Corporations and Stock Common and Preferred Types of Stock The Market Buying, Selling, and Trading

100

What is an IPO?
What the offering is called when a company first offers stock. This offering is issued in the primary market prior to being offered to the general public in the secondary market by brokers.

100

What is a stock split?
A process in which the shares of stock owned by existing shareholders are divided into a larger number of shares, but typically at half the price if 2:1.

100

What is a blue chip stock?
Considered a safe investment, this type of stock attracts the conservative investor who are interested in companies that represent industry leadership, a history of stable earnings, and consistency in the payment of dividends. They are large and legendary companies.

100

What is are bull market and bear markets?
Two terms given to the market when investors are optimistic and pessimistic, respectively, about the economy.

100

What are Securities?
Investments, such as stocks, bonds, mutual funds, options, and commodities are given this generic term.

200

What is a private corporation.
A closely held corporation, one who's shares are owned by a relatively small group of people and not traded openly on any of the market exchanges.

200

What is a par value of stock?
The dollar value printed on a stock certificate. For Preferred stock - your dividend may be a specific $ amount assigned by the board, or a percentage of this value.

200

What is Cyclical Stock.
This type of stock's value typically follows the up's and down's of the economy and is also impacted in high inflationary periods.. You may want to add Defensive stock to your portfolio to offset this type of stock's behavior.

200

What is Current Yield?
Annual dividend / a stock's current market value gives you this stock evaluation metric.

200

What is a Primary Market.
This type of market is where banks and other investment institutions purchase securities from corporations for the first time. Initial Public Offerings (IPO), the "first time" offering of stock, are largely sold here here and purchased by financial institutions for resale in the secondary exchanges.

300

What is a public corporation?
This type of corporation sells shares of stock openly on the stock market where anyone can buy them.

300

What is Convertible Stock?
A form of or feature of preferred stock that can be exchanged for a specified number of shares of common stock.

300

What is Penny Stock?
This type of stock is cheap, $5 or less according to the US Treasury, but in many cases they are risky given there is little data to investigate the companies that issue them.

300

What is Total Return.
Current Return + Capital Gain equals this stock measurement.

300

What is an odd lot.
Selling or buying stock in batches of fewer than 100 shares.

400

What is a proxy?
A document that transfers a stock holder's voting rights to someone else.

400

What is Cumulative Preferred Stock?
For the Preferred Stock holder, this is a feature of stock whose unpaid dividends build up and must be paid before any cash dividend is paid to the common stock holder.

400

What is Market Capitalization?
The total dollar value of stocks and bonds issued by a corporation and owned by shareholders, world-wide.

400

What is Earnings Per Share.
A widely used measurement of a corporation's performance is this and measures the amount of corporate profits that can be assigned to each share of common stock. It is calculated as: Net Earnings / Common Stock Outstanding

400

What is a Secondary Market.
This is the market exchange for buying and selling existing securities that are currently traded among investors...you and I. Such securities are sold time and again on security exchanges (NYSE and AMEX) or Over-The-Counter (OTC) like the NASDAQ.

500

What is a preemptive right.
The right to buy any new stock a corporation issues before the stock is offered to the general public. In the military, this may be similar the a "preemptive strike".

500

What is a Participation Feature.
This is a rare feature which allows preferred stock holders to share in the remaining earnings of a corporation's earnings with common stock holders after dividends are paid.

500

What is a large cap stock.
Stocks listed in the Dow Jones Average are typically this type of stock. Their market capitalization is greater than $500M.

500

What is Price /Earnings Ratio
This measurement is often used by investors when deciding to invest in a certain stock. If the value for this measurement is low, it could mean that the stock is a good investment as the company's earnings may be high compared to the price of its stock. It is calculated by: Market Price Per Share / Earnings Per Share

500

What is a round lot.
Selling or buying stock in batches consisting of 100 or multiples of 100 shares is given this term.

Chapter 9 Vocabulary: Stocks

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