Stock Exchange Basics - Glossary

This glossary was set up to help you understand the terms and their definitions for Stock Exchange.

After Hours Trading - Trading after regular trading hours on the major exchanges.

Bull Market - A market in which prices of a certain group of securities are falling or are expected to rise.

Bear Market - A market in which prices of a certain group of securities are falling or are expected to fall. Although figures can vary, a downturn of 15%-20% or more in multiple stocks is considered a bear market.

IPO (Initial Public Offering) - The first sale of stock by a private company to the public. IPOs are often smaller, younger companies seeking capital to expand their business.

Common Stock - Shares of stock offered to the public. All investor shares of stock are common stock. Preferred stock is owned by the virtual airline corporation and is always 50% of the outstanding shares of common stock.

Net worth - The total amount of assets including cash and investments for any corporation or investor on the Stock Exchange. For corporations, the preferred stock is added into the net worth. Outstanding Shares - The number of shares that are currently owned by investors for each corporation. Shares held by the public. Shares that the company has repurchased are not considered outstanding stock.

Penny Stock - A stock that typically sells for less than $1 a share, although it may rise to as much as $10/share as a result of heavy promotion.

Preferred stock - Shares of stock owned by the corporation. Every time a share of stock is purchased by an investor, the corporation gets one share of preferred stock. This prevents any investor from performing a hostile takeover of the corporation and from owning anymore than 50% of the corporation. Preferred stock adds to the net worth of a corporation.

Risk - The chance that an investment's actual return will be different than expected. This includes the possibility of losing some or all of the original investment. Usually measured using historical returns or average returns.

Share - A unit of ownership in a corporation and the central core of stock trading. The more shares you own in a corporation, the more ownership you have in that corporation.

Share Price - The price of each unit of ownership in the corporation. Stockholder - Any investor who owns a share of stock in the corporation.

Stock Split - The division of a Corporation's existing stock into more shares. In a 2-for-1 split, each stockholder would receive an additional share for each share formerly held. In a 3-for-1 split, each investor would own two more shares of stock for every stock, but share price would split down by 1/3.

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