Stocks Key Terms

Question 1

Shares

Answer 1

The single smallest denomination of a company’s stock. Technically speaking, shares represent units of stock

Question 2

Long term investment

Answer 2

Selling your stocks anytime after 1yr and 1 day after (Passive investors)

Question 3

Short term investments

Answer 3

Selling your stocks within 365 Days (Active investors)

Question 4

Day Trade

Answer 4

Everyday waking up in the morning at 9:30am when the stock market opens and buying a lot of stocks then instantly selling it. (Do not do)

Question 5

Long term capital gains tax

Answer 5

The tax you receive selling capital assets owned for more than one year. It is significantly less taxed than Short term capital gains tax.
The tax brackets for long-term capital gains were closely aligned with income tax brackets

Question 6

Short term capital gains tax

Answer 6

The tax you receive selling capital assets owned a year or less. It ranges from 10% to 37%. The tax rate correspond to the seven federal tax brackets in the U.S that you fall in.

Question 7

Alpha

Answer 7

How much better the portfolio manager did than the market average

Question 8

Index (what is its main use)

Answer 8

A hypothetical portfolio that represents a segment or piece of the financial market. The main us is for a comparison tool.
For example : The S&P 500 index measures the average stock gains of loss of the top 500 companies.

Question 9

ETF (Exchange traded fund)

Answer 9

mutual fund that can be be bought or sold any time the markets are open

Question 10

Portfolio

Answer 10

Portfolio investments are investments in the form of a group of assets, including transactions in equity, securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures.