What are some simple stock terms for beginners?


Quick Answer

Successful investing in the stock market requires knowledge of certain fundamental terms or phrases, such as net income, initial public offering, and market value. A stock grants ownership of a piece of a company and is expressed in terms of shares, according to Nasdaq.

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Full Answer

Net income, also known as profit, represents the amount of money a company brings in from sales of a product or a service minus the costs of delivering that product or service, HowStuffWorks states. Net income helps investors learn if a company is growing, Nasdaq explains.

An initial public offering comes into play the first time a company sells shares of stock to the general public, according to the Value Stock Guide. It is a way for companies to raise additional funds to invest in growing their business. Prior to initial public offerings, companies are typically owned by a few individual or organizational investors.

Following initial public offerings, companies often are measured by market value. This is calculated by multiplying the company's stock price by its total number of shares of stock. Market value gives investors an indication of how valuable the market as a whole believes a company to be when taking into account all assets and revenue, according to Investopedia, an online investing encyclopedia. Some companies can have market valuations of hundreds of billions of dollars.

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