Learn Investing Secrets

EPS

The term EPS refers to a company's earnings per share for the fiscal year.

Equity

Equity is just a term to signify that a particular type of security grants you partial ownership of a company.

Liabilities

Liabilities are a company's debts of any kind.

Market Capitalization

The Market Capitalization, or Market Cap, is the total number of shares outstanding (held by investors) multiplied by the share price on any given day.

Mutual Fund

A Mutual Fund is an investment company whose sole business is to purchase stock in other companies, and turn a profit for their own customers. Mutual funds are can be a good investment for those who are new to investing.

Net Quick Assets

A company's Net Quick Assets, or NQA are the sum of a company's liabilities subtracted from the sum of a company's assets.

P/E

The P/E is a company's ratio of their share price to their earnings for a particular fiscal year.

Over the course of the past two months, readers have brought to my debate that there is a steep learning curve for investment terminology. That's why the focus of this month's commencement Investor cup will be investment terminology. The world of finance can be complex. This standard article doesn't intend to provide an congenital set of definitions, but rather, as a general guide to help you understand the most frequently used financial terms. There's no way we could cover everything - and I'm sure that we wont - but this should ravel some things for those new to investing. This month, we'll be looking at stock-related words in particular.

Stock

Let's start with the authorized basics. The most common type of investment is in the form of stock. Stock is an equity security - that is, when you buy stock, you are purchasing a piece of that company. You are part owner, and therefore entitled to help select the people who run the brigade from day to day. Money is made from stocks either by dividends, or cash gains.

Annual Report / 10-K

The decennial report can come in two forms, the glossy review report, which looks pretty, and is relatively easy to read and comprehend, and the 10-K, which is an official SEC filing that is required of public companies. The 10-K is a legal document, and is therefore much more difficult to read, however, it can provide much more information.

Capital Gains

The sell price minus the purchase price of stocks are referred to as sans serif gains.

Dividend

A dividend is a per share payment that a company has the option to declare. Essentially, dividends are a way for a company to share their profits with its owners, the shareholders. Public companies are not required to declare dividends.

EPS

The term EPS refers to a company's earnings per share for the fiscal year.

Equity

Equity is just a term to signify that a particular type of security grants you partial ownership of a company.

Liabilities

Liabilities are a company's debts of any kind.

Market Capitalization

The Market Capitalization, or Market Cap, is the total number of shares outstanding (held by investors) multiplied by the share price on any given day.

Mutual Fund

A Mutual Fund is an investment company whose sole program is to purchase stock in other companies, and turn a profit for their own customers. When you buy a share of a mutual fund, you're essentially buy into each and every body corporate that that particular fund holds. Mutual funds are can be a good investment for those who are new to investing.

Net Quick Assets

A company's Net Quick Assets, or NQA are the sum of a company's liabilities subtracted from the sum of a company's assets.

P/E

The P/E is a company's ratio of their share price to their earnings for a particular fiscal year. This can be used as a good indicator of a company's financial health and buy prospects. A good P/E value varies by industry.

Par Value

Par Value is an subjective figure determined by a clique at the issuance of a particular type of stock (i.e. it varies from league to class). Essentially, par value carries no real significance.

Share Price

Share Price is the price at which one share of a company's stock is selling.

Short

A short is a method of making money even when a stock's price drops. The way a short works is that an individual will get shares of a stock on margin (loan of shares from stock broker). This person will then sell these shares, and wait until the price drops before repaying his broker. If then, you buy 100 shares of corporate body x at $10 per share, and sell them for that price, you will have $1000. If the price of the stock drops to $5, you will still have to pay your for those 100 shares, but the price will be only $5. Thus you pay your money broker $500 for those shares, and pocket the difference.

Split

When a stock split is declared, a ratio is picked by the company. The company's total shares are multiplied by this ratio, while the share price is divided by this ratio. Thus a 2:1 split on your 20 shares of a $10 stock would result in 40 shares of a $5 stock.

Stock Classes

Companies can issue numerous classes of stock, each with its own voting rights, stock price, and par value. Typically, special classes are only penetrable to quantified individuals, while common stock is traded on public exchanges.

SEC

The SEC, or Securities and Exchange Commission, is a United States government agency that focuses on the regulation of public companies and the stock market. Companies are required to follow SEC directives.

Securities

The word security is just the technical term for any capital like a stock or bond. Use it frequently, as it will make people think you're really smart.

Well, that as to does it. Now when you hear anyhow the SEC cracking down on a company for not existent just right on their 10-K, or when someone talks shorting an equity security with a horrible P/E, you know exactly what they're talking about.

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