Stock Market Terms
Standard 3.2 Apply the concepts of buying and selling stock
Objectives:

TSW define the basic terminology for buying and selling stock by using them
in written form.

TSW display their understanding of buying and selling stock through the
simulation game How the Market Works buy spending at least three fourths of
their $100,000 portfolio.
Two Types of Stock

Common Stock

Preferred Stock
Common Stock

Shares or units of ownership in a public corporation


Basic form of ownership
5 ways common stock values can be changed

The dollar value increases or decreases

Stock split occurs– shares owned by existing stockholders are split into larger
numbers of shares

A merger between two companies

Dividends are paid
Preferred Stock

Shares that pay fixed dividends and have priority over common stock

Dividends are stated as a percentage known as par value


A fixed value on the stock certificate
Less risky than common stock
Reading Stock Quotes
YTD is the Year to Date percent change of the stock price
from January 1st of the current year.
Example: If the stock was $43.00 on January 1st and $36.00
on July 30th, the percent change would be -16.3%
52 Week High Low
52-Week High & Low shows the highest and lowest prices the stock was sold per
share during the last 52 weeks
Stock Ticker
Every stock’s company is abbreviated with a Ticker symbol this is provided.
Dividends Per Share

Dividends per share is the total cash paid to common stockholders per share
annually

Helpful when determining the type of stock

If a company paid $10,000 in dividends for 30,000 shares, the dividends per share
would be $0.33
Price/Earnings Ratio

Price/earnings ratio is the closing price of the
share compared to the annual earnings per share

If the stock’s market price is $50.00 and the earnings per
share is $2.25, the P/E ratio is 22.2
 For
every dollar the company earns, the stock’s market
price is worth $22.00

A high number indicates people are optimistic about the
company and health of the market.