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What are ECN's?
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electronic communication networks. They are electronic trading systems that automatically match buy and sell orders at a specific price.
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bear market,
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stock prices are generally falling
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share,
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a percentage of a company (stock)
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Where was the first stock market?
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New York
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IPO,
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a company "goes public" and raises money/capital by selling shares to people who think the company will do well.
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small-cap stock,
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companies without much money in assets
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what's a treasury note?
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they mature in 2-10 years
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When did shares of public corporations begin to be traded?
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late 1800's
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When did General Electric make it's IPO?
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April, 1892
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market cap,
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market capitalization - or a measure of a company's value. Apple issues 100 shares, and people are willing to pay $100 for those shares, the public thinks that Apple is worth 100*$100, or 10,000
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401(k) plan,
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a program for employees where the employee can invest in the stock market with pre-tax money. Typically employers will pay (match) up to 3-5% of the money the employee puts in.
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EBITDA
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a good way to compare earnings from company to company. Interest, taxes, depreciation, and appreciation can make huge changes in the earnings number.
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market crash,
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a panic time triggered by something really bad happening globally, when investors sell stock and get money - even at major losses, just to try to get out of the diving market.
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Penny stock
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stock that sells for very little money, and may go bankrupt or double in value at any moment.
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Who created the Dow Joans Industrial Average? When?
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Charles Dow; 1896
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what's the bond market?
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a secondary market where investors trade securities
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S&P 500
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The top 500 companies as measured by Standard and Poor (these are people)
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Preferred stock
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the most protected level of stock. In the event of a bankruptcy, the people who were owed money by the company can take shares of the company to offset their loses. Preferred stock are the last people to lose their shares.
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Who are bonds bought from?
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other investors in the bond market.
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What is common stock?
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It represents basic ownership in a public company. It recieves most of the companies profits, and bears most losses. Investors are not gaurunteed dividends.
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Who signed the Buttonwood agreement?
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Brokers who had been conducting auctions under the Buttonwood tree on wallstreet.
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Day Order,
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an order to buy stock that expires at the end of the day
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Market Order,
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a command given to buy or sell stock at whatever the price is ("sell this now, whatever the price is")
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What did Alexander Hamilton write in 1790?
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A Report on public credit
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What is the NASDAQ known for?
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Listing newer, smaller companie that often specialize in technology.
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What is the market was GE traded on after the primary market?
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The secondary market.
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What did the word "stock" refer to in 1792?
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A long-term IOU
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How did corporations gain savings?
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by selling shares of ownership to stockgolders.
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what are the three type of funds?
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Mutual funds, Exchange traded funds, and closed-end funds
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what kinds of securities are less risky?
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those with short lifespans. Therefore, they offer lower interest rates than long-life securities.
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whats the relation between interest rates and bonds?
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If interest rates fall, bond prices usually rise, and vice versa.
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Whats does the secondary market allow?
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The general public to trade stocks as many times as they want, AFTER the original sale of the stock.
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What did the Buttonwood agreement state?
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The brokers agreed to include only one another in their auctions, and to cahrge a given commision on any trades.
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What does the stock market resemble?
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Markets that sell used cars, or existing houses.
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What is second step in purchasing stock?
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The broker transfers an order by phone, or electronically to the florr of the NYSE.
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What's the benefit of owning preffered stock?
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These investors must be payed a fixed dividend bfore the common stockholders are payed. Also, they are the first to be payed if the company fails and attemps to pay investors.
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Why did the government create the stock market?
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So they could borow money from the public to pay back debts on the revolutionary war.
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How does the NASDAQ differ from the AMEX and NYSE?
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It has no physical trading floor, while the others do.
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What happens if the prospects of a company look higher...lower?
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Investors will bid the stock price up, or down.
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how to treasury bonds campare to cororate bonds?
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they are backed by the credit of the federal government, and are much safer
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What was the New York stock exchange originally like?
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It was a place on Wall street where people gathered and traded bonds.
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What is the third step in purchasing stock?
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A floor broker routes the order to a specialist post. Other brokers gather there and participate in a continual auction of that particular stock. The specialist at the post oversees the market. The stock is then purched.
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share
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portion of a stock
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bond
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a certificate of debt (usually interest-bearing or discounted) that is issued by a government or corporation in order to raise money
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portfolio
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the group of assets--such as stocks, bonds, and mutual funds--held by an investor
to reduce their risk, investors tend to hold more than just a single stock or other asset. Think of this as a pie; each chunk is divided up into specific assets such as bonds, equities, etc.
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Stock
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A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings
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blue chip stocks
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stock of a well-established and financially-sound company that has demonstrated its ability to pay dividends in both good and bad times.
prices fluctuate the least with these. they offer the smallest returns.
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selling short
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borrow shares from your broker, then sell them and get the money
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Bear
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an investor who acts on the belief that a security or the market is falling or is expected to fall
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high-priced common stocks that have been strong, profitable stocks for a long period of time
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blue chip stocks
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Bear Market
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A market condition in which the prices of securities are falling or are expected to fall
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close
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the price paid for the stock in the last trade of the day
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Large Cap
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Between 10 and 200 billion dollars in market capitalization
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Mid Cap "Secondary Stocks"
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stocks issued by companies having a market capitalization between $2 billion and $10 billion
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penny stocks
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a stock that sells for less than $1 a share.
these are the riskiest to invest in. The gains can be huge, but so can the losses!
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Going Public: Initial Public Offering
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The process of selling shares that were formerly privately held to new investors for the first time
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