Investment Stocks

Background Vocabulary What is a stock? A stock is a share in the ownership of a corporation, a large business organization. A stock, also, represents a claim on the business’s profits. Stock is sold as shares in a business.

Background Vocabulary What is a shareholder? One who owns shares of stock in a corporation or mutual fund. For corporations, along with the ownership comes a right to declared dividends and the right to vote on certain company matters, including the board of directors.

Background Vocabulary What is a stock market? A stock market is a general term for the organized trading of stocks. Stocks are sold through exchanges. The most famous exchange is the New York Stock Exchange.

Background Vocabulary What is a stockbroker? A stockbroker is a person who sells or buys shares of stock for investors.

Background Vocabulary What is a stock certificate? A document reflecting legal ownership of a specific number of stock shares in a corporation.

Background Vocabulary What is a stock dividend? A share of the profits of a company paid as additional shares of stock rather than as cash.

Background Vocabulary What is a cash dividend? A share of the profits paid in the form of cash, usually by check. Dividends are usually paid out four times a year.

Background Vocabulary What is a mutual fund? A mutual fund is a collection of stocks picked by stock managers. The mutual fund can be stocks of one type (like technology) or a blend of different types of companies.

Background Vocabulary What is a stock split? When a stock price is too high, a company may declare a split in the stock. The shareholder receives more stock and the price of the stock is reduced by a certain ratio (2:1 or 4:1).

Stock Exchanges The New York Stock Exchange (NYSE) is the world’s largest and most powerful exchange, handling stock and bond transactions for the top companies in the U.S. and around the world. The Nasdaq is the second largest exchange market and the largest electronic market. Most tech/electronic companies trade on Nasdaq (Apple, Google, Netflix, etc.)

Measuring Stock Performance The Dow Jones Industrial Average (DJIA) measures stock performance. It is an index that shows how 30 large publicly owned companies based in the United States have traded during a standard trading session in the stock market. Companies include Apple, Coca-Cola, General Electric, McDonald’s, Verizon, Wal-Mart, Disney and others (aka, blue- chip stocks).