Stock Market Investing Glossary

The process of dividing investments among different asset categories such as stocks, bonds, and cash.

A market condition in which prices decline 20% or more from recent highs, typically accompanied by widespread pessimism.

A measure of a stock's volatility relative to the overall market. A beta greater than 1 indicates higher volatility than the market.

Shares of large, well-established, financially stable companies with a track record of reliable performance.

A fixed-income debt instrument in which an investor lends money to an entity that borrows for a defined period at a fixed interest rate.

A market condition in which prices rise 20% or more from recent lows, typically accompanied by optimism and investor confidence.

The profit realized from selling a security at a price higher than its purchase price.

Interest calculated on the initial principal and on the accumulated interest from previous periods.

A distribution of a portion of a company's earnings to its shareholders, usually paid quarterly.

An investment strategy of regularly investing a fixed dollar amount regardless of share price.

A company's net profit divided by the number of outstanding common shares.

A marketable security that tracks an index, commodity, or basket of assets and trades on a stock exchange like a regular stock.

The annual fee charged by investment funds, expressed as a percentage of average assets under management.

A method of evaluating securities by analyzing financial data, industry conditions, and economic factors to determine intrinsic value.

A type of mutual fund or ETF designed to replicate the performance of a specific market index.

The first sale of stock by a private company to the public, marking its transition to a publicly traded company.

The ease with which a security can be bought or sold in the market without significantly affecting its price.

The total market value of a company's outstanding shares, calculated as share price multiplied by shares outstanding.

A pooled investment vehicle managed by a professional that invests in a diversified portfolio of stocks, bonds, or other securities.

The Price-to-Earnings ratio, calculated by dividing the stock price by earnings per share.

A collection of financial investments such as stocks, bonds, cash, and other assets held by an individual or institution.

The process of realigning the weightings of a portfolio's assets to maintain a target allocation.

A method of evaluating securities by analyzing statistics generated by market activity, such as price movement and volume.

A statistical measure of the dispersion of returns for a given security or market index, often used as a proxy for risk.

The income return on an investment, expressed as a percentage of the investment's cost or current market value.