instance.
Pink Sheet Stocks
The term “pink sheets” refers most commonly to penny stocks, which are traded at $5 per share or less
Portfolio
A collection of investments owned by an investor makes up his or her portfolio.
Quote
Information on a stock’s latest trading price tells you its quote.
Rally
A rapid increase in the general price level of the market or of the price of a stock is known as a rally.
Sector
A group of stocks that are in the same industry belong to the same sector. An example would be the technology sector, which includes companies like Apple and Microsoft.
Short Selling
When you short-sell a stock, you borrow shares from someone else with the promise to return them at a point down the road. You then sell the stock for a profit. It’s a way to take advantage of a stock that you believe will decrease in price.
Spread
This is the difference between the bid and the ask prices of a stock, or the amount for which someone is willing to buy it and the amount for which someone is willing to sell it. For instance, if a trader is willing to trade Z stock for $10 and a buyer is willing to pay $9 for it, the spread is $1.
Stock Symbol
A stock symbol is a one- to four-character alphabetic root symbol that represents a publicly traded company on a stock exchange.
Volatility
The price movements of a stock or the stock market as a whole.
Volume
The number of shares of stock traded during a particular time period, normally measured in average daily trading volume.