Key Stock Market Terms and Definitions
Bid: The price a buyer is willing to offer for shares in a company.
Blue Chip Stocks: Stocks of leading companies with a reputation for stable growth and earnings. *Generally considered among the best stocks.*
Bond: Certificate issued by companies and governments to their lenders.
Capital: Money and other property of companies used in transacting the business.
Capital Stock: All shares representing ownership of a company.
Commodities: Products such as agricultural products and natural resources (wood, oil, and metals) that are traded on a separate, authorized commodities exchange.
Dividend: A portion of a company’s earnings which is paid to the shareholders/stockholders on a quarterly or annual basis.
Equity: The value of stocks and shares; the net value of mortgaged property.
Equities: Stocks and shares which represent a portion of the capital of a company.
Futures: Contracts to buy or sell securities at a future date.
Insider: A person who has access to inside information concerning the company.
Insider Dealing / Trading: Buying or selling with the help of information known only to those connected with the business.
IPO: Initial Public Offering – selling part of a company on the stock market.
Issue: Put into circulation a number of a company’s shares for sale.
Liabilities: The debts and obligations of a company or an individual.
Mortgage: Agreement by which a bank or building society lends money for the purchase of property, such as a house or apartment. The property is the security for the loan.
Mutual Fund: Savings fund that uses cash from a pool of savers to buy securities such as stock, bonds, or real estate.
Option: The right to buy and sell certain securities at a specified price and period of time.
Par Value: Nominal face value.
Penny Stock: Shares selling at less than $1 a share.
Portfolio: Various types of securities held by an individual or institution.
Securities: Transferable certificates showing ownership of stocks, bonds, shares, options, etc.
Share: The capital of a company is divided into shares which entitle the owner, or shareholder, to a proportion of the profits.
Share Certificate: Certificate representing the number of shares owned by an investor.
Shareholder: Owner of shares.
Speculator: Someone who buys and sells stocks and shares in the hope of making a profit through changes in their value.
Stock: Shares (portion of the capital of a business company) held by an investor.
Stockbroker: A licensed professional who buys and sells stocks and shares for clients in exchange for a fee called a ‘commission’.
Stockholder: Person who owns stocks and shares.
Trader: Investor who holds stocks and securities for a short time (minutes, hours, or days) with the objective of making profit from short-term gains in the market. Investment is generally based on stock price rather than on an evaluation of the company.
Trading Session: Period during which the Stock Exchange is open for trading.
Venture Capital: Money raised by companies to finance new ventures in exchange for percentage ownership.
Yield: Return on investment shown as a percentage.