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Investing Dictionary

30 essential stock market and investing terms explained clearly.

Stock

A share of ownership in a corporation.

ETF

A pooled investment fund whose shares generally trade on an exchange.

Bond

A debt security representing lending to an issuer.

Dividend

A distribution a company may make to shareholders.

Market capitalization

Share price multiplied by outstanding shares, with share-class nuances.

P/E ratio

Share price divided by earnings per share over a specified period.

Diversification

Spreading exposures across different assets, industries or investments.

Index fund

A fund designed to track a specified index.

Expense ratio

Annual operating expenses expressed as a portion of fund assets.

Market order

An order seeking prompt execution without guaranteeing price.

Limit order

An order setting a price boundary but not guaranteeing execution.

Bid-ask spread

The difference between offered buying and selling quotes.

Volume

The quantity traded over a period.

Volatility

The degree of variation in returns or prices.

Candlestick

Chart symbol summarizing opening, high, low and closing prices.

10-K

An annual report many public companies file with the SEC.

10-Q

A quarterly report many public companies file with the SEC.

Liquidity

How easily an asset can be traded without a substantial price impact.

Inflation

A general rise in prices that reduces purchasing power.

Rebalancing

Adjusting a portfolio toward a target mix.

Risk tolerance

An investor's comfort with uncertain investment outcomes.

Risk capacity

An investor's financial ability to absorb a loss.

Dollar-cost averaging

Investing fixed amounts at regular intervals.

Cash flow

Cash entering and leaving a business.

Leverage

Increasing exposure using borrowed funds or derivatives, increasing potential losses.

Stop order

An order activated at a trigger price, without a guaranteed execution price.

Slippage

Difference between expected and executed transaction prices.

Valuation

Estimating the economic worth of an asset or business.

Bull market

A prolonged period of rising market prices; definitions differ.

Bear market

A prolonged period of falling market prices; definitions differ.

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