It goes without saying that every industry has got its unique terms as well as vocabulary. So the same applies to the stock market and investors. It’s clear that it’s very important to be aware of this specific used by investor gurus because with this knowledge you’ll understand the stock market much better.
Let’s start with securities. I should say that this word “securities” is considered to be rather a broad term and it is often used to describe so called investment mediums having a certain financial value. By the way they are classified as equity and debt ones. I should say that equity securities give birth to stocks. Accordingly debt securities include such items as bonds and banknotes.
Then we should get acquainted with the stock exchange. To cut a long story short a stock exchange is a kind of company or corporation providing a suitable place for stock brokers. So they can trade securities there. It’s known that there are several stock exchanges in the world now. The biggest and most important ones are the New York Stock Exchange, the London Stock Exchange and certainly the Tokyo Stock Exchange.
I should also mention stock market. To say simply it’s a place, where stocks are traded. To be exact stock markets may be public and private. Stocks stand for certain units of ownership of a particular company. It’s evident that businesses as well as corporations use their cash flow for the purpose of financing their business ventures. As follows from the fact that it represents somebody’s ownership stock is often called “shares of a company”. They are also known as “shares”. There are various kinds of stock available to traders. It’s clear that all these stocks have got their own unique benefits and requirements.
Common stock should be mentioned too. I should say that this kind of stock points out to the primary ownership of a particular company. Investors engaged in purchasing common stock are called shareholders. And these shareholders have got certain rights as well as voting privileges regarding the company they are investing in. I’d like to add that the percent of stock which is owned by a shareholder forms the magnitude of his power as well as liability with the company.
And what about preferred stock? I can’t pass by it too. This kind of stock also points out to ownership in a particular company. By the way I’d like to stress that these terms can be found in a so called Certificate of Designation. This document deals with all the rights and benefits associated with an average investor. For instance investors who buy preferred stocks may not have these voting privileges at all. On the contrary preferred stocks often have dividends paid exactly to preferred stock holders. By the way common stock holders get their dividends much later. I hope you’ve learnt enough from this review.