The Language of Stock The Language of Stock
Market InvestingMarket InvestingMarket InvestingMarket Investing
Financial Terms
Definition of Stock
Financial Terms
� There are a couple of terms commonly used
by investors, financial advisors, stock market
analysts, and financial experts that YOU need
to know.
� It is critical that you understand basic stock � It is critical that you understand basic stock
market terminology , in order for you to
understand the stock market.
� THIS IS THE FIRST STEP IN UNDERSTANDING
THE STOCK MARKET.
Basic Terms You Should Know:
� Common Stock
� Shares
� Equity or Equity
Interest
� Ownership or
Ownership Interest
� Stake or Ownership
Stake
COMMON
STOCK
� There are different terms that are
synonymous with the word stock:
• Common Stock
• Shares
• Equity or Equity Interest
Other Names for Stock:
• Equity or Equity Interest
• Ownership or Ownership Interest
• Stake
SHARES
� If you say:
Shares
“I have 200 shares in Apple Computer.”
� It’s the same as saying:
“I own 200 shares of Apple Computer Stock.”
EQUITY OR
EQUITY
INTEREST
� If you say:
Equity
“After looking at my statement, I realized that I
have a 25% equity position in this company.”
� It’s the same as saying:
“I own 25% of all stock outstanding in this company.
So if a company has a 1000 shares (common stock)
out there I own 250 out of the 1000 shares of stock.”
OWNERSHIP
OR
OWNERSHIP
INTERESTINTEREST
� If you say:
Ownership
"I have a 20% ownership interest in this company
and I'll be damned if you close that
factory down."
� It’s the same as saying:
“I own 20% of all stock outstanding in this company.”
STAKE OR
OWNERSHIP
STAKE
• If you say:
• It’s the same as saying:
Stake
“I have a 50% stake in Microsoft.”
IF THIS WERE TRUE I WOULD BE WEALTHIER THAN BILL
GATES. DID YOU KNOW THAT BILL GATES DOESN’T EVEN
OWN 50% OF MICROSOFT SHARES OR COMMON STOCK
OUTSTANDING?
This simply means that I own 50% of all stock
outstanding of the Microsoft Company.
Note:
� Notice that all of these words mean the
same thing.
� They are just different terms.� They are just different terms.
� Stock is synonymous with shares, equity, and
ownership. Companies issue stock to raise
money for operations. In exchange, companies
give up ownership to stockholders. People
purchase stock as an investment in
In Summary:
purchase stock as an investment in
corporation in exchange for the opportunity to
receive capital gains and dividend income.
Stockholders are considered owners of the
corporation.
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