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Stock Market Basics

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What is a mutual fund?

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A mutual fund is an investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, and money market instruments.

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What does PE ratio mean?

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PE ratio stands for price-to-earnings ratio, a measure of the current share price relative to its per-share earnings.

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What is a limit order?

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A limit order is an order to buy or sell a stock at a specific price or better.

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What is market capitalization?

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Market capitalization is the total market value of a company's outstanding shares, calculated by multiplying the current stock price by the total number of outstanding shares.

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What are blue-chip stocks?

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Blue-chip stocks are shares of large, well-established, and financially sound companies with a history of reliable performance.

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What does it mean to 'short sell' a stock?

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To 'short sell' a stock means to sell it with the expectation that you will be able to buy it back at a lower price in the future.

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What is a bull market?

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A bull market is a market condition where securities are rising or are expected to rise.

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What is volume in stock trading?

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Volume in stock trading refers to the number of shares traded during a given period of time.

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What does it mean to 'go long' on a stock?

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To 'go long' on a stock means to buy it with the expectation that it will increase in value.

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What is a dividend?

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A dividend is a portion of a company's earnings that is paid to shareholders, typically on a quarterly basis.

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What is a stock?

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A stock is a share of ownership in a company, representing a claim on part of the company's assets and earnings.

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What is a ticker symbol?

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A ticker symbol is a unique series of letters assigned to a security for trading purposes.

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What is a bear market?

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A bear market is a condition in which securities prices fall and widespread pessimism causes a downward spiral to persist.

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What is the stock market?

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The stock market is a collection of markets where stocks (pieces of ownership in businesses) are traded between investors.

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What is diversification?

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Diversification is the practice of spreading your investments around so that your exposure to any one type of asset is limited.

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What does IPO stand for?

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IPO stands for Initial Public Offering, which is when a company first sells its shares to the public.

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What is a brokerage account?

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A brokerage account is an arrangement that allows an investor to deposit funds and place investment orders with a licensed brokerage firm.

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What is a portfolio?

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A portfolio is a collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs.

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What is an ETF?

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An ETF, or Exchange Traded Fund, is a type of investment fund and exchange-traded product, i.e., they are traded on stock exchanges.

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What is a market order?

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A market order is an order to buy or sell a stock at the best available current price.

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