Question
Answer
Stock
A share of ownership in a publicly traded company
Share
A single unit of ownership in a company
Equity
Ownership interest in a company represented by shares
Bond
A loan made to a company or government that pays regular interest
ETF (Exchange-Traded Fund)
A fund that tracks an index and trades on a stock exchange like a stock
Mutual Fund
A pooled investment fund managed by professional fund managers
Index Fund
A passive fund that tracks a market index like the S&P 500
S&P 500
An index tracking the 500 largest publicly traded US companies
Dow Jones Industrial Average
An index tracking 30 large blue-chip US companies
NASDAQ
A stock exchange known for technology companies
NYSE (New York Stock Exchange)
The world's largest stock exchange by market capitalisation
Bull Market
A period of rising stock prices generally 20% or more above a recent low
Bear Market
A period of falling stock prices generally 20% or more below a recent high
Market Capitalisation
The total market value of a company's outstanding shares
Blue Chip Stock
Shares in large well-established financially stable companies
Growth Stock
A stock expected to grow faster than the overall market
Value Stock
A stock trading below its perceived intrinsic value
Dividend
A portion of company profits paid regularly to shareholders
Dividend Yield
Annual dividend payment divided by the stock's current price
Capital Gain
Profit made from selling a stock for more than you paid
Capital Loss
A loss from selling a stock for less than you paid
Portfolio
The collection of all your investments
Diversification
Spreading investments across different assets to reduce risk
Asset Allocation
How your portfolio is divided among stocks bonds and cash
Risk Tolerance
Your ability and willingness to withstand investment losses
Volatility
The degree of price fluctuation in a stock or market
Liquidity
How easily an asset can be converted to cash without affecting its price
Market Order
An order to buy or sell a stock immediately at the current market price
Limit Order
An order to buy or sell a stock only at a specified price or better
Stop-Loss Order
An order to sell a stock when it reaches a specified lower price
Bid Price
The highest price a buyer is willing to pay for a stock
Ask Price
The lowest price a seller is willing to accept for a stock
Bid-Ask Spread
The difference between the bid price and the ask price
Volume
The number of shares traded in a given period
Average Volume
The typical number of shares traded per day over a set period
52-Week High
The highest price a stock has traded at in the past year
52-Week Low
The lowest price a stock has traded at in the past year
P/E Ratio (Price-to-Earnings)
A stock's price divided by its earnings per share
EPS (Earnings Per Share)
A company's profit divided by the number of outstanding shares
Revenue
The total income a company generates from its business activities
Net Income
A company's profit after all expenses and taxes are deducted
Profit Margin
Net income divided by revenue expressed as a percentage
Earnings Report
A quarterly report detailing a company's financial performance
Quarterly Earnings
Financial results reported every three months by public companies
Annual Report
A yearly report on a company's financial performance and operations
Balance Sheet
A financial statement showing assets liabilities and equity at a point in time
Income Statement
A financial statement showing revenue expenses and profit over a period
Cash Flow Statement
A financial statement showing money coming in and going out
IPO (Initial Public Offering)
When a private company first sells shares to the public
Secondary Market
Where investors buy and sell existing shares from each other
Market Maker
A firm that buys and sells securities to maintain market liquidity
Broker
A person or firm that executes buy and sell orders on behalf of investors
Brokerage Account
An account that allows you to buy and sell investments
Commission
A fee charged by a broker for executing a trade
Robo-Advisor
An automated digital platform that manages investments algorithmically
Dollar-Cost Averaging
Investing a fixed amount regularly regardless of market conditions
Compound Interest
Earning returns on both your original investment and previous gains
Return on Investment (ROI)
The gain or loss on an investment relative to its cost
Yield
The income generated by an investment expressed as a percentage
Total Return
Capital gains plus dividends received on an investment
Benchmark
A standard index used to measure a portfolio's performance
Alpha
The excess return of an investment compared to its benchmark
Beta
A measure of a stock's volatility relative to the overall market
Short Selling
Borrowing and selling shares hoping to buy them back at a lower price
Margin
Borrowing money from a broker to invest in securities
Leverage
Using borrowed money to amplify potential investment returns
Hedge
An investment made to offset potential losses in another investment
Hedge Fund
A private investment fund using advanced strategies to generate returns
Derivative
A financial contract whose value is based on an underlying asset
Options
Contracts giving the right but not obligation to buy or sell a stock at a set price
Call Option
The right to buy a stock at a specified price before a set date
Put Option
The right to sell a stock at a specified price before a set date
Strike Price
The fixed price at which an option can be exercised
Futures Contract
An agreement to buy or sell an asset at a future date and price
Commodity
A raw material or primary agricultural product traded on exchanges
Inflation
A general rise in prices that reduces the purchasing power of money
Interest Rate
The cost of borrowing money set by central banks
Federal Reserve
The central bank of the United States that sets monetary policy
Quantitative Easing
Central bank buying assets to inject money into the economy
Recession
Two consecutive quarters of negative economic growth
Correction
A decline of 10% or more in a stock or index from its recent peak
Crash
A sudden dramatic decline in stock prices across a significant portion of the market
Rally
A period of sustained increases in the prices of stocks
Sector
A group of companies operating in the same industry (e.g. technology healthcare)
Cyclical Stock
A stock whose performance is tied to the economic cycle
Defensive Stock
A stock that remains stable during economic downturns (e.g. utilities)
Penny Stock
A low-priced stock typically trading below $5 per share
Over-the-Counter (OTC)
Trading securities directly between parties outside formal exchanges
Market Sentiment
The overall attitude of investors toward a particular market or asset
Technical Analysis
Analysing stock price charts and patterns to predict future movements
Fundamental Analysis
Evaluating a company's financial health to determine its intrinsic value
Support Level
A price level where a stock tends to find buying interest and stop falling
Resistance Level
A price level where a stock tends to face selling pressure and stop rising
Moving Average
The average stock price over a set number of days to identify trends
RSI (Relative Strength Index)
A momentum indicator measuring speed and change of price movements
MACD
A trend-following indicator showing relationship between two moving averages
Candlestick Chart
A chart showing open high low and close prices for a time period
Portfolio Rebalancing
Adjusting your holdings back to your target asset allocation
Tax-Loss Harvesting
Selling losing investments to offset capital gains taxes
Wash Sale Rule
A rule preventing claiming a loss if you repurchase the same stock within 30 days
Fiduciary
A financial advisor legally required to act in your best interest
SEC (Securities and Exchange Commission)
The US government agency regulating the securities industry
Prospectus
A formal document providing details about an investment offering
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