Finance Terminology For Beginners

Finance Terminology For Beginners

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The history of the Stock Market in the United States is practically as old as the country. In the late 1700s, the Colonial Army helped finance the war by selling bolds sold bonds. Private banks began issuing stock in companies to the general population in order to contribute money to the war effort. In addition to fighting for our independence, this laid the groundwork for the Stock Market as we know it today

Shortly after the Revolutionary War, major business owners and merchants gathered to form the New York Stock Exchange (NYSE). Every day, people would gather at Wall Street in New York to trade stocks and bonds, as well as bulk goods. Because of this (and well into the 1800s) the United States saw a period of economic growth, while businesses, banks, and investors alike saw the value of trading stocks and bonds in order to maintain a flourishing economy and to expand our nation’s wealth.

We have gathered a list of term used in relation to the stock market, in order to understand the jargon used when discussing everyday economics:

After-hours Deal: The stock market usually closes at 4:00pm (Eastern Time). After this scheduled time, deals can also be made but the transaction is dated the next day, known as an after-hours deal.

Annual Report: An annual report is an audit report to show what shareholders produced yearly.

Balance Sheet: A balance sheet is a financial statement which shows the liabilities and assets of a company.

Bargain: Regarding sale or purchase in the stock market, bargain is a common word.

Bearer Stocks: A bearer stock is a stock that is unregistered with the owner’s name.

Bed and Breakfast Deal: This refers to the sale of share and repurchase on another day. It’s done to set up profit or loss for the purpose of tax.

Bid Price: The sale price listed for stocks or shares.

Blue Button: Refers to the stockbroker’s clerk. Only a blue button is allowed on the trading floor.

Blue Chip: These are shares of big and reputed companies. The term has its origins in poker, where blue poker chips denoted the highest value playing pieces.

Book Value: What the net worth of the business is, as listed on the balance sheet.

Bull: A person who considers the share price of the stock exchange to be on the rise.

Capital: The amount of money needed and used for starting and running a business.

Cash Settlement: There are certain deals which are rendered for cash and not for account settlement. They are settled the next day of the deal.

Contract Note: A printed confirmation letter from any broker indicating a deal has been negotiated.

Coupon: Refers to interest amount payable only for fixed interest stock.

Dawn Raid: Buying of a large amount of shares at the opening of stock market each morning.

Dealing: The purchasing and selling of sale of shares.

Debenture: The stock that a company issues which are backed by assets.

Depreciation: The amount of capital set aside for replacement of the assets.

Dividend: A dividend is a part of a business’s profits which is usually distributed to the shareholders on regular basis.

Equities: Ordinary shares or ownership of a business.

Ex-dividend: The share which is bought without any right for receiving the next dividend. This is usually retained by sellers.

Final Dividend: This is the dividend which is declared according to the company’s annual results.

Futures: Contracts that allow any holder the legal right to buy or sell Indexes and Commodities in the future at a price set today.

Gross: The interest paid without deducting of tax.

Hedge: This means to insure the risk.

Initial Public Offering: The issue of new shares by a previously private company as it becomes a public company.

Liquidation: Liquidating is converting the prevailing assets of a business into cash.

Loan Stock: The stock that bears a fixed interest rate. It’s different from debenture stock because it’s not required to be secured by any asset.

Nominee: The term refers to a person acting on the behalf of another in the stock market in documentary as well as financial affairs.

Offer Price: Refers to the specific price at which one can buy stocks and shares.

Options: The term means the right to purchase (call option) and sell (put option) a particular share at a particular price within a particular period.

Ordinary Share: An ordinary share is where the dividends vary in amount.

Over the Counter Market (OTC): Refers to a marketplace outside the main stock market.

PLC: This means Public Limited Company (formerly Ltd). In the stock market, some public limited companies are not always quoted.

Portfolio: A portfolio is a selection of shares held by a person or fund.

Proxy: A proxy is a person who votes on another person’s behalf if they are unable to attend a shareholder meeting.

Stock: Stock is a basic ownership unit of a company. Stocks are also referred to as a share or equity in a company.

Stock Warrants: Stock warrants are used to convey the right to buy additional stock within a fixed time period at a set price.

Yearlings: Yearlings are Bonds that are issued for a 12 month term.

Yield: A yield is the gross dividend shown as a percentage of the share price.

By utilizing this list, you should be able to get a good understanding of what speculators and news articles are trying say when they discuss the stock market. If you’re feeling adventurous, you may even take your new-found knowledge and apply it watching market trends and making investments of your own.