![]() You lend a borrower some money, and in return you receive a promise of repayment, plus interest, at a set date. To make investing easier when you're first starting out, think about investing in a mutual fund or exchange traded fund (ETF) as opposed to an individual stock.Ī bond is like an IOU. Sector and industry refer to a commonly used classification system in which stocks are generally divided into 11 sectors (information technology, telecom services, utilities, health care, financials, industrials, consumer discretionary, consumer staple, materials and energy) and 68 industries within those sectors (examples include food and drug, retailing, banks, building products, etc.).Style refers to whether a stock is considered to be a growth investment (with earnings and share price expected to grow rapidly) or a value investment (believed to be underpriced and a good value).You might also hear about the style of a stock, or a reference to what industry or sector a stock is in. Preferred stockholders usually don't have voting rights, but they receive dividend payments before common stockholders do, and have priority over common stockholders if the company goes bankrupt. It pays a fixed yield, and the prices tend to be less volatile than common stock, but also provides less potential for total return. Preferred stock acts much more like a bond than common stock.If you hold common stock you're in a position to share in the company's success or feel the lack of it. Owning common stock typically entitles owners to vote at shareholder meetings and receive dividends (if the company chooses to pay them). Common stock is a share of ownership that you buy when you invest in a company.There are actually two primary classes of stock: This is calculated by multiplying the stock price by the number of shares outstanding. Capitalization is the total stock market value of all shares of a company's stock. These definitions may vary, depending on the source, and the cutoffs have shifted over time. International-foreign (non-U.S.) companies.Small-cap-companies between $300 million and $2 billion.Mid-cap-companies between $2 billion and $10 billion in terms of market capitalization.Large-cap-generally understood as companies with market capitalizations starting at $10 billion.Charles Schwab Financial Literacy SurveyĪ stock-also called an equity security-represents a share of ownership in a company. ![]()
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