Stock Market Games Vocabulary
Part 1:
Stock: A security that signifies ownership in a corporation and represents a claim on a part of the corporation’s profit (or loss). Companies usually issue stock to raise money for a variety of reasons, including expanding or modernizing their operations.

Stock Exchange: Place/electronic platform where shares of are bought and sold.

Dividend: Part of a company’s profits (earnings) that is pays as money or shares to stockholders. In The Stock Market Game, any dividends received are listed in Transaction History and are included in the portfolio’s total equity.

Earnings: Whatever profits or net income remains after subtracting the company’s expenses from its revenue. A company’s profit.

Initial Public Offering (IPO): An IPO is the first issue of stock for public trading made by a company.

Preferred Stock: Often pay a fixed dividend on a regular schedule. The prices tend to be less volatile than common stock. Preferred stocks tend to move with changing
interest rates. Preferred stocks holders cannot vote on corporate matters.
Portfolio: A collection of investments owned by one individual or organization.

Private Company: A company owned by a person, family, or small group of investors that does not sell stock to the public.

Public Company: A company owned by investors who buy shares of stock usually through a stock exchange.

Stock Exchange: Place/electronic platform where shares of are bought and sold.

Part II.

Diversification: an investment strategy in which you spread your investment dollars among different markets, sectors, industries, and securities. The goal of the strategy is to protect the value of your overall portfolio in case a single security or market sector takes a serious downturn and drops in price.

Index: An index reports changes, usually expressed as a percentage, in a specific financial market, in a number of related markets, or in an economy as a whole. Each index — and there are a large number of them — measures the market or economy it tracks from a specific starting point, which might be as recent as the previous day or many years in the past.

Industry: A group of companies producing similar products or services.

Portfolio: A collection of investments owned by one individual or organization.

Risk: The chance of losing all or part of the value of an investment.

Risk Tolerance: An individual investor’s ability to accept loss of some or all of the money they have invested. A person’s risk tolerance is based on a number of factors including age, financial stability, amount of time before the invested funds are needed for other purposes, etc.

Sector: A group of stocks, often in one industry. The performance of any single stock in a sector can be measured against the performance of the group. Pharmaceutical companies, for example, are part of the health care sector.

Part III

1. Risk is defined as the “exposure to a chance of loss.”

2. Each investor must decide what level of risk is acceptable to them. This is called “risk tolerance.” There are three levels of risk tolerance: conservative, moderate, and speculative.

3. Conservative-investment bonds and preferred shares are considered conservative.

4.Moderate-among which are growth stocks, which are stocks that pay little or no dividends because the company is investing its profits in its rapid growth, particularly young companies with great potential.

5.Speculative-volatile equity investments that can generate big profits or big losses.

6.Volatility: Indicates how much and how quickly changes the value of an investment, a market or a market sector.
Part V.