A share of a company that gives the purchaser part ownership in the company
What is the Dow?
Dow Jones Industrial Average (DJIA) – the most widely cited indicator of day-to-day stock market activity. The DJIA is a weighted average of 30 widely traded stocks on the New York Stock Exchange.
Some stocks listed on the DJIA
AXP – American Express
BA – Boeing
C – Citigroup
KO – Coca Cola
HD – Home Depot
MCD – McDonalds
PG – Proctor and Gamble
WMT – Wal Mart
DIS – Walt Disney
What is a dividend?
A share of the profits of a corporation distributed to its stockholders
Another way for people to invest in the market, a mutual fund is a collection of stocks that is managed by a fund manager. It is up to the fund manager to do what he or she thinks is best to maximize returns.
Translating Stock Market Talk
After the bell – refers to the time after the bell sounds and the stock market closes for the day
Bull market – a market in which prices are expected to rise
Bear Market – a market in which prices are expected to fall
Deer Market – a flat market where not much is happening
Lemon – a bad investment
Nervous Nelly – an investor who isn’t comfortable with investing, mainly because of the risks
An IOU, or a promise to pay, issued by companies, corporations and the government for the purpose of borrowing money
It provides another outlet for people to invest their money
Things you should know about Bonds
Face Value (Par Value) – dollar amount specified on the bond. The total amount the issuer of the bond will repay to the buyer of the bond.
Coupon Rate – the percentage of the face value that the bondholder receives each year until the bond matures
Maturity Date – the day when the issuer of the bond must repay the face value to the buyer of the bond
Example of how a bond works
Example: Jimmy buys a savings bond with a face value of $10,000 that matures in five years and has a coupon rate of 10%. Each year, Jimmy will receive $1,000 from the issuer of the bond until the bond matures. When the bond matures, he will receive $10,000. Therefore, Jimmy receives $5,000 for his five year $10,000 investment