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Stock Market Terms Study Cards


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What is a stock?

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Answer:

A share of ownership in a corporation that represents a claim on the company's assets and earnings

What is a dividend?

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Answer:

A payment made by a corporation to its shareholders typically as a distribution of profits

What is market capitalization?

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Answer:

The total value of a company's shares calculated by multiplying share price by number of outstanding shares

What is a bull market?

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Answer:

A market condition where stock prices are rising or expected to rise generally indicating investor optimism

What is a bear market?

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Answer:

A market condition where stock prices fall 20% or more from recent highs indicating investor pessimism

What is the bid price?

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Answer:

The highest price a buyer is willing to pay for a stock at a given time

What is the ask price?

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Answer:

The lowest price a seller is willing to accept for a stock at a given time

What is the bid-ask spread?

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Answer:

The difference between the bid price and ask price of a stock

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What is volume in stock trading?

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Answer:

The number of shares traded in a security during a specific time period

What is a P/E ratio?

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Answer:

Price-to-earnings ratio - a valuation measure comparing a company's stock price to its earnings per share

What is an IPO?

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Answer:

Initial Public Offering - when a private company first sells shares to the public

What is a stock split?

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Answer:

When a company divides existing shares into multiple shares reducing the price per share proportionally

What is a dividend yield?

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Answer:

The annual dividend payment divided by the stock's current price expressed as a percentage

What is volatility?

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Answer:

A measure of how much a stock's price fluctuates over time

What is a limit order?

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Answer:

An order to buy or sell a stock at a specific price or better

What is a market order?

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Answer:

An order to buy or sell a stock immediately at the current market price

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What is a stop-loss order?

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Answer:

An order to sell a stock when it reaches a certain price to limit losses

What is short selling?

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Answer:

Borrowing shares to sell them hoping to buy them back later at a lower price

What is a margin account?

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Answer:

A brokerage account that allows investors to borrow money to purchase securities

What is the S&P 500?

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Answer:

A stock market index that measures the performance of 500 large US companies

What is the Dow Jones Industrial Average?

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Answer:

A stock market index that tracks 30 large publicly-owned US companies

What is NASDAQ?

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Answer:

A global electronic marketplace for buying and selling securities and the second-largest stock exchange

What is earnings per share (EPS)?

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Answer:

A company's net profit divided by the number of outstanding shares

What is a mutual fund?

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Answer:

An investment vehicle that pools money from many investors to purchase securities

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What is an ETF?

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Answer:

Exchange-Traded Fund - a security that tracks an index commodity bonds or basket of assets

What is beta?

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Answer:

A measure of a stock's volatility relative to the overall market

What is a 52-week high/low?

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Answer:

The highest and lowest prices at which a stock has traded during the past 52 weeks

What is market maker?

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Answer:

A firm that provides liquidity by being ready to buy or sell securities at publicly quoted prices

What is after-hours trading?

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Answer:

Trading that occurs outside regular market hours typically through electronic networks

What is a ticker symbol?

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Answer:

A unique series of letters assigned to a security for trading purposes

Remember: Use all available resources to study. Flearn alone cannot guarantee success in any exams—make sure to supplement your learning!