Savvy investors need to have some financial terms under their belts — like these:
Bear market:
Book value:
Capital appreciation:
Capital gain/loss:
Doe:
Liquidity:
Market timing:
Standard & Poor’s 500 Index:
Treasury bill (T-bill):
Learn more at www.investorwords.com and wiki.fool.com.
when the overall market loses value over an extended period of time. There’s no official definition of it, but many analysts feel a drop of at least 10 percent is needed. A smaller drop is often called a “correction” (though that term is never used when the market moves up 10 percent!).
a company’s assets, minus any liabilities and intangible assets. Book value is the value of a company that can be found via its balance sheet. It’s often represented as a per-share value by taking the company’s shareholder equity and dividing it by the current number of shares outstanding.
One of the two components of total return (along with dividend yield), capital appreciation reflects how much the underlying value of a security has increased. If you bought a stock at $10 per share and it has risen to $13, you have enjoyed a 30 percent return or appre- ciation on your invested capital.
the difference between the price at which an asset is sold and its original purchase price (or “basis”).
a deer, a female deer.
a measure of how quickly a security can be sold at a fair price and converted to cash. Illiquid stocks are those that don’t trade in high volume — so having too many shares of them would make for a position that cannot necessarily be sold.
an investment strategy based on predicting short-term price changes in securities, which is virtually impossible to do.
an index of 500 of America’s biggest publicly traded companies. The S&P 500 is considered a good measurement of the overall U.S. stock market, and indeed, it represents about 75 percent of the market.
a short-term discounted security issued by the U.S. government, with a maturity of one year or less.
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