Stock market glossary, A to Z
24 terms you meet on stock pages and in company reports, each with a plain definition, an example and its source.
B
- Bear market
A bear market is a period when stock prices are falling and investors are pessimistic. The SEC's investor site says it generally means a broad market index falling 20%...
- Beta
Beta is a number that compares a stock's past price moves with those of a benchmark index, which is given a beta of 1. Above 1 means the stock has historically moved...
- Blue-chip stock
A blue-chip stock is an informal label for shares of a large, well-established company. There is no single rule for which stocks qualify, so each fund or website that...
- Brokerage account
A brokerage account is an account at a broker-dealer that you use to buy, sell and hold securities such as stocks. It can be a cash account, where you pay in full, or a...
- Bull market
A bull market is a period when stock prices are rising and investors are optimistic. The SEC's investor site says it generally means a broad market index rising 20% or...
C
- Capital gain
A capital gain is the profit you make when you sell an asset, such as a stock, for more than your adjusted basis, which is generally what you paid including costs like...
- Common stock
Common stock is a type of security that represents an ownership interest, or equity, in a company. Holders typically can vote to elect the board of directors, may...
E
- EBITDA
EBITDA stands for earnings before interest, taxes, depreciation and amortization. It starts from net income and adds those four costs back, so it is always larger than...
F
- Fiscal year
A fiscal year is the 12-month accounting period a company uses for its annual results. It can match the calendar year or end in another month, and some companies use a...
- Free cash flow
Free cash flow is the cash a company's operations brought in during a period after paying for capital expenditures such as buildings and equipment. It is not a GAAP line...
I
- IPO (initial public offering)
An initial public offering, or IPO, generally refers to when a company first sells its shares to the public. The company registers the offering with the SEC, usually on...
M
- Market correction
A market correction is a reversal of at least 10% in the price of stocks, bonds, commodities or an index before the earlier trend resumes. A deeper fall of 20% or more...
N
- Net income
Net income is the profit a company has left for a period after subtracting every cost, interest expense and income tax from its revenue. A negative result is a net loss.
P
- Preferred stock
Preferred stock is a class of ownership in a company with preferential rights over common stockholders, such as being paid dividends first and ranking ahead of common...
R
- Revenue
Revenue is the value of the goods and services a company sold during a period, before any costs are subtracted. It is the first line of the income statement, which is...
S
- Sector
A sector is a broad group of companies that share a main line of business, such as Energy or Health Care. One widely used system, GICS, sorts companies into 11 sectors...
- Share buyback
A share buyback, or stock repurchase, is a purchase of a company's own shares made by or on behalf of the company. Like a dividend, it distributes resources to...
- Short selling
Short selling is selling a stock you do not own, usually shares borrowed for delivery, in the hope of buying it back later at a lower price. If the price rises instead...
- Stock split
A stock split is a decision by a company's board to increase the number of its outstanding shares by issuing new shares to existing shareholders in a set proportion. The...
- Stop order
A stop order, also called a stop-loss order, is an order to buy or sell a stock once its price reaches a level you set, the stop price. At that point it becomes a market...
- Stop-limit order
A stop-limit order combines a stop order and a limit order. When the stock reaches the stop price, it becomes a limit order that only executes at the limit price or...
T
- Ticker symbol
A ticker symbol is the short abbreviation that identifies a publicly traded stock, usually one to five letters. It is a label for trading and quotes, not a description...
- Total return
Total return is the full gain or loss on an investment over a period: the change in its value, up or down, plus all the income it paid, such as dividends or interest.
V
- Volatility
Volatility is how much and how quickly a stock's or an index's price moves up and down. The bigger the swings, the higher the volatility.