Stocks & the Stock Market
Stocks and Stock Market

Capital Gain -- The amount by which an asset's selling price exceeds its initial purchase price. A realized capital gain is an investment that has been sold at a profit. An unrealized capital gain is an investment that hasn't been sold yet but would result in a profit if sold.

Dividend -- A taxable payment declared by a company's board of directors and given to its shareholders out of the company's current or retained earnings, usually quarterly.

Mutual fund -- An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives.

Stock -- A share of a company held by an individual or group. Corporations raise capital by issuing stocks and entitle the stock owners (shareholders) to partial ownership of the corporation. Stocks are bought and sold on what is called an exchange.

Closing Price -- The price of the last transaction for a given security at the end of a given trading session. also called close.

Net Asset Value -- The dollar value of a single mutual fund share, based on the value of the underlying assets of the fund minus its liabilities, divided by the number of shares outstanding. Calculated at the end of each business day.

Price to Earnings Ratio (P/E ratio) -- The most common measure of how expensive a stock is. The E is for earnings per share over the last four quarters. The price is divided by the earnings per share. A high P/E ratio for a given stock means the investor is paying a high price for that stock. It is good to compare P/E ratios for various companies in the same industry.

Stock Symbol -- Ticker symbol for a stock.

Trading Volume -- The number of shares, bonds or contracts traded during a given period, for a security or an entire exchange. also called volume.

Yield -- The annual rate of return on an investment, expressed as a percentage.