Mrs. Kimball's 6th Grade Science

 Vocabulary 

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Auction market: Auction market trading (sometimes known as open outcry) is the way the major exchanges, such as the New York Stock Exchange (NYSE) and the Chicago Mercantile Exchange (CME), have traditionally handled buying and selling.

Brokers: Acting for buyers compete against each other on the exchange floor, as brokers acting for sellers do, to get the best price. While the trading can be quite intense, it is orderly because the participants adhere to exchange rules

Bid Price: Bid is the price a market maker or broker offers to pay for a security.

Blue Chip Stock: Blue chip stock is the common stock of a large, well-regarded US company. The companies in that informal category are collectively known as blue chip companies. Blue chips have a long-established record of earning profits and paying dividends regardless of the economic climate.

Initial public offering (IPO): When a company reaches a certain stage in its growth, it may decide to issue stock, or go public, with an initial public offering (IPO). The goal may be to raise capital, to provide liquidity for the existing shareholders, or a number of other reasons. Any company planning an IPO must register its offering with the Securities and Exchange Commission (SEC). In most cases, the company works with an investment bank, which underwrites the offering. That means marketing the shares being offered to the public at a set price with the expectation of making a profit.

Large Cap: The stock of companies with market capitalizations typically of $10 billion or more is known as large-cap stock . Large-cap stock is generally considered less volatile than stock in smaller companies, in part because the bigger companies may have larger reserves to carry them through economic downturns. However, market capitalization is always in flux. Today’s large-cap stock can drop out of that category if the share price plunges either in a general market downturn or as a result of internal problems.

Listing Requirement: Listing requirements are the standards a corporation must meet to have its stock or bonds traded on a particular exchange. Exchanges set their own initial and continuing listing requirements. Among the listing criteria are a corporation’s pretax earnings, a minimum market value, and a minimum number of existing shares.

Market Capitalization: This is the market value of a company’s stock.

Mid cap Stock: A mid-cap stock is one issued by a corporation whose market capitalization falls in a range between $2 billion and $10 billion, making it larger than a small-cap stock but smaller than a large-cap stock. Investors tend to buy mid-cap stocks for their growth potential. Their prices are typically lower than those of large-caps. At the same time, these companies tend to be less volatile than small-caps, in part because they have more resources with which to weather an economic downturn.

Small Cap Stock: Shares of relatively small publicly traded corporations with a total market capitalization of less than $2.3 billion are typically considered small-capitalization, or small-cap, stocks. That number is not used uniformly, however, and you may find small-cap defined as below $1.5 billion. Small-cap stocks tend to be issued by young, potentially fast-growing companies. Over the long term — though not in every period — small-cap stocks as a group have produced stronger returns than any other investment category.

Stock: Stock is an equity investment that represents part ownership in a corporation and entitles you to part of that corporation’s earnings and assets. Common stock gives shareholders voting rights but no guarantee of dividend payments. Preferred stock provides no voting rights but usually guarantees a dividend payment.

Stock Exchange: Where brokers gather to buy and sell stocks and other securities. The term is also used more broadly to include electronic trading that takes place over computer and telephone lines. In fact, in many markets around the world, all stock trading is handled electronically. Shareholder: If you own stock in a corporation, you are a shareholder of that corporation.