Understanding stock market terminology
Opening - is the price at which the first trade gets executed at the start of the trading day (or trading period). High - is the highest price the stock is traded at during the day (or trading period). Low - is the lowest price the stock is traded at during the day (or trading period). Closing - is the price at which the last trade gets executed at the end of the trading day (or trading period). Volume - is the amount of shares that get traded during the trading day (or trading period). For example, if you bought 1000 shares during the day and another 9 people also bought 1000 shares each, then the trading volume for the day would be 10 x 1000 = 10,000. One of the most useful ways to depict Open, High, Low, Close, and Volume is with a Candlestick Chart. I like to use the following options from Stockcharts.com: http://stockcharts.com/h-sc/ui?s=SPY&p=D&yr=0&mn=3&dy=0&id=p57211761385
crank out expensive shares when markets are frothy Corporations go public (sell their shares for the first time) in market conditions that have a lot of liquidity (a lot of people buying shares) and when they have to make the fewest concessions to appease an investing public. When people are greedy and looking to make money without using too much due diligence. Think Netscape's IPO in 1995 or Snapchat's IPO in 2017. They also issue more shares after already being public in similar circumstances. Think Tesla's 1 billion dollar dilution in 2017. Dilution results in the 1 share owning less of the company. So in a less euphoric investing environment, share prices go down in response to dilution. See Viggle's stock for an example, if you can find a chart. issue debt Non-financial companies create bonds and sell bonds. Why is that surprising to you? Cash is cash. This is called corporate bonds or corporate debt. You can buy Apple bonds right now if you want from the same brokers that let you buy stocks. mutual fund investor Bernstein is making a cynical assessment of the markets which carries a lot of truth. Dumping shares on your mom's 401k is a running gag amongst some financial professionals. Basically mutual fund investors are typically the least well researched or most gullible market participants to sell to, influenced by brand name more than company fundamentals, who will balk at the concept of reading a prospectus. Financial professionals and CFOs have more information than their investors and can gain extended advantages because of this. Just take the emotions out of it and make objective assessments. "1) Are the definitions for capital market from the two sources the same? Yes.  They are from two different perspectives.  Investopedia is looking at it primarily from the perspective of a trader and they lead-off with the secondary market. This refers to the secondary market: A market in which individuals and institutions trade financial securities. This refers to the primary market: Organizations/institutions in the public and private sectors also often sell securities on the capital markets in order to raise funds. Also, the Investopedia definition leaves much to be desired, but it is supposed to be pithy.  So, you are comparing apples and oranges, to some extent.  One is an article, as short as it may be, this other one is an entry in a dictionary. 2) What is the opposite of capital market, according to the definition in investopedia?  It's not quite about opposites, this is not physics.  However, that is not the issue here.  The Investopedia definition simply does not mention any other possibilities.  The Wikipedia article defines the term more thoroughly.  It talks about primary/secondary markets in separate paragraph. 3) According to the Wikipedia's definition, why does stock market belong to capital market, given that stocks can be held less than one year too? If you follow the link in the Wikipedia article to money market: As money became a commodity, the money market is nowadays a component of the financial markets for assets involved in short-term borrowing, lending, buying and selling with original maturities of one year or less. The key here is original maturities of one year or less. Here's my attempt at explaining this: Financial markets are comprised of money markets and capital markets.   Money is traded as if it were a commodity on the money markets.  Hence, the short-term nature in its definition.  They are more focused on the money itself.     Capital markets are focused on the money as a means to an end. Companies seek money in these markets for longer terms in order to improve their business in some way. A business may go to the money markets to access money quickly in order to deal with a short-term cash crunch.  Meanwhile, a business may go to the capital markets to seek money in order to expand its business. Note that capital markets came first and money markets are a relatively recent development.   Also, we are typically speaking about the secondary (capital) market when we are talking about the stock or bond market.  In this market, participants are merely trading among themselves.  The company that sought money by issuing that stock/bond certificate is out of the picture at that point and has its money.   So, Facebook got its money from participants in the primary market: the underwriters.  The underwriters then turned around and sold that stock in an IPO to the secondary market.  After the IPO, their stock trades on the secondary market where you or I have access to trade it.  That money flows between traders.  Facebook got its money at the ""beginning"" of the process." "Take the case where a stock has just two owners, A and B, both at $10. One of them sells his shares to C, at $11.  Now B has made $1 in profit but is no longer an owner of the stock. A hasn't sold anything but his shares are worth 10% more due to the last traded price printed. C has bought shares at $11 and the price is $11, so technically he hasn't lost any money. In a larger market, there are winners and losers every day on a single stock, but they may not remain owners of a stock. There could be days in which those that remain owners are all winners - say when a stock goes up to an all time high and all those that are currently owners have an average buy price lower than the last traded price. And the reverse applies too.  It is of course more complicated. Say you own a stock and let someone else ""borrow"" it for a short-selling opportunity (he sells it in the market). For each uptick in price, you win, the short seller loses, and the guy he sold it to also wins. A person that has a covered call on a stock is not a winner beyond a point. And so on." The suffix represents the stock exchange the stock is traded on. N represents the New York Stock Exchange and O represents the Nasdaq. Sometimes a stock can be listed on more than one exchange so the suffix will give you an indication of which exchange the stock is on. For example the Australian company BHP Billiton Ltd is listed on multiple exchanges so is given a different suffix for the different exchanges (especially when the code is the same for each exchange). Below are a few examples of BHP: How I understand it is: supply/demand affect price of stock   negatively/positively, respectively. Correct. Volume is the amount of buying/selling activity in these stocks (more   volume = more fluctuation, right?). Sort of.  Higher volume means higher liquidity.  That is, a stock that is traded more is easier to trade.  It doesn't necessarily mean more fluctuation and in the real world, it often means that these are well-understood stocks with a high amount of analyst coverage.  This tends towards these stocks not being as volatile as smaller stocks with less liquidity. Company revenue (and profit) will help an investor predict company   growth. That is one factor in a stock price.  There are certain stocks that you would buy without them making a profit because their future revenue looks potentially explosive.  However, these stocks are very risky and are bubble-prone. If you're starting out in the share market, it's generally a good idea to invest in index funds (I am not a broker, my advice should not be taken as financial advice).  These funds aggregate risk by holding a lot of different companies.  Also, statistics have shown that over time, buying and holding index funds long term tends to dramatically outperform other investment strategies, particularly for people with low amounts of capital. "The other two folks here are right with the math and such, so I'll just throw some intuition out there for you.  The basis for this valuation model is really just tacking the Gordon growth model (which is really just a form of valuing a perpetuity) onto a couple of finite discounted cash flows. So that ending part is the Gordon growth model *at the future point* discounted back to the present.  The Gordon growth model uses a ""next period"" dividend for the very simple reason that it's the next one you'd get if you bought the stock.  Is that explanation clear enough, or were some of these points not adequately explained in your class? I'll help a bit more, if I can." "Ditto to MD-Tech, but from a more ""philosophical"" point of view: When you buy stock, you own it, just like you own a cell phone or a toaster or a pair of socks that you bought. The difference is that a share of stock means that you own a piece of a corporation. You can't physically take possession of it and put it in your garage, because if all the stock-holders did that, then all the company's assets would be scattered around all the stock-holder's garages and the company couldn't function. Like if you bought a 1/11 share in a football team, you couldn't take one of the football players home and keep him in your closet, because then the team wouldn't be able to function. (I might want to take one of the cheerleaders home, but that's another subject ...) In pre-electronic times, you could get a piece of paper that said, ""XYZ Corporation - 1 share"". You could take physical possession of this piece of paper and put it in your filing cabinet. I'm not sure if you can even get such certificates any more; I haven't seen one in decades. These days it's just recorded electronically. That doesn't mean that you don't own it. It just means that someone else is keeping the records for you. It's like leaving your car in a parking lot. It's still your car. The people who run the parking lot doesn't own it. They are keeping it for you, but just because they have physical possession doesn't make it theirs." "The Business Dictionary has three definitions of ""turnover"".  When it comes to share dealing, the most likely one is the total value of shares traded on the stock exchange in a given period." I hovered over the label for trading volume and the following message popped up: Volume / average volume  Volume is the number of shares traded on the   latest trading day. The average volume is measured over 30 days. NYSE and Nasdaq are secondary markets where stocks are bought or sold. The process of creating new stocks via IPO or private placements etc are called Private Market. "@jidugger mostly got it right. It basically mean that past performance of a stock, or a basket of stocks, are not at all useful when trying to predict its future. There is no proven correlation between past and future performance. If there was such a correlation, that was ""proven"" or known, then investors would quickly exploit this correlation by buying or selling this stock, thus nullifying the prediction. It doesn't mean the specific individuals cannot predict the future stock market - hell, if I set up 2^100 different robots, where every robots gives a different series of answers to the 100 questions ""how will stock X do Y days from now"" (for 1<=Y<=100), then one of those robots would be perfectly correct. The problem is that an outside observer has no way of knowing which of the predictor robots is right. To say that stock is memoryless strikes me as not quite right -- to   the extent that stocks are valued based on earnings, much of what we   infer about future earnings relies on past and present earnings. To put it another way - you have $1000 now, and need to decide whether to invest in a particular stock, or a stock index. The ""memoryless"" property means that no matter how many earning reports you view ... by the time you see them, the stock price already accounts for them, so they're not useful to you. If the earning reports are positive, the stock is already ""too high"" because people bought it before you did. So on average, you can't use this information to predict the stock's future performance, and are better off investing in an index fund (unless you desire extra risk that doesn't come with more profitability)." "This is another semantics question.  Again what matters is how the words are commonly used, as the usage came about long before the technical definitions. In this case, when people say ""mutual fund,"" they are often including both unit investment trusts and closed end funds.  Despite the labels the SEC has given in order to differentiate them, I'd say it's common (typical) practice to think of a closed-end fund as a type of mutual fund, rather than a different category altogether.  That's the way I've seen it used, anyway." This is a very simple picture book on ***financial statements*** with retard level examples. Shows COGS, SGA and the like. stockbroker is using terms that are on financial statements.   http://www.amazon.com/Financial-Statements-Step-Step-Understanding/dp/1564143414  A good map for you might be to think in terms of Macro and Micro economics. stockbroker is doing micro - analyzing the fundamentals of a business. Macro economics has to do with big issues of a nations  economy like gdp. Both are important. "A share of stock is a share of the underlying business. If one believes the underlying business will grow in value, then one would expect the stock price to increase commensurately. Participants in the stock market, in theory, assign value based on some combination of factors like capital assets, cash on hand, revenue, cash flow, profits, dividends paid, and a bunch of other things, including ""intangibles"" like customer loyalty. A dividend stream may be more important to one investor than another. But, essentially, non-dividend paying companies (and, thus, their shares) are expected by their owners to become more valuable over time, at which point they may be sold for a profit. EDIT TO ADD: Let's take an extremely simple example of company valuation: book value, or the sum of assets (capital, cash, etc) and liabilities (debt, etc). Suppose our company has a book value of $1M today, and has 1 million shares outstanding, and so each share is priced at $1. Now, suppose the company, over the next year, puts another $1M in the bank through its profitable operation. Now, the book value is $2/share. Suppose further that the stock price did not go up, so the market capitalization is still $1M, but the underlying asset is worth $2M. Some extremely rational market participant should then immediately use his $1M to buy up all the shares of the company for $1M and sell the underlying assets for their $2M value, for an instant profit of 100%. But this rarely happens, because the existing shareholders are also rational, can read the balance sheet, and refuse to sell their shares unless they get something a lot closer to $2--likely even more if they expect the company to keep getting bigger. In reality, the valuation of shares is obviously much more complicated, but this is the essence of it. This is how one makes money from growth (as opposed to income) stocks. You are correct that you get no income stream while you hold the asset. But you do get money from selling, eventually." Try downloading a finance app like yahoo finance. Follow a few stocks, read through the articles - look up terms you don’t understand. Search them on YouTube, Investopedia, - note book recommendations. Learn some economics as well.  Even if you’re not interested in trading, this should help you learn the language enough to get an idea of what’s out there - how money is thought of in different time periods, etc.  Finance can be very opaque when you first dip your feet in. You’ll find you only understand 75% - 25% of what you’re reading but that’s ok just keep looking things up. I guarantee your understanding of what “finance” means will slowly evolve as you keep learning.   Expect to spend maybe a few years to a lifetime figuring this stuff out.