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A list of basic stock and investing terms to get you started. #economics, #stocks, #investing




Beginner Investor? Here’s some terminology to help guide you.



—1—

Common stock: A type of security that represents ownership in a corporation. Common stockholders may receive a share of the company's profits (dividends) and are entitled to voting rights.

Preferred stock: A type of security that ranks ahead of common stock in terms of dividends and claims on assets in the event of liquidation. Preferred stockholders do not have voting rights.

Dividend: A portion of a company's profits that is paid to its shareholders. Dividends can be paid in cash, stock, or other assets.

Capital gain: The profit made from the sale of an asset, such as a stock, bond, or real estate.

Capital loss: The loss made from the sale of an asset.



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Liquidity: The ability to easily convert an asset into cash without losing value.

Risk: The possibility of losing money on an investment.

Return: The profit or loss made on an investment.

Diversification: The practice of investing in a variety of assets to reduce risk.

Portfolio: A collection of investments.

Brokerage account: An account that is used to buy and sell stocks, bonds, and other investments.

Investment advisor: A professional who provides advice on investments.



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Beta: A measure of a stock's volatility relative to the market.

PE ratio: The price of a stock divided by its earnings per share.

Yield: The income generated by an investment, such as a dividend or interest.

Short selling: The practice of selling borrowed shares of stock in the hope that the price will fall and the shares can be bought back at a lower price.

Margin trading: The practice of borrowing money from a broker to buy stocks.

Options: A contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price on or before a specified date.

Futures: A contract that obligates the buyer to buy an asset at a specified price on or before a specified date.

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