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Encyclopedia > Stock Market
Financial markets

Bond market
Fixed income
Corporate bond
Government bond
Municipal bond
Bond valuation
High-yield debt
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
For other uses, see Stock (disambiguation). ... 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. ...

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A stock market or (equity market) is a private or public market for the trading of company stock and derivatives of company stock at an agreed price; both of these are securities listed on a stock exchange as well as those only traded privately. A market system is any systematic process enabling many market players to bid and ask: helping bidders and sellers interact and make deals. ... This article is about economic exchange. ... For other uses, see Corporation (disambiguation). ... For other uses, see Stock (disambiguation). ... Derivatives traders at the Chicago Board of Trade. ... For security (collateral), the legal right given to a creditor by a borrower, see security interest A security is a fungible, negotiable instrument representing financial value. ...

Contents

The Definition

The expression 'stock market' refers to the market that enables the trading of company stocks (collective shares), other securities, and derivatives. Bonds are still traditionally traded in an informal, over-the-counter market known as the bond market. Commodities are traded in commodities markets, and derivatives are traded in a variety of markets (but, like bonds, mostly 'over-the-counter'). For security (collateral), the legal right given to a creditor by a borrower, see security interest A security is a fungible, negotiable instrument representing financial value. ... Derivatives traders at the Chicago Board of Trade. ... Over-the-counter (OTC) trading is to trade financial instruments such as stocks, bonds, commodities or derivatives directly between two parties. ... 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 or section does not cite its references or sources. ...


The size of the worldwide 'bond market' is estimated at $45 trillion. The size of the 'stock market' is estimated at about $51 trillion. The world derivatives market has been estimated at about $480 trillion 'face' or nominal value, 30 times the size of the U.S. economy…and 12 times the size of the entire world economy. It must be noted though that the value of the derivatives market, because it is stated in terms of notional values, cannot be directly compared to a stock or a fixed income security, which traditionally refers to an actual value. (Many such relatively illiquid securities are valued as marked to model, rather than an actual market price.) A nominal is a word or a group of words that functions as a noun, i. ... Nominal or notional amounts outstanding are defined as the gross nominal or notional value of all deals concluded and not yet settled on the reporting date. ... In the property and casualty insurance industry, actual cash value (ACV) is a method of computing what an insurer will pay an insured, after a loss, for a specific insured item. ... Market liquidity is a business or economics term that refers to the ability to quickly buy or sell a particular item without causing a significant movement in the price. ... In accounting and finance, mark to market is the act of assigning a value to a position held in a financial instrument based on the current market price for that instrument or similar instruments. ... Market price is an economic concept with commonplace familiarity; it is the price that a good or service is offered at, or will fetch, in the marketplace; it is of interest mainly in the study of microeconomics. ...


The stocks are listed and traded on stock exchanges which are entities (a corporation or mutual organization) specialized in the business of bringing buyers and sellers of stocks and securities together. The stock market in the United States includes the trading of all securities listed on the NYSE, the NASDAQ, the Amex, as well as on the many regional exchanges, e.g. OTCBB and Pink Sheets. European examples of stock exchanges include the Paris Bourse (now part of Euronext), the London Stock Exchange and the Deutsche Borse. For other uses, see Corporation (disambiguation). ... A mutual organization (or society) is a cooperative organization (which is often, but not always, a company or business) based on the principle of mutuality. ... The New York Stock Exchange (NYSE), nicknamed the Big Board, is a New York City-based stock exchange. ... NASDAQ in Times Square, New York City. ... The American Stock Exchange (AMEX) is an American stock exchange situated in New York. ... Pink Sheets is an electronic system, published by Pink Sheets LLC, to display bid and ask quotation prices. ... To meet Wikipedias quality standards, this article or section may require cleanup. ... Euronext N.V. is a pan-European stock exchange based in Paris[1] and with subsidiaries in Belgium, France, Netherlands, Portugal and the United Kingdom. ... The Source by Greyworld, in the new LSE building Paternoster Square. ... Deutsche Börse Logo Deutsche Börse AG LSE: DHE is a marketplace organizer for the trading of shares and other securities. ...


Trading

Participants in the stock market range from small individual stock investors to large hedge fund traders, who can be based anywhere. Their orders usually end up with a professional at a stock exchange, who executes the order. A Stock Trader or Stock Investor is a securities professional or firm, who buys and sells securities, such as stocks and bonds. ... A hedge fund is a private investment fund charging a performance fee and typically open to only a limited range of qualified investors. ... In finance, a trader is someone who buys and sells financial instruments such as stocks, bonds and derivatives. ...


Some exchanges are physical locations where transactions are carried out on a trading floor, by a method known as open outcry. This type of auction is used in stock exchanges and commodity exchanges where traders may enter "verbal" bids and offers simultaneously. The other type of exchange is a virtual kind, composed of a network of computers where trades are made electronically via traders. Open outcry occurs on a commodities exchange when traders shout their buy and sell orders. ... This article is in need of attention. ...


Actual trades are based on an auction market paradigm where a potential buyer bids a specific price for a stock and a potential seller asks a specific price for the stock. (Buying or selling at market means you will accept any ask price or bid price for the stock, respectively.) When the bid and ask prices match, a sale takes place on a first come first served basis if there are multiple bidders or askers at a given price. An auctioneer and her assistants scan the crowd for bidders An auction is a process of buying and selling goods by offering them up for bid, taking bids, and then selling the item to the winning bidder. ...


The purpose of a stock exchange is to facilitate the exchange of securities between buyers and sellers, thus providing a marketplace (virtual or real). The exchanges provide real-time trading information on the listed securities, facilitating price discovery. A marketplace is the space, actual or metaphorical, in which a market operates. ...


The New York Stock Exchange is a physical exchange, also referred to as a listed exchange — only stocks listed with the exchange may be traded. Orders enter by way of exchange members and flow down to a specialist, who goes to the floor trading post to trade stock. The specialist's job is to match buy and sell orders using open outcry. If a spread exists, no trade immediately takes place--in this case the specialist should use his/her own resources (money or stock) to close the difference after his/her judged time. Once a trade has been made the details are reported on the "tape" and sent back to the brokerage firm, which then notifies the investor who placed the order. Although there is a significant amount of human contact in this process, computers play an important role, especially for so-called "program trading". The New York Stock Exchange (NYSE), nicknamed the Big Board, is a New York City-based stock exchange. ... The New York Stock Exchange (NYSE), nicknamed the Big Board, is a New York City-based stock exchange. ... Look up spread in Wiktionary, the free dictionary. ... The New York Stock Exchange (NYSE), nicknamed the Big Board, is a New York City-based stock exchange. ... Program trading is casually defined as the use of computers in stock markets to engage in arbitrage and portfolio insurance strategies. ...


The NASDAQ is a virtual listed exchange, where all of the trading is done over a computer network. The process is similar to the New York Stock Exchange. However, buyers and sellers are electronically matched. One or more NASDAQ market makers will always provide a bid and ask price at which they will always purchase or sell 'their' stock. [1]. NASDAQ in Times Square, New York City. ... 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. ...


The Paris Bourse, now part of Euronext, is an order-driven, electronic stock exchange. It was automated in the late 1980s. Prior to the 1980s, it consisted of an open outcry exchange. Stockbrokers met on the trading floor or the Palais Brongniart. In 1986, the CATS trading system was introduced, and the order matching process was fully automated. To meet Wikipedias quality standards, this article or section may require cleanup. ... Euronext N.V. is a pan-European stock exchange based in Paris[1] and with subsidiaries in Belgium, France, Netherlands, Portugal and the United Kingdom. ... A stockbroker is a person who buys and sells stocks on behalf of another person (or company). ... CATS (Computer Assisted Trading System) is an automated exchange system developped for the Toronto Stock Exchange in the late 1970s. ...


From time to time, active trading (especially in large blocks of securities) have moved away from the 'active' exchanges. Securities firms, led by UBS AG, Goldman Sachs Group Inc. and Credit Suisse Group, already steer 12 percent of U.S. security trades away from the exchanges to their internal systems. That share probably will increase to 18 percent by 2010 as more investment banks bypass the NYSE and NASDAQ and pair buyers and sellers of securities themselves, according to data compiled by Boston-based Aite Group LLC, a brokerage-industry consultant [citation needed].


Now that computers have eliminated the need for trading floors like the Big Board's, the balance of power in equity markets is shifting. By bringing more orders in-house, where clients can move big blocks of stock anonymously, brokers pay the exchanges less in fees and capture a bigger share of the $11 billion a year that institutional investors pay in trading commissions[citation needed]. In commerce, a broker is a party that mediates between a buyer and a seller. ...


Market participants

Many years ago, worldwide, buyers and sellers were individual investors, such as wealthy businessmen, with long family histories (and emotional ties) to particular corporations. Over time, markets have become more "institutionalized"; buyers and sellers are largely institutions (e.g., pension funds, insurance companies, mutual funds, hedge funds, investor groups, and banks). The rise of the institutional investor has brought with it some improvements in market operations. Thus, the government was responsible for "fixed" (and exorbitant) fees being markedly reduced for the 'small' investor, but only after the large institutions had managed to break the brokers' solid front on fees (they then went to 'negotiated' fees, but only for large institutions)[citation needed]. A pension (also known as superannuation) is a retirement plan intended to provide a person with a secure income for life. ... Wikipedia does not yet have an article with this exact name. ... This article deals with U.S. mutual funds. ... The term hedge fund dates back to the first such fund founded by Alfred Winslow Jones in 1949. ... For other uses, see Bank (disambiguation). ... An institutional investor is an investor who is an institution like a bank, insurance fund, retirement fund, or mutual fund manager. ...


However, corporate governance (at least in the West) has been very much adversely affected by the rise of (largely 'absentee') institutional 'owners'[citation needed]. Corporate governance is the set of processes, customs, policies, laws and institutions affecting the way in which a corporation is directed, administered or controlled. ...


History

Historian Fernand Braudel suggests that in Cairo in the 11th century Muslim and Jewish merchants had already set up every form of trade association and had knowledge of many methods of credit and payment, disproving the belief that these were invented later by Italians. In 12th century France the courratiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. Because these men also traded with debts, they could be called the first brokers. In late 13th century Bruges commodity traders gathered inside the house of a man called Van der Beurse, and in 1309 they became the "Brugse Beurse", institutionalizing what had been, until then, an informal meeting. The idea quickly spread around Flanders and neighboring counties and "Beurzen" soon opened in Ghent and Amsterdam. Fernand Braudel (August 24, 1902–November 27, 1985) was a French historian. ... For other uses, see Cairo (disambiguation). ... As a means of recording the passage of time, the 11th century was that century which lasted from 1001 to 1100. ... The Radhanites (also Radanites, Hebrew sing. ... An industry trade group, also known as a trade association, is generally a public relations organization founded and funded by corporations that operate in a specific industry. ... A Stock broker sells or buys stock on behalf of a customer. ... Geography Country Belgium Community Flemish Community Region Flemish Region Province West Flanders Arrondissement Bruges Coordinates , , Area 138. ... For other uses, see Flanders (disambiguation). ... This article is about the Belgian city. ... For other uses, see Amsterdam (disambiguation). ...


In the middle of the 13th century Venetian bankers began to trade in government securities. In 1351 the Venetian government outlawed spreading rumors intended to lower the price of government funds. Bankers in Pisa, Verona, Genoa and Florence also began trading in government securities during the 14th century. This was only possible because these were independent city states not ruled by a duke but a council of influential citizens. The Dutch later started joint stock companies, which let shareholders invest in business ventures and get a share of their profits - or losses. In 1602, the Dutch East India Company issued the first shares on the Amsterdam Stock Exchange. It was the first company to issue stocks and bonds. For other uses, see Venice (disambiguation). ... For other uses, see Pisa (disambiguation). ... This article is about the city in Italy. ... For other uses, see Genoa (disambiguation). ... Florence (or Firenze, Florentia and Fiorenza) is the capital city of the Italian region of Tuscany, and of the province of Florence. ... This 14th-century statue from south India depicts the gods Shiva (on the left) and Uma (on the right). ... 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 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. ... This article is about the trading company. ... A bond from the Dutch East India Company, dating from 7 November 1623, for the amount of 2,400 florins The Amsterdam Stock Exchange (AEX) is a European stock exchange, based in Amsterdam, the Netherlands. ...


The Amsterdam Stock Exchange (or Amsterdam Beurs) is also said to have been the first stock exchange to introduce continuous trade in the early 17th century. The Dutch "pioneered short selling, option trading, debt-equity swaps, merchant banking, unit trusts and other speculative instruments, much as we know them" (Murray Sayle, "Japan Goes Dutch", London Review of Books XXIII.7, April 5, 2001). There are now stock markets in virtually every developed and most developing economies, with the world's biggest markets being in the United States, Canada, China (Hongkong), India, UK, Germany, France and Japan[1]. A bond from the Dutch East India Company, dating from 7 November 1623, for the amount of 2,400 florins The Amsterdam Stock Exchange (AEX) is a European stock exchange, based in Amsterdam, the Netherlands. ... (16th century - 17th century - 18th century - more centuries) As a means of recording the passage of time, the 17th century was that century which lasted from 1601-1700. ... 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. ... An option strategy is implemented by combining one or more option positions and possibly an underlying stock position. ... In banking, a merchant bank is a traditional term for an Investment Bank. ... This law-related article does not cite its references or sources. ... 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. ... is the 95th day of the year (96th in leap years) in the Gregorian calendar. ... This article is about the year. ... Hong Kong (香港; Cantonese IPA: ; Jyutping: hoeng1 gong2; Yale: heūng góng; pinyin: Xiānggǎng; Wade-Giles: Hsiang-kang) is one of the two Special Administrative Regions of the Peoples Republic of China. ... The United Kingdom of Great Britain and Northern Ireland is a country in western Europe, and member of the Commonwealth of Nations, the G8, the European Union, and NATO. Usually known simply as the United Kingdom, the UK, or (inaccurately) as Great Britain or Britain, the UK has four constituent...

Image File history File links Download high resolution version (500x664, 65 KB) The Bombay Bombay Stock Exchange in Mumbai. ... Image File history File links Download high resolution version (500x664, 65 KB) The Bombay Bombay Stock Exchange in Mumbai. ... The Bombay Stock Exchange The Bombay Stock Exchange Limited (Marathi:मुंबई शेयर बाजार) (formerly, The Stock Exchange, Mumbai; popularly called The Bombay Stock Exchange, or BSE) is the oldest stock exchange in Asia. ...

Importance of stock market

Function and purpose

The stock market is one of the most important sources for companies to raise money. This allows businesses to go public, or raise additional capital for expansion. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate. A company in the broadest sense is an aggregation of people who stay together for a common purpose. ... For other uses, see Money (disambiguation). ... Market liquidity is a business or economics term that refers to the ability to quickly buy or sell a particular item without causing a significant movement in the price. ... Real estate is a legal term that encompasses land along with anything permanently affixed to the land, such as buildings. ...


History has shown that the price of shares and other assets is an important part of the dynamics of economic activity, and can influence or be an indicator of social mood. Rising share prices, for instance, tend to be associated with increased business investment and vice versa. Share prices also affect the wealth of households and their consumption. Therefore, central banks tend to keep an eye on the control and behavior of the stock market and, in general, on the smooth operation of financial system functions. Financial stability is the raison d'être of central banks. In financial markets, a share is a unit of account for various financial instruments including stocks, mutual funds, limited partnerships, and REITs. ... The Global Financial System refers to those financial institutions and regulations that act on the international level, as opposed to those that act on a national or regional level. ... Look up raison dêtre in Wiktionary, the free dictionary. ...


Exchanges also act as the clearinghouse for each transaction, meaning that they collect and deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk to an individual buyer or seller that the counterparty could default on the transaction. A counterparty is a legal and financial term. ...


The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the production of goods and services as well as employment. In this way the financial system contributes to increased prosperity. World GDP/capita changed very little for most of human history before the industrial revolution. ...


Relation of the stock market to the modern financial system

The financial system in most western countries has undergone a remarkable transformation. One feature of this development is disintermediation. A portion of the funds involved in saving and financing flows directly to the financial markets instead of being routed via banks' traditional lending and deposit operations. The general public's heightened interest in investing in the stock market, either directly or through mutual funds, has been an important component of this process. Statistics show that in recent decades shares have made up an increasingly large proportion of households' financial assets in many countries. In the 1970s, in Sweden, deposit accounts and other very liquid assets with little risk made up almost 60 per cent of households' financial wealth, compared to less than 20 per cent in the 2000s. The major part of this adjustment in financial portfolios has gone directly to shares but a good deal now takes the form of various kinds of institutional investment for groups of individuals, e.g., pension funds, mutual funds, hedge funds, insurance investment of premiums, etc. The trend towards forms of saving with a higher risk has been accentuated by new rules for most funds and insurance, permitting a higher proportion of shares to bonds. Similar tendencies are to be found in other industrialized countries. In all developed economic systems, such as the European Union, the United States, Japan and other developed nations, the trend has been the same: saving has moved away from traditional (government insured) bank deposits to more risky securities of one sort or another. In economics, disintermediation is the removal of intermediaries in a supply chain: cutting out the middleman. Instead of going through traditional distribution channels, which had some type of intermediate (such as a distributor, wholesaler, broker, or agent), companies may now deal with every customer directly, for example via the Internet. ... This article deals with U.S. mutual funds. ... This article is about the field of statistics. ... This article does not cite any references or sources. ... In finance, a portfolio is a collection of investments held by an institution or a private individual. ... ...


The stock market, individual investors, and financial risk

Riskier long-term saving requires that an individual possess the ability to manage the associated increased risks. Stock prices fluctuate widely, in marked contrast to the stability of (government insured) bank deposits or bonds. This is something that could affect not only the individual investor or household, but also the economy on a large scale. The following deals with some of the risks of the financial sector in general and the stock market in particular. This is certainly more important now that so many newcomers have entered the stock market, or have acquired other 'risky' investments (such as 'investment' property, i.e., real estate and collectables). A collectible (or collectable) is a manufactured item designed for people to collect. ...

With each passing year, the noise level in the stock market rises. Television commentators, financial writers, analysts, and market strategists are all overtalking each other to get investors' attention. At the same time, individual investors, immersed in chat rooms and message boards, are exchanging questionable and often misleading tips. Yet, despite all this available information, investors find it increasingly difficult to profit. Stock prices skyrocket with little reason, then plummet just as quickly, and people who have turned to investing for their children's education and their own retirement become frightened. Sometimes there appears to be no rhyme or reason to the market, only folly.

This is a quote from the preface to a published biography about the long-term value-oriented stock investor Warren Buffett.[2] Buffett began his career with $100, and $105,000 from seven limited partners consisting of Buffett's family and friends. Over the years he has built himself a multi-billion-dollar fortune. The quote illustrates some of what has been happening in the stock market during the end of the 20th century and the beginning of the 21st. A Stock Trader or Stock Investor is a securities professional or firm, who buys and sells securities, such as stocks and bonds. ... Warren Edward Buffett (born August 30, 1930, in Omaha, Nebraska) is an American investor, businessman and philanthropist. ...


The behavior of the stock market

NASDAQ in Times Square, New York City.
NASDAQ in Times Square, New York City.

From experience we know that investors may temporarily pull financial prices away from their long term trend level. Over-reactions may occur—so that excessive optimism (euphoria) may drive prices unduly high or excessive pessimism may drive prices unduly low. New theoretical and empirical arguments have been put forward against the notion that financial markets are efficient. Download high resolution version (426x640, 120 KB)NASDAQ in Timesquare New York City. ... Download high resolution version (426x640, 120 KB)NASDAQ in Timesquare New York City. ... NASDAQ in Times Square, New York City. ... New York, New York and NYC redirect here. ...


According to the efficient market hypothesis (EMH), only changes in fundamental factors, such as profits or dividends, ought to affect share prices. (But this largely theoretic academic viewpoint also predicts that little or no trading should take place—contrary to fact—since prices are already at or near equilibrium, having priced in all public knowledge.) But the efficient-market hypothesis is sorely tested by such events as the stock market crash in 1987, when the Dow Jones index plummeted 22.6 percent—the largest-ever one-day fall in the United States. This event demonstrated that share prices can fall dramatically even though, to this day, it is impossible to fix a definite cause: a thorough search failed to detect any specific or unexpected development that might account for the crash. It also seems to be the case more generally that many price movements are not occasioned by new information; a study of the fifty largest one-day share price movements in the United States in the post-war period confirms this.[3] Moreover, while the EMH predicts that all price movement (in the absence of change in fundamental information) is random (i.e., non-trending), many studies have shown a marked tendency for the stock market to trend over time periods of weeks or longer. In finance, the efficient market hypothesis (EMH) asserts that financial markets are informationally efficient, or that prices on traded assets, e. ... DJIA (19 July 1987 through 19 January 1988) FTSE 100 Index (19 July 1987 through 19 January 1988) Black Monday is the name given to Monday, October 19, 1987, when the Dow Jones Industrial Average (DJIA) fell 22. ... ...


Various explanations for large price movements have been promulgated. For instance, some research has shown that changes in estimated risk, and the use of certain strategies, such as stop-loss limits and Value at Risk limits, theoretically could cause financial markets to overreact. Definition In economics and finance, the Value at risk, or VaR, is a measure used to estimate how the value of an asset or of a portfolio of assets will decrease over a certain time period (usually over 1 day or 10 days) under usual conditions. ...


Other research has shown that psychological factors may result in exaggerated stock price movements. Psychological research has demonstrated that people are predisposed to 'seeing' patterns, and often will perceive a pattern in what is, in fact, just noise. (Something like seeing familiar shapes in clouds or ink blots.) In the present context this means that a succession of good news items about a company may lead investors to overreact positively (unjustifiably driving the price up). A period of good returns also boosts the investor's self-confidence, reducing his (psychological) risk threshold.[4] Economics Nobel Laureate Daniel Kahneman, was an important figure in the development of behavioral finance and economics and continues to write extensively in the field. ...


Another phenomenon—also from psychology—that works against an objective assessment is group thinking. As social animals, it is not easy to stick to an opinion that differs markedly from that of a majority of the group. An example with which one may be familiar is the reluctance to enter a restaurant that is empty; people generally prefer to have their opinion validated by those of others in the group. Groupthink is a type of thought exhibited by group members who try to minimize conflict and reach consensus without critically testing, analyzing, and evaluating ideas. ...


In one paper the authors draw an analogy with gambling.[5] In normal times the market behaves like a game of roulette; the probabilities are known and largely independent of the investment decisions of the different players. In times of market stress, however, the game becomes more like poker (herding behavior takes over). The players now must give heavy weight to the psychology of other investors and how they are likely to react psychologically.


The stock market, as any other business, is quite unforgiving of amateurs. Inexperienced investors rarely get the assistance and support they need. In the period running up to the recent Nasdaq crash, less than 1 per cent of the analyst's recommendations had been to sell (and even during the 2000 - 2002 crash, the average did not rise above 5%). The media amplified the general euphoria, with reports of rapidly rising share prices and the notion that large sums of money could be quickly earned in the so-called new economy stock market. (And later amplified the gloom which descended during the 2000 - 2002 crash, so that by summer of 2002, predictions of a DOW average below 5000 were quite common.) NASDAQ in Times Square, New York City. ... New Economy was a term coined in late 1990s by pundits to describe what some thought was an evolution of the United States and other developed countries from an industrial/manufacturing-based wealth producing economy into a service sector asset based economy from globalization and currency manipulation by governments and...


Irrational behavior

Sometimes the market tends to react irrationally to economic news, even if that news has no real effect on the technical value of securities itself. Therefore, the stock market can be swayed tremendously in either direction by press releases, rumors, euphoria and mass panic. Look up euphoria, euphoric in Wiktionary, the free dictionary. ... In psychology collective hysteria is the name given to a phenomenon of the manifestation of the same hysterical symptoms by more than one person. ...


Over the short-term, stocks and other securities can be battered or buoyed by any number of fast market-changing events, making the stock market difficult to predict.


The crashes

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.[6] 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[6], 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."[6]
Main article: Stock market crash

A stock market crash is often defined as a sharp dip in share prices of equities listed on the stock exchanges. In parallel with various economic factors, a reason for stock market crashes is also due to panic. Often, stock market crashes end up with speculative economic bubbles. 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. ... A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market. ... 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. ... Ownership equity, commonly known simply as equity, also risk or liable capital, is a financial term for the difference between a companys assets and liabilities -- that is, the value that accrues to the owners (sole proprieter, partners, or shareholders). ... This article is about the human activity. ...


There have been famous stock market crashes that have ended in the loss of billions of dollars and wealth destruction on a massive scale. An increasing number of people are involved in the stock market, especially since the social security and retirement plans are being increasingly privatized and linked to stocks and bonds and other elements of the market. There have been a number of famous stock market crashes like the Wall Street Crash of 1929, the stock market crash of 1973–4, the Black Monday of 1987, the Dot-com bubble of 2000. But those stock market crashes did not begin in 1929, or 1987. They actually started years or months before the crash really hit hard. A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market. ... Social security primarily refers to social welfare service concerned with social protection, or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. ... A retirement plan is an arrangement to provide people with an income, or pension, during retirement, when they are no longer earning a steady income from employment. ... For other uses, see Stock (disambiguation). ... Look up bond in Wiktionary, the free dictionary. ... Crowd gathering on Wall Street. ... The stock market crash of 1973–4 was a stock market crash that lasted between 11 January 1973 and 6 December 1974. ... DJIA (19 July 1987 through 19 January 1988). ... The dot-com bubble was a speculative bubble covering roughly 1995–2001 during which stock markets in Western nations saw their value increase rapidly from growth in the new Internet sector and related fields. ...


One of the most famous stock market crashes started October 24, 1929 on Black Thursday. The Dow Jones Industrial lost 50% during this stock market crash. It was the beginning of the Great Depression. Another famous crash took place on October 19, 1987 – Black Monday. On Black Monday itself, the Dow Jones fell by 22.6% after completing a 5 year continuous rise in share prices. This event not only shook the USA, but quickly spread across the world. Thus, by the end of October, stock exchanges in Australia lost 41.8%, Canada lost 22.5%, Hong Kong lost 45.8% and Great Britain lost 26.4%. Names “Black Monday” and “Black Tuesday” are also used for October 28-29,1929, which followed Terrible Thursday – starting day of the stock market crash in 1929. The crash in 1987 raised some mysticism – main news or events did not predict the catastrophe and visible reasons for the collapse were not identified. This event had put many important assumptions, of modern economics, under uncertainty, namely, the theory of rational conduct of human being, the theory of market equilibrium and the hypothesis of market efficiency. For some time after the crash, trading in stock exchanges worldwide was halted, since the exchange's computers did not perform well owing to enormous quantity of trades being received at one time. This halt in trading allowed the Federal Reserve system and central banks of other countries to take measures to control the spreading of worldwide financial crisis. In the United States the SEC introduced several new measures of control into the stock market in an attempt to prevent a re-occurrence of the events of Black Monday. Computer systems were upgraded in the stock exchanges to handle larger trading volumes in a more accurate and controlled manner. The SEC modified the margin requirements in an attempt to lower the volatility of common stocks, stock options and the futures market. The New York Stock Exchange and the Chicago Mercantile Exchange introduced the concept of a circuit breaker. The circuit breaker halts trading if the Dow declines a prescribed number of points for a prescribed amount of time. The Dow Jones Industrial Average (DJIA) is one of several stock market indices created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow. ... For other uses, see The Great Depression (disambiguation). ... Face-to-face trading interactions on the New York Stock Exchange trading floor. ... The Federal Reserve System is headquartered in the Eccles Building on Constitution Avenue in Washington, DC. The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States. ...


Stock market index

Main article: Stock market index

The movements of the prices in a market or section of a market are captured in price indices called stock market indices, of which there are many, e.g., the S&P, the FTSE and the Euronext indices. Such indices are usually market capitalization (the total market value of floating capital of the company) weighted, with the weights reflecting the contribution of the stock to the index. The constituents of the index are reviewed frequently to include/exclude stocks in order to reflect the changing business environment. A comparison of three major stock indices: the NASDAQ Composite, Dow Jones Industrial Average, and S&P 500. ... A comparison of three major stock indices: the NASDAQ Composite, Dow Jones Industrial Average, and S&P 500. ... Publications Standard & Poors publishes a weekly (48 times a year) stock market analysis newsletter called The Outlook, which is issued both in print and online to subscribers. ... FTSE may stand for a number of things: FTSE 100 Index on the London Stock Exchange. ... Euronext N.V. is a pan-European stock exchange based in Paris[1] and with subsidiaries in Belgium, France, Netherlands, Portugal and the United Kingdom. ... Market capitalization, or market cap, is a measurement of corporate or economic size equal to the stock price times the number of shares outstanding of a public company. ... This article or section does not cite its references or sources. ...


Derivative instruments

Main article: Derivative (finance)

Financial innovation has brought many new financial instruments whose pay-offs or values depend on the prices of stocks. Some examples are exchange-traded funds (ETFs), stock index and stock options, equity swaps, single-stock futures, and stock index futures. These last two may be traded on futures exchanges (which are distinct from stock exchanges—their history traces back to commodities futures exchanges), or traded over-the-counter. As all of these products are only derived from stocks, they are sometimes considered to be traded in a (hypothetical) derivatives market, rather than the (hypothetical) stock market. Derivatives traders at the Chicago Board of Trade. ... An exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges, much like stocks or bonds. ... A stock market index is a listing of stocks, and a statistic reflecting the composite value of its components. ... 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). ... An equity swap, a branch of derivative security, is a swap in which at least one party pays the return on a stock or stock index. ... Single-stock futures (SSFs) are securities that share some of the features of equities and also some of those of traditional commodity futures. ... 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. ... The introduction to this article provides insufficient context for those unfamiliar with the subject matter. ... The word commodity has a different meaning in business than in Marxian political economy. ... Over-the-counter (OTC) trading is to trade financial instruments such as stocks, bonds, commodities or derivatives directly between two parties. ... Derivatives traders at the Chicago Board of Trade. ... The derivatives markets are the financial markets for derivatives. ...


Leveraged Strategies

Stock that a trader does not actually own may be traded using short selling; margin buying may be used to purchase stock with borrowed funds; or, derivatives may be used to control large blocks of stocks for a much smaller amount of money than would be required by outright purchase or sale. It has been suggested that Short (finance) be merged into this article or section. ... 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. ... Derivatives traders at the Chicago Board of Trade. ...


Short selling

Main article: Short selling

In short selling, the trader borrows stock (usually from his brokerage which holds its clients' shares or its own shares on account to lend to short sellers) then sells it on the market, hoping for the price to fall. The trader eventually buys back the stock, making money if the price fell in the meantime or losing money if it rose. Exiting a short position by buying back the stock is called "covering a short position." This strategy may also be used by unscrupulous traders to artificially lower the price of a stock. Hence most markets either prevent short selling or place restrictions on when and how a short sale can occur. The practice of naked shorting is illegal in most (but not all) stock markets. It has been suggested that Short (finance) be merged into this article or section. ... To meet Wikipedias quality standards, this article or section may require cleanup. ...


Margin buying

Main article: margin buying

In margin buying, the trader borrows money (at interest) to buy a stock and hopes for it to rise. Most industrialized countries have regulations that require that if the borrowing is based on collateral from other stocks the trader owns outright, it can be a maximum of a certain percentage of those other stocks' value. In the United States, the margin requirements have been 50% for many years (that is, if you want to make a $1000 investment, you need to put up $500, and there is often a maintenance margin below the $500). A margin call is made if the total value of the investor's account cannot support the loss of the trade. (Upon a decline in the value of the margined securities additional funds may be required to maintain the account's equity, and with or without notice the margined security or any others within the account may be sold by the brokerage to protect its loan position. The investor is responsible for any shortfall following such forced sales.) Regulation of margin requirements (by the Federal Reserve) was implemented after the Crash of 1929. Before that, speculators typically only needed to put up as little as 10 percent (or even less) of the total investment represented by the stocks purchased. Other rules may include the prohibition of free-riding: putting in an order to buy stocks without paying initially (there is normally a three-day grace period for delivery of the stock), but then selling them (before the three-days are up) and using part of the proceeds to make the original payment (assuming that the value of the stocks has not declined in the interim). 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. ... The Federal Reserve System is headquartered in the Eccles Building on Constitution Avenue in Washington, DC. The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States. ... The Great Depression was a global economic slump that began in 1929 and bottomed in 1933. ...


New issuance

Global issuance of equity and equity-related instruments totaled $505 billion in 2004, a 29.8% increase over the $389 billion raised in 2003. Initial public offerings (IPOs) by US issuers increased 221% with 233 offerings that raised $45 billion, and IPOs in Europe, Middle East and Africa (EMEA) increased by 333%, from $ 9 billion to $39 billion. Thomson Financials standard league tables are rankings of Investment Banks in terms of the dollar volume of deals they work on. ... In financial markets, an initial public offering (IPO) is the first sale of a companys common shares to public investors. ... Europe, the Middle East and Africa, usually abbreviated to EMEA, is a regional designation used for government, marketing and business purposes. ...


Investment strategies

Main article: Stock valuation

One of the many things people always want to know about the stock market is, "How do I make money investing?" There are many different approaches; two basic methods are classified as either fundamental analysis or technical analysis. Fundamental analysis refers to analyzing companies by their financial statements found in SEC Filings, business trends, general economic conditions, etc. Technical analysis studies price actions in markets through the use of charts and quantitative techniques to attempt to forecast price trends regardless of the company's financial prospects. One example of a technical strategy is the Trend following method, used by John W. Henry and Ed Seykota, which uses price patterns, utilizes strict money management and is also rooted in risk control and diversification. There are several methods used to value companies and their stocks. ... 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. ... Fundamental analysis of a business involves analyzing its income statement, financial statements and health, its management and competitive advantages, and its competitors and markets. ... Historical financial statement Financial statements (or financial reports) are formal records of a business financial activities. ... The Securities and Exchange Commission (SEC) requires public companies to file reports regularly so that they can be made available to the public. ... Technical analysis is the study of market action, primarily through the use of charts, for the purpose of forecasting future price trends. ... Trend following is an investment strategy that takes advantage of long-term moves that play out in various markets. ... John W Henry. ... Edward A. Seykota (born August 7, 1946) is a commodities trader, best known for having been profiled in the books Market Wizards by Jack D. Schwager and Trend Following by Michael Covel. ... For non-business risks, see risk or the disambiguation page risk analysis. ... Diversification in finance involves spreading investments around into many types of investments, including stocks, mutual funds, bonds, and cash. ...


Additionally, many choose to invest via the index method. In this method, one holds a weighted or unweighted portfolio consisting of the entire stock market or some segment of the stock market (such as the S&P 500 or Wilshire 5000). The principal aim of this strategy is to maximize diversification, minimize taxes from too frequent trading, and ride the general trend of the stock market (which, in the U.S., has averaged nearly 10%/year, compounded annually, since World War II). An index fund or index tracker is a collective investment scheme that aims to replicate the movements of an index of a specific financial market, or a set of rules of ownership that are held constant, regardless of market conditions. ... The S&P 500 is an index containing the stocks of 500 Large-Cap corporations, most of which are American. ... The Dow Jones Wilshire 5000 Total Stock Market Index, also known as the Dow Jones Wilshire 5000 Composite Index or simply the Wilshire 5000 is a broad base stock market index often used to represent the entire United States stock market. ...


Taxation

Main article: Capital gains tax

According to each national or state legislation, a large array of fiscal obligations must be respected regarding capital gains, and taxes are charged by the state over the transactions, dividends and capital gains on the stock market, in particular in the stock exchanges. However, these fiscal obligations may vary from jurisdiction to jurisdiction because, among other reasons, it could be assumed that taxation is already incorporated into the stock price through the different taxes companies pay to the state, or that tax free stock market operations are useful to boost economic growth. For all other forms of taxation, see tax Tax rates around the world Tax revenue as % of GDP Economic policy Monetary policy Central bank   Money supply Fiscal policy Spending   Deficit   Debt Trade policy Tariff   Trade agreement Finance Financial market Financial market participants Corporate   Personal Public   Banking   Regulation        A capital gains... In finance, a capital gain is profit that is realized from the sale of an asset that was previously purchased at a lower price. ... In many jurisdictions, including the United States and the United Kingdom, a capital gains tax or CGT is charged on capital gains, that is the profit realised on the sale of an asset that was previously purchased at a lower price. ... A tax is an involuntary fee paid by individuals or businesses to a state, or to functional equivalents of a state, including tribes, secessionist movements or revolutionary movements. ... See stock (disambiguation) for other meanings of the term stock In financial terminology, stock is the capital raised by a corporation, through the issuance and sale of shares. ... World GDP/capita changed very little for most of human history before the industrial revolution. ...


References

  1. ^ Alternative Stock Library (2008-02-14). Japan Might Be Extremely Profitable Investment. Alternative Stock Library. Retrieved on 2008-02-25.
  2. ^ Hagstrom, Robert G. (2001). The Essential Buffett: Timeless Principles for the New Economy. New York: John Wiley & Sons. ISBN 0-471-22703-X. 
  3. ^ Cutler, D. Poterba, J. & Summers, L. (1991). "Speculative dynamics". Review of Economic Studies 58. 
  4. ^ Tversky, A. & Kahneman, D. (1974). "Judgement under uncertainty: heuristics and biases". Science 185: 1124-1131. doi:10.1126/science.185.4157.1124. 
  5. ^ Stephen Morris and Hyun Song Shin, Oxford Review of Economic Policy, vol. 15, no 3, 1999.
  6. ^ a b c Shiller, Robert (2005). Irrational Exuberance (2d ed.). Princeton University Press. ISBN 0-691-12335-7. 

2008 (MMVIII) is the current year, a leap year that started on Tuesday of the Anno Domini (or common era), in accordance to the Gregorian calendar. ... is the 45th day of the year in the Gregorian calendar. ... 2008 (MMVIII) is the current year, a leap year that started on Tuesday of the Anno Domini (or common era), in accordance to the Gregorian calendar. ... is the 56th day of the year in the Gregorian calendar. ... John Wiley & Sons, Inc. ... A digital object identifier (or DOI) is a standard for persistently identifying a piece of intellectual property on a digital network and associating it with related data, the metadata, in a structured extensible way. ... 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. ...

See also

This article needs additional references or sources for verification. ... Much effort has gone into the study of financial markets and how prices vary with time. ... This article or section is in need of attention from an expert on the subject. ... A Stock Trader or Stock Investor is a securities professional or firm, who buys and sells securities, such as stocks and bonds. ... A comparison of three major stock indices: the NASDAQ Composite, Dow Jones Industrial Average, and S&P 500. ... 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. ... A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market. ... A stock market boom is a sudden dramatic gain of value of shares of stock in corporations. ... Eat pizza everyday. ... In finance, a trader is someone who buys and sells financial instruments such as stocks, bonds and derivatives. ...

Lists

Following is a list of accounting topics. ... This aims to be a complete list of the articles on economics. ... This is an alphabetical list of notable economists, that is, experts in the social science of economics. ... Topics in finance include: // Finance an overview Arbitrage Capital (economics) Capital asset pricing model Cash flow Cash flow matching Debt Default Consumer debt Debt consolidation Debt settlement Credit counseling Bankruptcy Debt diet Debt-snowball method Discounted cash flow Financial capital Funding Financial modeling Entrepreneur Entrepreneurship Fixed income analysis Gap financing... This is a list of articles on general management and strategic management topics. ... This is a list of over 200 articles on marketing topics. ... This is a list of notable recessions, financial crises, depressions and downturns. ... This is a list of stock exchanges. ... This is a list of stock market crashes. ... // Commonly used stock market indices include: Large companies not ordered by any nation or type of business (in alphabetical order). ...

External links

Wikiquote has a collection of quotations related to:
Look up Stock market in
Wiktionary, the free dictionary.
Image File history File links This is a lossless scalable vector image. ... Wikiquote is one of a family of wiki-based projects run by the Wikimedia Foundation, running on MediaWiki software. ... Wiktionary (a portmanteau of wiki and dictionary) is a multilingual, Web-based project to create a free content dictionary, available in over 151 languages. ... 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. ... For other uses, see Stock (disambiguation). ... 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. ... This article is about financial dividends. ... 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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