subject: Virtual Stock Market - Basic Stock Market Terminology [print this page] When learning about the stock market you will come across a lot of new vocabulary. You might feel like you are leaning an entire new language. In a sense you are learning the language of the financial world. In this article you will learn what some of these vocabulary terms means. Hopefully, by the end of the article you will sound like a stock market expert among your group of friends.
The first thing you should be able to define is the stock market. The stock market is simply a place where both stocks and bonds are traded. The stock market in the United States is open Monday through Friday from 9:30 a.m. and closes at 4 p.m. sharp. The stock exchange in the United States is located in New York City. The stock market is closed for most major holidays which include Christmas (observed on December 26), Thanksgiving, New Year's Day, President's Day, Martin Luther King Day, Good Friday, Memorial Day, Labor Day, and Independence Day.
Now you may want to know what the difference is between a stock and a bond. A stock is a share in a company. When you buy a stock in a company you are actually buying ownership into that company. If the company makes any net profit you may be entitled to a portion of it. A company has blue chip stocks if the company has a history of high earnings. On the other hand a bond is considered a loan you make to the company. You could then cash the bond in on its maturity date and make a profit. As far is risk is concerned bonds are typically a safer investment, but you do not make the same kind of profit you could with a stock
Companies have assets and you should pay attention to them. The assets of a company are not only what a company owns but they are also what a company may be owed at any given time. This information can be found on their balance sheet.
The market trend describes how the stock market is acting at any given time. A bear market is described when the prices of stocks are on a decline. A bull market is described when the prices of stocks are on an incline.
Dividends are a portion of the earnings of the company that are paid out to you as a stock holder. The dividends can be either paid out in the form of a stock or cash. They are usually paid out quarterly in most scenarios.
The earning per share is the amount of company profit allocated to each share. The earnings per share are a good indication of how profitable a company may really be.
The ask is the lowest amount of money that you can pay for a stock. The bid is the highest amount of money you would be willing to pay for a stock. The difference between the ask and the bid is the spread.
The person who would takes care of your transactions for you would be your stock broker. The stock broker does this for a fee.
