Vocabulary

1. Dow Jones - a compilation of 30 major companies that indicates how the stock market is doing
                         Today I looked at the Dow Jones and saw it was doing badly, but tomorrow it could go up.
2. Bonds - A debt investment in which an investor loans money to an entity who borrows the funds for a defined period of time with interest.
                 China bought bonds from the US which our government will eventually have to pay back.
3. Equity - the market value minus the intrest
                 I decided to invest in equity rather than bonds.
4. Dividend - money paid to a number of people (usually shareholders) by a company
                 I was extremely happy when Apple paid me this month's dividends.

5. Small Cap - stocks with small market capitalization $300 million to $2 Billion
                Today I invested in a small cap company because I believe it will grow someday into a large cap company and will pay me some sweet dividends.


6. Mid Cap - Stocks with a market capitalization between $2 and $10 billion
               I invested in a mid cap company because I didn't want to invest in a huge company nor did I   want to invest a small company.


7. Large Cap - stocks with a market capitalization higher than $ 10 billion
               Wal-mart is definitely a large cap company because it has a market cap of $185 billion.


8. Dow Number - the 30 companies are added together then divided by a Dow divisor which is subject to change
               The DOW calculation is not as simple as adding the companies value and then dividing by thirty. You must use the Dow divisor which may change from day to day.

9. EARNINGS – the amount of profit a company makes in a given time period, usually a quarter or a year

Macy’s earnings were better than expected this quarter, so their stock prices sky-rocketed.

10. PRIVATE COMPANIES VS. PUBLIC COMPANIES – private companies have shares that are held only by a select group of people while public companies allow the general public to buy their stock.

Today I tried to buy shares of Mars Inc. the candy company; however they are a privately held company, so instead I decided to put my stock in Costco, a publicly owned company.

11. GROWTH STOCK – a company’s shares that are expected to grow at an above average rate compared to the market

The S&P 500 is expected to grow 2.5% this quarter while Apple’s stock is expected to grow 2.9%, making Apple’s shares a growth stock.

12. Risk - a standard deviation of the return on a total investment
      I am expecting to get a good return on the money I invested in Exxon, but there is always risk associated with an investment.

13. S and P 500 (standard and poor's) - an index of 500 large cap stocks that are selected by a group of analysts to indicate how the market its doing.
      Today the S and P 500 went up 100 points, indicating that the overall market is doing pretty well.
14. Russell 2000 - the bottom 2000 companies in the Russell 3000 index. It is a benchmark for small cap stocks in the  US. 
      Today I thought about investing in a small cap company, but after looking at the Russell 2000 I decided not to because my potential stock was underpreforming compared to the Russell 2000.
15. Treasury Bond - a bond issued by the US treasury that has fixed interest and a maturity of 10+ years
       My grandmother bought some treasury bonds because she believes the stock market is too risky and she has faith her money will be returned by the government.
 

1.      WHAT IS THE RUSSELL 2000?

2.      TREASURY BOND

3.      INFLATION - In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time

4.      GROSS DOMESTIC PRODUCT - totl value of goods and services produced by a country in one year

5.      CURRENCY - system of money used in a country

6.      INFRASTRUCTURE - buildings roads etc

7.      ECONOMY - wealth/resources of a country in terms of goods and services

8.      ECONOMIC SYSTEM - system of distribution production and consumption

9.      SUPPLY AND DEMAND

10.  INTEREST

11.  ASSETS

12.  ACCOUNTS PAYABLE

13.  ACCOUNTS RECEIVABLE

14.  AMORTIZE - to reduce a debt by putting money aside

15.  ECONOMIC INDEX -

16.  DEPRECIATION

17.  GROSS MARGIN -

18.  EARNINGS PER SHARE - earnings returned on initial investment

19.  LIABILITIES

20.  OVERHEAD EXPENSE - ongoing expense of an operation

21.  OWNERS EQUITY - total assets minus liabilities

22.  PRODUCTION COST

23.  WORKING CAPITAL

24.  LOAN

25.  LOSS LEADER - merchandise sold at a loss to draw a market

26.  SCARCITY -

27.  OPPORTUNITY COSTS - loss of potential gain when one alternative is chosen over another

28.  EXPLICIT COSTS - easily accounted cost

29.  IMPLICIT COSTS - no direct payment but loss of some sort

30.  PRICE

31.  RELATIVE PRICE

32.  INCENTIVES

33.  PROFIT

34.  LOSS

35.  EQUILIBRIUM

36.  SURPLUS

37.  SHORTAGE

38.  MINIMUM WAGE

39.  PRICE FLOOR - floor that prices aren't allowed to drop below

40.  BEAR MARKET - prices are falling selling is encouraged

41.  BULL MARKET - prices are rising encouraging buying

42.  BOOM -

43.  BILL OF EXCHANGE - promissory note

44.  BUDGET DEFICIT - excess of expense over revenue

45.  CAPITAL

46.  SHORT SELL -

47.  SHORT COVER - after short sellbuy back