Stock Market Flashcards
Guidance
An estimate of future earnings
What is a market bubble?
Market share price increases passed real value due to people buying stock based on popularity instead of the fundamentals of the business (hopping on the bandwagon)
Why are bubbles a bad thing?
People panic sell the their shares of companies they bought based because of popularity
What causes a stock market market crash?
a prolonged period of rising stock prices and excessive economic optimism
Monetary Value
is value in currency that a person, business, or the market places on a resource, product, or service
Stock Index
A measurement of the value of a section of the stock market. It is computed from the prices of selected stocks. It is a tool used by investors and financial managers to describe the market, and to compare the return on specific investments. EX: Dow Jones is 18,000
Market Trend
Is a tendency of financial markets to move in a particular direction over time
Bear Market
A bear market is a general decline in the stock market over a period of time
Bull Market
A bull market is a period of generally rising prices
Market Top
The market has simply reached the highest point that it will, for some time (usually a few years). Market participants are usually not aware of it as it happens
Market Bottom
A market bottom is a trend reversal, the end of a market downturn, and the beginning of an upward moving trend (bull market).
Economic bubble
An asset at a price or price range that strongly deviates from the asset’s intrinsic value
Intrinsic Value
The actual value of a security, as opposed to its market price or book value. The intrinsic value includes other variables such as brand name, trademarks, and copyrights that are often dificult to calculate and sometimes not accurately reflected in the market price
Stock Broker
A person who buys and sells stocks on behalf of their clients
Common Stock
A form of equity ownership
Preferred Stock
A type of stock which may have any combination of features not possessed by common stock. Have priority over common stock in terms of dividends (get paid before common stock holders) and/or liquidation
Share Dilution
A persons ownership of a company is decreased because more shares have been issued of a companies stock
Why is increasing the minimum wage a bad idea?
There will be lots of job loss due to more positions being replaced by robots so they don’t have to pay the higher minimum wage; also the extra cash is going to dumb people (people working at minimum wage) that are going to spend it on dumb things
If a shareholder owns 50% of a company, do they get to use the equipment and building whenever they want?
No because the company is considered a legal person, thus it owns all its assets itself
Sell off
The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the value of the security
