Let’s consolidate your understanding of key stock market vocabulary. Whether you’re a beginner trader or an aspiring investor, having a solid grasp of these terms is essential. Here are some fundamental stock market terms explained:
- Arbitrage: Buying an asset in one market and selling it in another where the price is higher, resulting in profit.
- Ask: The selling price that a trader offers for their shares.
- Asset Allocation: Balancing investments (stocks, bonds, real estate, etc.) across different assets in a portfolio.
- Bear Market: A prolonged period of declining stock prices (opposite of a bull market).
- Beta: A measure of a stock’s volatility relative to the overall market.
- Bid: The highest price a buyer is willing to pay for a stock.
- Blockchain: A decentralized digital ledger technology used for cryptocurrencies and other applications.
- Blue-Chip Stocks: Shares of well-established, financially stable companies.
- Bull Market: A period of rising stock prices.
- Diversification: Spreading investments across different assets to reduce risk.
- Dividend: A portion of a company’s profits distributed to shareholders.
- Earnings per Share (EPS): Company’s profit divided by the number of outstanding shares.
- Initial Public Offering (IPO): When a private company goes public by offering shares to the public.
- Limit Order: An order to buy or sell a stock at a specific price.
- Market Volatility: Fluctuations in stock prices.
- Mutual Funds: Pooled investments managed by professionals.
- NASDAQ: A major stock exchange known for technology and growth stocks.
- P/E Ratio: Price-to-earnings ratio, comparing stock price to earnings per share.
- Stock Split: Dividing existing shares into multiple shares.
- Value Stocks: Undervalued stocks with growth potential.
