INVESTMENT GLOSSARY
Investing terms you will find useful

 

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Ask Price
Ask is the lowest price that any seller will accept when stocks and shares (securities).

Bear Market
The state of a market where investors think the market as a whole will go down in value.

Bull Market
The state of a market where investors think that the market as a whole will rise.

Bull or Bulls
An investor, or investors who think the market prices in general will rise.

Bear or Bears
An investor, or investors who think the market prices in general will fall.

Bid Price
The highest price a buyer will accept when a stock or share  is bought.

Blue Chip Company
A blue chip company is a company that has a history of solid earnings, regular and increasing dividends. These companies are regarded as low risk investments.

Book Value
The book value is the value of a company if all company liabilities are subtracted from the total company assets.

Broker
A broker is an experienced individual who buys and sells stocks and shares for a client in return for a commission.

Dividends
A dividend is a portion of a company’s profits that is paid out to shareholders. Dividends are paid  either quarterly or annually, depending on company policy.

Earnings or Profit
Earnings or profit is a portion of a company’s income left over after all costs have been paid out during a reporting period. Companies that make a profit are know as being in the “black” and companies that do not make a profit are said to be in the “red”.

Sales Revenue
What a company earns for the goods they produce, or the services they provide. Sales revenue and profit is not the same thing.

Market Capitalisation (Market Cap)
This is calculated by multiplying the current share price (per share) with the number of shares outstanding.

Mutual Funds
Mutual funds refers to an investment company which manages money from a large group of investors (known as the fund) to buy stocks and other investments.

P/E Ratio
How much money you are paying for £1 of the company’s earnings. In other words, if a company reports a profit of $10 per share, and the stock is selling for £100 per share, the P/E ratio is 10 because you are paying ten-times earnings.

Securities
Securities is a term for investments including stocks, shares, unit trusts, bonds, and bank deposits.

Spread
The spread refers to the difference between the ask price and the bid price.

Volume
Refers to that amount of one stock or other type of security traded in one day.

Yield
If a company pays a dividend, the yield is the percentage of dividend over the share  price. For example, if a share is trading for £10 and pays a dividend of £0.50, the yield is 5%, because for every £10 you invest, you would receive 5% back annually (£ 0.50)

 

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