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Financial Terms | |
Stock market |
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Definition of Stock marketStock marketAlso called the equity market, the market for trading equities.
Related Terms:Common stock marketThe market for trading equities, not including preferred stock. Bear MarketA prolonged period of falling stock market prices. Beta coefficientA measurement of the extent to which the returns on a given stock move with stock market. BourseA term of French origin used to refer to stock markets. Bull MarketA prolonged period of rising stock market prices. Country selectionA type of active international management that measures the contribution to performance Equity capAn agreement in which one party, for an upfront premium, agrees to compensate the other at ![]() Equity floorAn agreement in which one party agrees to pay the other at specific time periods if a specific Equity marketRelated:stock market Index optionA call or put option based on a stock market index. market portfolioPortfolio of all assets in the economy. In practice a broad stock market index, such as the Standard & Poor's Composite, is used to represent the market. market riskEconomywide (macroeconomic) sources of risk that affect the overall stock market. Also called systematic risk. Market timerA money manager who assumes he or she can forecast when the stock market will go up and down. price/earnings ratio (price to earnings ratio, P/E ratio, PE ratio)This key ratio equals the current market price Publicly traded assetsAssets that can be traded in a public market, such as the stock market. Small-firm effectThe tendency of small firms (in terms of total market capitalization) to outperform the ![]() StockUnits of ownership, also called shares, in a public corporation. Owners of such units, called shareholders, share in the earnings of the company through dividends. The price of a stock is determined by supply and demand in the stock market. Weekend effectThe common recurrent low or negative average return from Friday to Monday in the stock market. Acquisition of stockA merger or consolidation in which an acquirer purchases the acquiree's stock. Adjustable rate preferred stock (ARPS)Publicly traded issues that may be collateralized by mortgages and MBSs. American Stock Exchange (AMEX)The second-largest stock exchange in the United States. It trades Auction marketsmarkets in which the prevailing price is determined through the free interaction of Auction rate preferred stock (ARPS)Floating rate preferred stock, the dividend on which is adjusted every Bear marketAny market in which prices are in a declining trend. bear marketA market in which stock or bond prices are generally Beta equation (Stocks)The beta of a stock is determined as follows: Black marketAn illegal market. BOOK VALUE OF COMMON STOCKThe theoretical amount per share that each stockholder would receive if a company’s assets were sold on the balance sheet’s date. Book value equals: Brokered marketA market where an intermediary offers search services to buyers and sellers. Bull marketAny market in which prices are in an upward trend. bull marketA market in which stock or bond prices are generally rising. Bulldog marketThe foreign market in the United Kingdom. Capital marketThe market for trading long-term debt instruments (those that mature in more than one year). Capital marketThe market in which investors buy and sell shares of companies, normally associated with a stock Exchange. Capital MarketA market that specializes in trading long-term, relatively high risk Capital MarketThe market in which savings are made available to those needing funds to undertake investment projects. A financial market in which longer-term (maturity greater than one year) bonds and stocks are traded. Capital market efficiencyReflects the relative amount of wealth wasted in making transactions. An efficient Capital market imperfections viewThe view that issuing debt is generally valuable but that the firm's Capital market line (CML)The line defined by every combination of the risk-free asset and the market portfolio. capital marketsmarkets for long-term financing. capital stockOwnership shares issued by a business corporation. A business Capital StockThe total amount of plant, equipment, and other physical capital. Cash marketsAlso called spot markets, these are markets that involve the immediate delivery of a security Common marketAn agreement between two or more countries that permits the free movement of capital Common stockThese are securities that represent equity ownership in a company. Common shares let an Common stockShares of ownership sold to the public. Common StockA financial security that represents an ownership claim on the common stockOwnership shares in a publicly held corporation. Common StockThat part of the capital stock of a corporation that carries voting rights and represents Common stock equivalentA convertible security that is traded like an equity issue because the optioned Common stock/other equityValue of outstanding common shares at par, plus accumulated retained Common stock ratiosRatios that are designed to measure the relative claims of stockholders to earnings Complete capital marketA market in which there is a distinct marketable security for each and every Conflict between bondholders and stockholdersThese two groups may have interests in a corporation that Consigned stocksInventories owned by a company, but located on the premises Convertible exchangeable preferred stockConvertible preferred stock that may be exchanged, at the Convertible preferred stockPreferred stock that can be converted into common stock at the option of the holder. Corner A MarketTo purchase enough of the available supply of a commodity or stock in order to Cost of Common StockThe rate of return required by the investors in the common stock of Cost of Preferred StockThe rate of return required by the investors in the preferred stock of Cumulative preferred stockPreferred stock whose dividends accrue, should the issuer not make timely Dealer marketA market where traders specializing in particular commodities buy and sell assets for their Debt marketThe market for trading debt instruments. Departmental stocksThe informal and frequently unauthorized retention of excess inventory on the shop floor, which is used as buffer safety stock. Derivative marketsmarkets for derivative instruments. Direct search marketBuyers and sellers seek each other directly and transact directly. Direct stock-purchase programsThe purchase by investors of securities directly from the issuer. Dividend yield (Stocks)Indicated yield represents annual dividends divided by current stock price. DLOM (discount for lack of marketability)an amount or percentage deducted from an equity interest to reflect lack of marketability. Domestic marketPart of a nation's internal market representing the mechanisms for issuing and trading Earnings per share of common stockHow much profit a company made on each share of common stock this year. Efficient capital marketA market in which new information is very quickly reflected accurately in share efficient capital marketsFinancial markets in which security prices rapidly reflect all relevant information about asset values. Efficient Market HypothesisIn general the hypothesis states that all relevant information is fully and Efficient Markets HypothesisThe hypothesis that securities are typically in equilibrium--that they are fairly priced in the sense that the price reflects all publicly available information on the security. Either-way marketIn the interbank Eurodollar deposit market, an either-way market is one in which the bid Emerging marketsThe financial markets of developing economies. Employee stock fundA firm-sponsored program that enables employees to purchase shares of the firm's Employee stock ownership plan (ESOP)A company contributes to a trust fund that buys stock on behalf of Employee Stock Ownership Plan (ESOP)a profit-sharing compensation program in which investments are made in Employee Stock Ownership Plan (ESOP)A fund containing company stock and owned by employees, paid for by ongoing contributions by the employer. Equilibrium market price of riskThe slope of the capital market line (CML). Since the CML represents the Eurocurrency marketThe money market for borrowing and lending currencies that are held in the form of Excess return on the market portfolioThe difference between the return on the market portfolio and the Exchange of stockAcquisition of another company by purchase of its stock in exchange for cash or shares. External marketAlso referred to as the international market, the offshore market, or, more popularly, the Fair market priceAmount at which an asset would change hands between two parties, both having Fair market valueThe price that an asset or service will fetch on the open market. Fair Market ValueThe highest price available, expressed in terms of cash, in an open and unrestricted market between informed, prudent parties acting at arm's length and under no compulsion to transact. Farm Improvement and Marketing Cooperatives Loans ActSee here Federal funds marketThe market where banks can borrow or lend reserves, allowing banks temporarily Federal Open Market Committee (FOMC)Fed committee that makes decisions about open-market operations. Financial marketAn organized institutional structure or mechanism for creating and exchanging financial assets. financial marketsmarkets in which financial assets are traded. Fixed-income marketThe market for trading bonds and preferred stock. Floor stocksLow-cost, high-usage inventory items stored near the shop floor, Foreign banking marketThat portion of domestic bank loans supplied to foreigners for use abroad. Foreign bond marketThat portion of the domestic bond market that represents issues floated by foreign Foreign equity marketThat portion of the domestic equity market that represents issues floated by foreign companies. 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