Basic Terms
1. Stock: A share representing ownership in a company.
2. Dividend: A portion of a company's profits paid to shareholders.
3. Portfolio: A collection of financial investments like stocks, bonds, and mutual funds.
4. Bull Market: A market condition where prices are rising or expected to rise.
5. Bear Market: A market condition characterized by falling prices.
Trading Terms
1. IPO (Initial Public Offering): The process by which a private company offers its shares to the public for the first time.
2. Market Capitalization: The total value of a company's outstanding shares.
3. Liquidity: The ease with which an asset can be converted into cash without affecting its value.
4. Volume: The number of shares or contracts traded in a security or market during a given period.
5. Bid: The price at which a buyer is willing to purchase a security.
6. Ask: The price at which a seller is willing to sell a security.
Analysis Terms
1. Technical Analysis: The study of past market data to forecast future price movements.
2. Fundamental Analysis: The evaluation of a security's intrinsic value by examining related economic and financial factors.
3. Moving Average: A stock's average price over a specific period, used to smooth out price data.
4. Support Level: A price level where a stock tends to stop falling because of increased demand.
5. Resistance Level: A price level where a stock tends to stop rising because of increased selling pressure.
Derivatives Terms
1. Options: Contracts giving the buyer the right, but not the obligation, to buy or sell an asset at a specific price before a certain date.
2. Futures: Contracts to buy or sell an asset at a predetermined future date and price.
3. Call Option: A contract giving the holder the right to buy an asset at a specified price.
4. Put Option: A contract giving the holder the right to sell an asset at a specified price.
5. Leverage: The use of borrowed funds to increase the potential return of an investment.
Risk Management Terms
1. Stop-Loss Order: An order placed with a broker to buy or sell once the stock reaches a certain price.
2. Margin: Borrowing money from a broker to purchase stock, using the purchased stock as collateral.
3. Volatility: A statistical measure of the dispersion of returns for a given security or market index.
4. Hedging: Reducing the risk of adverse price movements in an asset.
5. Diversification: Spreading investments across various financial instruments, industries, and other categories to reduce risk.
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