Random Walk
A theory claiming that stock price changes occur randomly and are independent of one another over time

 

Return On Equity
Amount, expressed as a percentage, earned on a company’s common stock investment for a given period. It is calculated by dividing common stock equity (net worth) at the beginning of the accounting period into net income for the point in time after preferred stock dividends but before common stock dividends. Return on equity tells common shareholders how effectually their money is being employed.
 

SEC
The Securities and Exchange Commission, established by Congress in 1933 to protect investors.

 

Securities
Various types of investments including stocks & bonds.

 

Secondary Market
The New York stock Exchange (NYSE), American Stock Exchange (AMEX), and Over-the-Counter (OTC) are secondary markets. The stock has already been issued and is now trading among investors.

 

Standard & Poor’s Index
A broad-based measurement of changes in stock-market conditions based on the average performance of 500 widely held common stocks; commonly know as the Standard & Poor’s 500 (or S&P 500).

 

Stock
Also known as "shares", stock represents ownership in a corporation. Stocks make money in two ways; through dividends which are portions of a company’s profit given to shareholders, and through appreciation, which means you sell a stock for more than you bought it.

 

Stock Dividend
A dividend that is paid in securities rather than cash. The dividend may be additional shares of another company (usually a subsidiary) held by the issuing company.

 

Stock Split
As stock prices go higher, fewer investors are willing to trade the stock; a split makes it easier for people to buy a stock by dividing the outstanding number of shares to the stock into larger shares, thus lowering the price. The Board of Directors of the company determines whether the stock should split.

 

Back to Top

 

Total Return
Dividends received for the past 12 months, plus Stock price change over the past 12 months, Yield (%) + Appreciation ($).

 

Uptick
A term used to designate a transaction made at a price higher than the preceding transaction.

 

Value Investing
Seeking undervalued companies.

 

Volume
The number of shares traded in a security or an entire market during a given period.

 

Warrant
The holder of a warrant has the right to purchase securities at a stipulated price within a specified time limit or sometimes perpetually.

 

Working Control
Usually, ownership of 51% and above of a company’s voting stock in necessary to exercise working control.

 

Yield
Also know as return. The dividends or interest paid by a security expressed as a percentage of the current price. A stock with a current market value of $20 a share that is currently paying dividends at the rate of $1 a year is said to return 5% ($1.00 divided by $20.00). The current return on a bond is figured the same way.

 

Zero coupon bond
A bond that pays no interest but is priced, at issue, at a discount from its redemption price.

 

Back to Top

PERS Help © 2004 All rights reserved.
 Last Revised: May 14, 2006