Bob Brinker's Marketimer

  Wednesday September 26, 2018

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Learn even more about this topic with the Encyclopedia of Personal Finance™

Broker. An intermediary between the buyer and the seller. Brokers earn commissions for handling trades. Brokers who trade at an exchange must be registered members of that exchange.

Certificate. A document that serves as evidence of ownership of a company's stock. It shows the number of shares, the issuing company, the par value, and the shareholder's rights.

Class. Separation of equity into two kinds of shares, usually Class A and Class B. Classified stock is issued to give one group of shareholders, usually founders, board members and key employees, more rights than others.

Diversification. A strategy of including different kinds of assets in a portfolio to reduce risk.

Dividend. A distribution of earnings to shareholders as decided by the firm's board of directors.

Equity. Equity is what you are buying when you buy stocks?a share in the ownership of a company that gives you a right to a portion of its assets and earnings.

Portfolio. A collection of different kinds of stocks. Investors generally put together a portfolio with particular kinds of stock to meet specific goals, such as current income or achieving high growth.

Principal. The funds you invest, as opposed to your earnings.

Public company. One that offers stock for sale to the public.

The Securities and Exchange Commission (SEC). Appointed by the president, this is a five-member board responsible for supervising the sale of securities and enforcing securities exchange laws.

Stock. A share of ownership in a company that represents a claim on the company's assets and earnings.

Stock market. The general term for the organized trading of stock. The stock market consists of stock exchanges and the over-the-counter market.

Symbol. An abbreviation used to identify a stock on the exchange on which it is traded. Stocks are often listed by their symbols in newspaper and television market reports.

Voting rights. Most shares of common stock permit you to vote in board of directors elections and other key decisions; preferred stock usually lacks this right.

Now let's look at some terms that describe types of stock.


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