Basic Terminology


What is the Stock Market?

The stock market is simply a place where stocks from a variety of companies are bought and sold.

What is a Stock?

When you hear the term “Stock” it simply means a share or part of a company. For instance, let’s say hypothetically the company Nike has a total of 100 shares of stock available for purchase. If you buy 1 share of Nike stock you actually become part owner of the company. You would own 1% of the company since you purchased 1 share of the total 100 shares available. When you own shares of a company you become a “shareholder”.

Companies offer shares of stock to the public because they are looking for investors in order to raise capital for their business.

What is a Stock Exchange?

A stock exchange is simply an establishment that allows brokers and traders to purchase or sell the stock of companies. You’ve probably heard of the NYSE (New York Stock Exchange). NYSE is simply an institution that provides brokerage firms with the ability to complete these transactions.



What is an IPO?

IPO stands for Initial Public Offering. It’s simply the first sale of stock issued by the company to the public. This allows for the company to gain capital for business expenditures. A company is considered a private corporation prior to the IPO.

What are dividends?

Dividends are payouts that some companies make to shareholders based on the company earnings. Companies that offer dividends tend to make payouts quarterly.