1. Stock: A stock represents a share in the ownership of a company and constitutes a claim on part of the company's assets and earnings.
2. Stock Exchange: A stock exchange is a regulated marketplace where securities, such as stocks and bonds, are bought and sold by investors.
3. Dividend: A dividend is a payment made by a corporation to its shareholders, usually in the form of cash or additional shares of stock.
4. Initial Public Offering (IPO): An IPO is the first sale of a company's shares to the public, marking its transition from a private company to a publicly traded one.
5. Market Capitalization: Market capitalization, or market cap, represents the total value of all outstanding shares of a company's stock, calculated by multiplying the share price by the number of outstanding shares.
6. Price-to-Earnings ratio (P/E): The P/E ratio is a valuation ratio calculated by dividing the market price of a stock by its earnings per share. It is used by investors to determine the relative value of a company compared to its peers.
7. Bid and Ask: The bid price is the highest price a buyer is willing to pay for a security, while the ask price is the lowest price a seller is willing to accept. The difference between the bid and ask prices is called the bid-ask spread.
8. Trading Volume: Trading volume is the total number of shares of a security that have been bought and sold during a specified period, usually a day.
9. Bear and Bull Market: A bear market refers to a period of declining stock prices, while a bull market is characterized by rising stock prices. These terms are used to describe the overall trend of the stock market.
10. Index: A stock market index is a measurement of the average performance of a group of stocks, representing a sample of the overall market or a specific industry sector.
11. Blue Chip Stocks: Blue chip stocks are shares in large, well-established, and financially stable companies with a history of paying dividends and a reputation for solid growth.
12. Short Selling: Short selling is an investment strategy where an investor borrows shares of a stock and sells them with the intent of buying them back later at a lower price, aiming to profit from a decline in the stock's price.
13. Margin: Buying on margin is the practice of borrowing money from a broker to purchase securities. This allows an investor to purchase more shares than they could with their own cash, amplifying potential gains, but also increasing the potential risk of losses.
Briefly explain 13 vocabularies on stock exchange
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