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Encyclopedia > Stock
Financial markets

Bond market
Fixed income
Corporate bond
Government bond
Municipal bond
Bond valuation
High-yield debt
Image File history File links Gnome-globe. ... This article does not cite any references or sources. ... Download high resolution version (480x640, 110 KB)Blockade in front of NYSE. Picture taken in April 2004. ... The bond market, also known as the debit, credit, or fixed income market, is a financial market where participants buy and sell debt securities usually in the form of bonds. ... This article does not cite any references or sources. ... A corporate bond is a bond issued by a corporation. ... A government bond is a bond issued by a national government denominated in the countrys own currency. ... In the United States, a municipal bond (or muni) is a bond issued by a state, city or other local government, or their agencies. ... Bond valuation is the process of determining the fair price of a bond. ... In finance, a high yield bond (non-investment grade bond, speculative grade bond or junk bond) is a bond that is rated below investment grade at the time of purchase. ...

Stock market
Stock
Preferred stock
Common stock
Registered share
Voting share
Stock exchange
A stock market is a market for the trading of company stock, and derivatives of same; both of these are securities listed on a stock exchange as well as those only traded privately. ... Preferred stock, also called preferred shares or preference shares, is typically a higher ranking stock than voting shares, and its terms are negotiated between the corporation and the investor. ... Common stock, also referred to as common shares, are, as the name implies, the most usual and commonly held form of stock in a corporation. ...

Foreign exchange market
The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. ...

Derivatives market
Credit derivative
Hybrid security
Options
Futures
Forwards
Swaps
The derivatives markets are the financial markets for derivatives. ... // A credit derivative is a financial instrument or derivative (finance) whose price and value derives from the creditworthiness of the obligations of a third party, which is isolated and traded. ... Definition A hybrid security, as the name implies, is a security that combines two or more different financial instruments. ... This article is about options traded in financial markets. ... In finance, a futures contract is a standardized contract, traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a specified price. ... A forward contract is an agreement between two parties to buy or sell an asset (which can be of any kind) at a pre-agreed future point in time. ... For the Thoroughbred horse racing champion, see: Swaps (horse). ...

Other Markets
Commodity market
OTC market
Real estate market
Spot market
Chicago Board of Trade Futures market Commodity markets are markets where raw or primary products are exchanged. ... Over-the-counter (OTC) trading is to trade financial instruments such as stocks, bonds, commodities or derivatives directly between two parties. ... Real estate is a legal term that encompasses land along with anything permanently affixed to the land, such as buildings. ... Template:The Spot Market The Spot Market or Cash Marketis a commodities or securities market in which goods are sold for cash and delivered immediately. ...


Finance series
Financial market
Financial market participants
Corporate finance
Personal finance
Public finance
Banks and Banking
Financial regulation
The field of finance refers to the concepts of time, money and risk and how they are interelated. ... This article does not cite any references or sources. ... There are two basic financial market participant catagories, Investor vs. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. ... This article does not cite any references or sources. ... For other uses, see Bank (disambiguation). ... Financial supervision is government supervision of financial institutions by regulators. ...

 v  d  e 

A share (also referred to as equity shares) of stock represents a share of ownership in a corporation. // Look up stock in Wiktionary, the free dictionary. ... For other uses, see Corporation (disambiguation). ...

Contents

Types of stock

Stock typically takes the form of shares of common stock (or voting shares). As a unit of ownership, common stock typically carries voting rights that can be exercised in corporate decisions. Preferred stock differs from common stock in that it typically does not carry voting rights but is legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders.[1][2] Convertible preferred stock is preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Shares of such stock are called "convertible preferred shares" (or "convertible preference shares" in the United Kingdom). Preferred stock, also called preferred shares or preference shares, is typically a higher ranking stock than voting shares, and its terms are negotiated between the corporation and the investor. ... This article is about options traded in financial markets. ...


Although there is a great deal of commonality between the stocks of different companies, each new equity issue can have legal clauses attached to it that make it dynamically different from the more general cases. Some shares of common stock may be issued without the typical voting rights being included, for instance, or some shares may have special rights unique to them and issued only to certain parties. Note that not all equity shares are the same.[1][2]


Stock derivatives

For more details on this topic, see equity derivatives.

A stock derivative is any financial instrument which has a value that is dependent on the price of the underlying stock. Futures and options are the main types of derivatives on stocks. The underlying security may be a stock index or an individual firm's stock, e.g. single-stock futures. Equity derivatives are financial derivative products whose value is dependent on the value of an underlying share or group of shares. ... Derivatives traders at the Chicago Board of Trade. ... In finance, an underlying is an investment from which a derivative security is derived. ... In finance, a futures contract is a standardized contract, traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a specified price. ... A stock market index is a listing of stocks, and a statistic reflecting the composite value of its components. ... Single-stock futures (SSFs) are securities that share some of the features of equities and also some of those of traditional commodity futures. ...


Stock futures are contracts where the buyer is long, i.e., takes on the obligation to buy on the contract maturity date, and the seller is short, i.e., takes on the obligation to sell. Stock index futures are generally not delivered in the usual manner, but by cash settlement. In finance, a long position in a security, such as a stock or a bond, or equivalently to be long a security, means the holder of the position owns the security and will profit if the price of the security goes up. ... In finance, short selling or shorting is the practice of selling securities the seller does not then own, in the hope of repurchasing them later at a lower price. ... The term equity derivative describes a class of financial instruments whose value is at least partly derived from one or more underlying equity securities. ...


A stock option is a class of option. Specifically, a call option is the right (not obligation) to buy stock in the future at a fixed price and a put option is the right (not obligation) to sell stock in the future at a fixed price. Thus, the value of a stock option changes in reaction to the underlying stock of which it is a derivative. The most popular method of valuing stock options is the Black Scholes model.[3] Apart from call options granted to employees, most stock options are transferable. Main article: Option A stock option is a specific type of option that uses the stock itself as an underlying instrument to determine the options pay-off (and therefore its value). ... This article does not cite any references or sources. ... A put option (sometimes simply called a put) is a financial contract between two parties, the buyer and the writer of the option. ... Derivatives traders at the Chicago Board of Trade. ... The Black–Scholes model is a model that posits that a stock price evolves according to geometric Brownian motion and that there is a well defined risk free instrument that pays a constant interest rate. ... An Employee stock option is a call option on a companys own stock issued as a form of non-cash compensation. ...


History

During Roman times, the empire contracted out many of its services to private groups called publicani. Shares in publicani were called "socii" (for large cooperatives) and "particulae" which were analogous to today's Over-The-Counter shares of small companies. Though the records available for this time are incomplete, Edward Chancellor states in his book Devil Take the Hindmost that there is some evidence that a speculation in these shares became increasingly widespread and that perhaps the first ever speculative bubble in "stocks" occurred. Ancient Rome was a civilization that grew from a small agricultural community founded on the Italian Peninsula circa the 9th century BC to a massive empire straddling the Mediterranean Sea. ... A Publican can be the manager of a public house, or in New Testament times, a tax collecter. ... A stock market bubble is a type of economic bubble taking place in stock markets when price of stocks rise and become overvalued by any measure of stock valuation. ...


The first company to issue shares of stock after the Middle Ages was the Dutch East India Company in 1606. The innovation of joint ownership made a great deal of Europe's economic growth possible following the Middle Ages. The technique of pooling capital to finance the building of ships, for example, made the Netherlands a maritime superpower. Before adoption of the joint-stock corporation, an expensive venture such as the building of a merchant ship could be undertaken only by governments or by very wealthy individuals or families. The Middle Ages formed the middle period in a traditional schematic division of European history into three ages: the classical civilization of Antiquity, the Middle Ages, and modern times, beginning with the Renaissance. ... This article is about the trading company. ... For other uses, see Europe (disambiguation). ... World GDP/capita changed very little for most of human history before the industrial revolution. ... The Middle Ages formed the middle period in a traditional schematic division of European history into three ages: the classical civilization of Antiquity, the Middle Ages, and modern times, beginning with the Renaissance. ... Damaged package The Panama canal. ... Superpowers redirects here. ...


Economic Historians find the Dutch stock market of the 1600s particularly interesting: there is clear documentation of the use of stock futures, stock options, short selling, the use of credit to purchase shares, a speculative bubble that crashed in 1695, and a change in fashion that unfolded and reverted in time with the market (in this case it was headdresses instead of hemlines). Dr. Edward Stringham also noted that the uses of practices such as short selling continued to occur during this time despite the government passing laws against it. This is unusual because it shows individual parties fulfilling contracts that were not legally enforceable and where the parties involved could incur a loss. Stringham argues that this shows that contracts can be created and enforced without state sanction or, in this case, in spite of laws to the contrary.[4][5] The hemline of a garment is its lower edge. ...


Shareholder

A shareholder (or stockholder) is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. Companies listed at the stock market are expected to strive to enhance shareholder value. As commonly used, individual refers to a person or to any specific object in a collection. ... The term company may refer to a separate legal entity, as in English law, or may simply refer to a business, as is the common use in the United States. ... For other uses, see Corporation (disambiguation). ... In financial markets, a share is a unit of account for various financial instruments including stocks, mutual funds, limited partnerships, and REITs. ... A joint stock company (JSC) is a type of business partnership in which the capital is formed by the individual contributions of a group of shareholders. ... A stock market is a market for the trading of company stock, and derivatives of same; both of these are securities listed on a stock exchange as well as those only traded privately. ... Shareholder value is a term used in many ways: To refer to the market capitalization of a company (rarely used) To refer to the concept that the primary goal for a company is to enrich its shareholders (owners) by paying dividends and/or causing the stock price to increase To...


Shareholders are granted special privileges depending on the class of stock, including the right to vote (usually one vote per share owned) on matters such as elections to the board of directors, the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company. However, shareholder's rights to a company's assets are subordinate to the rights of the company's creditors. Chairman of the Board redirects here. ... Winding up redirects here. ...


Shareholders are considered by some to be a partial subset of stakeholders, which may include anyone who has a direct or indirect equity interest in the business entity or someone with even a non-pecuniary interest in a non-profit organization. Thus it might be common to call volunteer contributors to an association stakeholders, even though they are not shareholders. Superset redirects here. ... A corporate stakeholder is a party who affects, or can be affected by, the companys actions. ... The term business entity refers generally to any organization engaged in business activities, regardless of legal structure. ... A non-profit organization (abbreviated NPO, or non-profit or not-for-profit) is an organization whose primary objective is to support an issue or matter of private interest or public concern for non-commercial purposes, without concern for monetary profit. ... For other uses, see Volunteer (disambiguation). ... A voluntary association (also sometimes called an unincorporated association, or just an association) is a group of individuals who voluntarily enter into an agreement to form a body (or organization) to accomplish a purpose. ...


Although directors and officers of a company are bound by fiduciary duties to act in the best interest of the shareholders, the shareholders themselves normally do not have such duties towards each other. The court of chancery, which governed fiduciary relations prior to the Judicature Acts The fiduciary duty is a legal relationship between two or more parties, most commonly a fiduciary or trustee and a principal or beneficiary, that in English common law is arguably the most important concept within the portion...


However, in a few unusual cases, some courts have been willing to imply such a duty between shareholders. For example, in California, USA, majority shareholders of closely held corporations have a duty to not destroy the value of the shares held by minority shareholders.[6][7] This article is about the U.S. state. ...


The largest shareholders (in terms of percentages of companies owned) are often mutual funds, and especially passively managed exchange-traded funds. An exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges, much like stocks or bonds. ...


Application

The owners of a company may want additional capital to invest in new projects within the company. They may also simply wish to reduce their holding, freeing up capital for their own private use.


By selling shares they can sell part or all of the company to many part-owners. The purchase of one share entitles the owner of that share to literally share in the ownership of the company, a fraction of the decision-making power, and potentially a fraction of the profits, which the company may issue as dividends. It has been suggested that ex-dividend date be merged into this article or section. ...


In the common case of a publicly traded corporation, where there may be thousands of shareholders, it is impractical to have all of them making the daily decisions required to run a company. Thus, the shareholders will use their shares as votes in the election of members of the board of directors of the company. Chairman of the Board redirects here. ...


In a typical case, each share constitutes one vote. Corporations may, however, issue different classes of shares, which may have different voting rights. Owning the majority of the shares allows other shareholders to be out-voted - effective control rests with the majority shareholder (or shareholders acting in concert). In this way the original owners of the company often still have control of the company.


Shareholder rights

Although ownership of 51% of shares does result in 51% ownership of a company, it does not give the shareholder the right to use a company's building, equipment, materials, or other property. This is because the company is considered a legal person, thus it owns all its assets itself. This is important in areas such as insurance, which must be in the name of the company and not the main shareholder.


In most countries, including the United States, boards of directors and company managers have a fiduciary responsibility to run the company in the interests of its stockholders. Nonetheless, as Martin Whitman writes: Chairman of the Board redirects here. ... Management (from Old French ménagement the art of conducting, directing, from Latin manu agere to lead by the hand) characterises the process of leading and directing all or part of an organization, often a business, through the deployment and manipulation of resources (human, financial, material, intellectual or intangible). ... The court of chancery, which governed fiduciary relations prior to the Judicature Acts The fiduciary duty is a legal relationship between two or more parties, most commonly a fiduciary or trustee and a principal or beneficiary, that in English common law is arguably the most important concept within the portion... Martin J. Whitman is an American investment advisor and a strong critic of the direction of recent changes in Generally Accepted Accounting Principles (GAAP) in the U.S. He is founder, Co-Chief Investment Officer, and Portfolio Manager of the Third Avenue Value Fund. ...

...it can safely be stated that there does not exist any publicly traded company where management works exclusively in the best interests of OPMI [Outside Passive Minority Investor] stockholders. Instead, there are both "communities of interest" and "conflicts of interest" between stockholders (principal) and management (agent). This conflict is referred to as the principal/agent problem. It would be naive to think that any management would forgo management compensation, and management entrenchment, just because some of these management privileges might be perceived as giving rise to a conflict of interest with OPMIs.[8]

Even though the board of directors runs the company, the shareholder has some impact on the company's policy, as the shareholders elect the board of directors. Each shareholder typically has a percentage of votes equal to the percentage of shares he or she owns. So as long as the shareholders agree that the management (agent) are performing poorly they can elect a new board of directors which can then hire a new management team. In practice, however, genuinely contested board elections are rare. Board candidates are usually nominated by insiders or by the board of the directors themselves, and a considerable amount of stock is held and voted by insiders.


Owning shares does not mean responsibility for liabilities. If a company goes broke and has to default on loans, the shareholders are not liable in any way. However, all money obtained by converting assets into cash will be used to repay loans and other debts first, so that shareholders cannot receive any money unless and until creditors have been paid (most often the shareholders end up with nothing).


Means of financing

Financing a company through the sale of stock in a company is known as equity financing. Alternatively, debt financing (for example issuing bonds) can be done to avoid giving up shares of ownership of the company. Unofficial financing known as trade financing usually provides the major part of a company's working capital (day-to-day operational needs). Trade financing is provided by vendors and suppliers who sell their products to the company at short-term, unsecured credit terms, usually 30 days. Equity and debt financing are usually used for longer-term investment projects such as investments in a new factory or a new foreign market. Customer provided financing exists when a customer pays for services before they are delivered, e.g. subscriptions and insurance. At the start of a business, owners put some funding into the business to finance assets. ... For other uses, see Debt (disambiguation). ... For alternative meanings, see bond (a disambiguation page). ...


Trading

A stock exchange is an organization that provides a marketplace for either physical or virtual trading shares, bonds and warrants and other financial products where investors (represented by stock brokers) may buy and sell shares of a wide range of companies. A company will usually list its shares by meeting and maintaining the listing requirements of a particular stock exchange. In the United States, through the inter-market quotation system, stocks listed on one exchange can also be bought or sold on several other exchanges, including relatively new so-called ECNs (Electronic Communication Networks like Archipelago or Instinet). A Stock broker sells or buys stock on behalf of a customer. ... A stock exchange is a corporation or mutual organization which provides the facilities for stock brokers to trade company stocks and other securities. ... An Electronic Communication Network (ECN) is a computer system that facilitates trading of financial products outside of stock exchanges. ...


In the USA stocks used to be broadly grouped into NYSE-listed and NASDAQ-listed stocks. Until a few years ago there was a law that NYSE listed stocks were not allowed to be listed on the NASDAQ or vice versa.


Many large non-U.S companies choose to list on a U.S. exchange as well as an exchange in their home country in order to broaden their investor base. These companies have then to ship a certain amount of shares to a bank in the US (a certain percentage of their principal) and put it in the safe of the bank. Then the bank where they deposited the shares can issue a certain amount of so-called American Depositary Shares, short ADS (singular). If someone buys now a certain amount of ADSs the bank where the shares are deposited issues an American Depository Receipt (ADR) for the buyer of the ADSs. An American depository receipt (ADR) is how the stock of most foreign companies trades in United States stock markets. ...


Likewise, many large U.S. companies list themselves at foreign exchanges to raise capital abroad.


Arbitrage trading

Although it makes sense for some companies to raise capital by offering stock on more than one exchange, a keen investor with access to information about such discrepancies could invest in expectation of their eventual convergence, known as an arbitrage trade. In today's era of electronic trading, these discrepancies, if they exist, are both shorter-lived and more quickly acted upon. As such, arbitrage opportunities disappear quickly due to the efficient nature of the market. In economics and finance, arbitrage is the practice of taking advantage of a price differential between two or more markets: a combination of matching deals are struck that capitalize upon the imbalance, the profit being the difference between the market prices. ... Electronic trading is a mode of trading that uses information technology to bring together a buyer and a seller through electronic media to create a virtual market place. ... In finance, the efficient market hypothesis (EMH) asserts that financial markets are informationally efficient, or that prices on traded assets, e. ...


Buying

There are various methods of buying and financing stocks. The most common means is through a stock broker. Whether they are a full service or discount broker, they arrange the transfer of stock from a seller to a buyer. Most trades are actually done through brokers listed with a stock exchange, such as the New York Stock Exchange. Finance addresses the ways in which individuals, business entities and other organizations allocate and use monetary resources over time. ... A Stock broker sells or buys stock on behalf of a customer. ... Full service is a term that has many different uses. ... In finance, discounting is the process of finding the current value of an amount of cash at some future date, and along with compounding cash from the basis of time value of money calculations. ... The New York Stock Exchange (NYSE), nicknamed the Big Board, is a New York City-based stock exchange. ...


There are many different stock brokers from which to choose, such as full service brokers or discount brokers. The full service brokers usually charge more per trade, but give investment advice or more personal service; the discount brokers offer little or no investment advice but charge less for trades. Another type of broker would be a bank or credit union that may have a deal set up with either a full service or discount broker. For other uses, see Bank (disambiguation). ... A credit union is a cooperative financial institution that is owned and controlled by its members. ...


There are other ways of buying stock besides through a broker. One way is directly from the company itself. If at least one share is owned, most companies will allow the purchase of shares directly from the company through their investor relations departments. However, the initial share of stock in the company will have to be obtained through a regular stock broker. Another way to buy stock in companies is through Direct Public Offerings which are usually sold by the company itself. A direct public offering is an initial public offering in which the stock is purchased directly from the company, usually without the aid of brokers. Investor relations is a set of activities which relate to the ways in which a company discloses information required for regulatory compliance and good investment judgment to bond and/or shareholders and the wider financial markets. ... IPO redirects here. ...


When it comes to financing a purchase of stocks there are two ways: purchasing stock with money that is currently in the buyers ownership, or by buying stock on margin. Buying stock on margin means buying stock with money borrowed against the stocks in the same account. These stocks, or collateral, guarantee that the buyer can repay the loan; otherwise, the stockbroker has the right to sell the stock (collateral) to repay the borrowed money. He can sell if the share price drops below the margin requirement, at least 50% of the value of the stocks in the account. Buying on margin works the same way as borrowing money to buy a car or a house, using the car or house as collateral. Moreover, borrowing is not free; the broker usually charges 8-10% interest. Note that this is an entirely different structure from that of stock lending at the institutional level, or private placement stock loans or hedged portfolio stock loans. Loan proceeds from the latter, for example, cannot be used to purchase marginable securities. [9] Finance addresses the ways in which individuals, business entities and other organizations allocate and use monetary resources over time. ... In finance, a margin is collateral that the holder of a position in securities, options, or futures contracts has to deposit to cover the credit risk of his counterparty. ... In finance, a margin is collateral that the holder of a position in securities, options, or futures contracts has to deposit to cover the credit risk of his counterparty. ... Collateral within a financial context is used to indicate assets that secure a debt obligation. ... For other uses, see Loan (disambiguation). ... In economics and financial theory, analysts use random walk techniques to model behavior of asset prices, in particular share prices on stock markets, currency exchange rates and commodity prices. ... In finance, a margin is collateral that the holder of a position in securities, options, or futures contracts has to deposit to cover the credit risk of his counterparty. ...


Selling

Selling stock is procedurally similar to buying stock. Generally, the investor wants to buy low and sell high, if not in that order (short selling); although a number of reasons may induce an investor to sell at a loss, e.g., to avoid further loss. It has been suggested that Short (finance) be merged into this article or section. ...


As with buying a stock, there is a transaction fee for the broker's efforts in arranging the transfer of stock from a seller to a buyer. This fee can be high or low depending on which type of brokerage, full service or discount, handles the transaction.


After the transaction has been made, the seller is then entitled to all of the money. An important part of selling is keeping track of the earnings. Importantly, on selling the stock, in jurisdictions that have them, capital gains taxes will have to be paid on the additional proceeds, if any, that are in excess of the cost basis.


Stock price fluctuations

Robert Shiller's plot of the S&P Composite Real Price Index, Earnings, Dividends, and Interest Rates, from Irrational Exuberance, 2d ed. In the preface to this edition, Shiller warns that "[t]he stock market has not come down to historical levels: the price-earnings ratio as I define it in this book is still, at this writing [2005], in the mid-20s, far higher than the historical average. … People still place too much confidence in the markets and have too strong a belief that paying attention to the gyrations in their investments will someday make them rich, and so they do not make conservative preparations for possible bad outcomes."
Robert Shiller's plot of the S&P Composite Real Price Index, Earnings, Dividends, and Interest Rates, from Irrational Exuberance, 2d ed.[10] In the preface to this edition, Shiller warns that "[t]he stock market has not come down to historical levels: the price-earnings ratio as I define it in this book is still, at this writing [2005], in the mid-20s, far higher than the historical average. … People still place too much confidence in the markets and have too strong a belief that paying attention to the gyrations in their investments will someday make them rich, and so they do not make conservative preparations for possible bad outcomes."
Price-Earnings ratios as a predictor of twenty-year returns based upon the plot by Robert Shiller (Figure 10.1, source). The horizontal axis shows the real price-earnings ratio of the S&P Composite Stock Price Index as computed in Irrational Exuberance (inflation adjusted price divided by the prior ten-year mean of inflation-adjusted earnings). The vertical axis shows the geometric average real annual return on investing in the S&P Composite Stock Price Index, reinvesting dividends, and selling twenty years later. Data from different twenty year periods is color-coded as shown in the key. See also ten-year returns. Shiller states that this plot "confirms that long-term investors—investors who commit their money to an investment for ten full years—did do well when prices were low relative to earnings at the beginning of the ten years. Long-term investors would be well advised, individually, to lower their exposure to the stock market when it is high, as it has been recently, and get into the market when it is low."
Price-Earnings ratios as a predictor of twenty-year returns based upon the plot by Robert Shiller (Figure 10.1[10], source). The horizontal axis shows the real price-earnings ratio of the S&P Composite Stock Price Index as computed in Irrational Exuberance (inflation adjusted price divided by the prior ten-year mean of inflation-adjusted earnings). The vertical axis shows the geometric average real annual return on investing in the S&P Composite Stock Price Index, reinvesting dividends, and selling twenty years later. Data from different twenty year periods is color-coded as shown in the key. See also ten-year returns. Shiller states that this plot "confirms that long-term investors—investors who commit their money to an investment for ten full years—did do well when prices were low relative to earnings at the beginning of the ten years. Long-term investors would be well advised, individually, to lower their exposure to the stock market when it is high, as it has been recently, and get into the market when it is low."[10]

The price of a stock fluctuates fundamentally due to the theory of supply and demand. Like all commodities in the market, the price of a stock is directly proportional to the demand. However, there are many factors on the basis of which the demand for a particular stock may increase or decrease. These factors are studied using methods of fundamental analysis and technical analysis to predict the changes in the stock price. A recent study shows that customer satisfaction, as measured by the American Customer Satisfaction Index (ACSI), is significantly correlated to the stock market value. Stock price is also changed based on the forecast for the company and whether their profits are expected to increase or decrease. Robert James Bob Shiller (born 1946) is an American economist, academic, and best-selling author. ... This article is about the book by Robert Shiller. ... Robert James Bob Shiller (born 1946) is an American economist, academic, and best-selling author. ... The supply and demand model describes how prices vary as a result of a balance between product availability at each price (supply) and the desires of those with purchasing power at each price (demand). ... Look up Market in Wiktionary, the free dictionary. ... Fundamental analysis of a business involves analyzing its income statement, financial statements and health, its management and competitive advantages, and its competitors and markets. ... Technical analysis is the study of market action, primarily through the use of charts, for the purpose of forecasting future price trends. ... Since 1994, the American Customer Satisfaction Index (ACSI) has been a leading indicator of customer satisfaction, measuring satisfaction across the entire U.S. consumer economy. ...


See also

Railroad companies can interact with and control others in many ways. ... The term boiler room is used to describe a high pressure telemarketing operation, often cold calling individuals at home (during non-business hours) in an attempt to persuade them to invest in high-risk products, usually Stock (company shares). ... Bucket shop is a colloquial phrase which refers to different kinds of businesses, each of which is a scam. ... Buying in has several meanings: // In the securities market it refers to a process by which the buyer of securities, whose seller fails to deliver the securities contracted for, can buy in the securities from a third party with the defaulting seller to make good. ... Concentrated stock is an equity making up a substantial part (usually, more than 30%) of the investors portfolio. ... The Direct Registration System is an electronic system for registering stock with a corporations transfer agent. ... Equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and funds in anticipation of income from dividends and capital gain as the value of the stock rises. ... GICS, which stands for Global Industry Classification Standard, was developed by Morgan Stanley Capital International (MSCI), a provider of global indices and benchmark-related products and services, and Standard & Poor’s (S&P), a financial data and investment services company and provider of global equity indices. ... A Golden Share is a nominal share, held by a government organization, in a government company undergoing the process of privatization and transformation into a stock-company. ... A house stock is commonly referred to as a stock that the management of a brokerage firm has instructed all brokers working for him to promote. ... Insider trading is the trading of a corporations stock or other securities (e. ... Naked short selling, or naked shorting, is a controversial form of selling shares of securities short. ... Penny stocks are common stocks that trade for less than $5 a share. ... Restricted stock is an equity instrument that is not fully transferable until certain conditions have ben met. ... Scripophily is the study and collection of stocks and Bonds. ... It has been suggested that Short (finance) be merged into this article or section. ... A stock in business and social accounting refers to the value of an asset at a balance date (or point in time), while a flow refers to the total value of transactions (sales or purchases) during an accounting period. ... This article needs to be cleaned up to conform to a higher standard of quality. ... A Stock Trader or Stock Investor is a securities professional or firm, who buys and sells securities, such as stocks and bonds. ... A stock market is a market for the trading of company stock, and derivatives of same; both of these are securities listed on a stock exchange as well as those only traded privately. ... A stock option is a specific type of option with a stock as the underlying instrument (the security that the value of the option is based on). ... There are several methods used to value companies and their stocks. ... A stub is the stock representing the remaining equity in a corporation left over after a major cash or security distribution from a buyout, a spin-out, a demerger or some other form of restructuring removes most of the companys operations from the parent corporation. ... Voting interest in business and accounting is a percentage of voting stock owned. ...

Notes

  1. ^ a b "Stock Basics", Investor Guide.com.
  2. ^ a b Zvi Bodie, Alex Kane, Alan J. Marcus, Investments, 7th Ed., p. 26–53.
  3. ^ Black Scholes Calculator
  4. ^ http://www.sjsu.edu/depts/economics/faculty/stringham/docs/stringham-amsterdam.pdf
  5. ^ "Devil the Hindmost" by Edward Chancellor.
  6. ^ Jones v. H. F. Ahmanson & Co., 1 Cal. 3d)
  7. ^ JONES v. H. F. AHMANSON & CO. (1969) 1 C3d 93
  8. ^ Whitman, 2004, 5
  9. ^ The term hedge loan was coined in 2001 by U.S. company HedgeLender(trademark HedgeLoan) to refer to a hedged portfolio stock loan in which lender risk has been reduced to an acceptable level via some form of hedging of the shares. Under federal banking regulations (Reg U), funds from such loans cannot be used to purchase marginable stock.
  10. ^ a b c Shiller, Robert (2005). Irrational Exuberance (2d ed.). Princeton University Press. ISBN 0-691-12335-7. 

This article is about the book by Robert Shiller. ... The Princeton University Press is a publishing house, a division of Princeton University, that is highly respected in academic publishing. ...

External links

This article is about the trading company. ... The Open Directory Project (ODP), also known as dmoz (from , its original domain name), is a multilingual open content directory of World Wide Web links owned by Netscape that is constructed and maintained by a community of volunteer editors. ... The Open Directory Project (ODP), also known as dmoz (from , its original domain name), is a multilingual open content directory of World Wide Web links owned by Netscape that is constructed and maintained by a community of volunteer editors. ... A stock market is a market for the trading of company stock, and derivatives of same; both of these are securities listed on a stock exchange as well as those only traded privately. ... Common stock, also referred to as common shares, are, as the name implies, the most usual and commonly held form of stock in a corporation. ... Preferred stock, also called preferred shares or preference shares, is typically a higher ranking stock than voting shares, and its terms are negotiated between the corporation and the investor. ... Outstanding stock is common stock that has been authorized and issued by a corporation and purchased by investors. ... A treasury stock or reacquired stock is stock which is bought back by the issuing company, reducing the amount of outstanding stock on the open market (open market including insiders holdings). ... A market maker is a person or a firm which quotes a buy and sell price in a financial instrument or commodity hoping to make a profit on the turn or the bid/offer spread. ... A Floor Trader checking market prices A Floor Trader is a member of a stock or commodities exchange who trades on the floor of that exchange for his or her own account. ... A Floor Broker is a member of an exchange who is an employee of a member firm and executes orders, as agent, on the floor of the exchange for clients. ... This is a list of stock exchanges. ... There are several methods used to value companies and their stocks. ... Gordon growth model is a variant of the discounted dividend model, a method for valuing a stock or business. ... The dividend yield on a company stock is the companys annual dividend payments divided by its market cap, or the dividend per share divided by the price per share. ... Income per share is the bottom line net income divided by the number of shares outstanding. ... The book value of an asset or group of assets is sometimes the price at which they were originally acquired (historic cost), in many cases equal to purchase price. ... Earnings yield is the quotient of earnings per share divided by the share price. ... The Beta coefficient, in terms of finance and investing, is a measure of a stock (or portfolio)’s volatility in relation to the rest of the market. ... An estimation of the CAPM and the Security Market Line (purple) for the Dow Jones Industrial Average over the last 3 years for monthly data. ... In finance, a financial ratio is a ratio of selected values on a enterprises financial statements. ... The price/cash flow ratio (also called price-to-cash flow ratio or P/CF), is a ratio used to compare a companys market value to its cash flow. ... The P/E ratio (price-to-earnings ratio) of a stock (also called its earnings multiple, or simply multiple, P/E, or PE) is used to measure how cheap or expensive its share price is. ... The PEG ratio is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share (EPS), and the companys expected future growth. ... Price-to-sales ratio, P/S ratio, or PSR, is a valuation metric for stocks. ... Price-to-book ratio or P/B ratio, is a ratio used to compare a stocks market value to its book value. ... The debt to equity ratio (D/E) is a financial ratio indicating the relative proportion of equity and debt used to finance a companys assets. ... Return on capital, also known as Return On Invested Capital (ROIC) is defined as NOPLAT / Invested Capital usually expressed as a percentage. ... Return on Equity (ROE, Return on average common equity) measures the rate of return on the ownership interest (shareholders equity) of the common stock owners. ... Arbitrage pricing theory (APT), in Finance, is a general theory of asset pricing, that has become influential in the pricing of shares. ... In finance, the efficient market hypothesis (EMH) asserts that financial markets are informationally efficient, or that prices on traded assets, e. ... Fundamental analysis of a business involves analyzing its income statement, financial statements and health, its management and competitive advantages, and its competitors and markets. ... Technical analysis is the study of market action, primarily through the use of charts, for the purpose of forecasting future price trends. ... It has been suggested that ex-dividend date be merged into this article or section. ... Stock split refers to a corporate action that increases the number of shares in a public company. ... Growth Stocks in finance, are stocks that appreciate in value and yield a high return on equity (ROE). ... Invest redirects here. ... Speculation involves the buying, holding, and selling of stocks, bonds, commodities, currencies, collectibles, real estate, derivatives or any valuable financial instrument to profit from fluctuations in its price as opposed to buying it for use or for income via methods such as dividends or interest. ... A Trade involves the buying, holding, selling, and short-selling of stocks, bonds, commodities, currencies, derivatives or any valuable financial instrument to profit from fluctuations in its price as opposed to buying it for use or for income via methods such as dividends or interest. ... Day trading refers to the practice of buying and selling financial instruments within the same trading day such that all positions will usually (not necessarily always) be closed before the market close of the trading day. ... A stock trader or a stock investor is an individual or firm who buys and sells stocks or bonds (and possibly other financial assets) in the financial markets. ... Wikipedia does not yet have an article with this exact name. ...

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