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A beginner’s guide to the stock market terminology

Union Bank

Posted: May 21, 2011 1:55 a.m.
Updated: May 21, 2011 1:55 a.m.

Have you considered adding stocks to your investment portfolio? Many financial experts consider owning stock one of the most profitable ways to grow wealth over the long term.

An important factor in growing long-term wealth is the rate of return on your investment, and stocks have historically had an average return of around 10-12 percent.

While stocks can help generate wealth, they also come with risks.

A key to protecting yourself in the stock market is to educate yourself. Below are some basic terms that may help you when learning more about the stock market or when speaking with a financial adviser or stock broker:

At some point, every company needs to raise money. To do this, companies can either borrow it or raise it by selling part of the company, which is known as issuing stock.

The stock of a business is divided into shares. Each share represents a fraction of ownership of a company, a claim on the company’s assets and earnings. 

A shareholder is one of the many owners of shares in a company or corporation. Shareholders own the stock, but not the corporation itself. As an owner, shareholders are entitled to a share of the company’s earnings, as well as any voting rights attached to the stock.

When a company makes a profit, it is called earnings. Public companies are required to report their earnings four times a year (once each quarter).

This is the portion of a company’s profit that is given back to the shareholder. Payments are made on either an annual or quarterly basis. The dividend is most often quoted in terms of the dollar amount each share receives (dividends per share).

Stock market
Stock markets are places where buyers and sellers of company stock meet to trade and determine prices of stock. For example, the NYSE (New York Stock Exchange) and the NASDAQ (National Association of Securities Dealers Automated Quotations) are two common exchanges in the United States.


A stock broker is a person who buys or sells stocks in exchange for a fee, which is called a commission.

Bull market
A bull market is when the economy is doing well and stocks are rising. If a person is optimistic and believes that stocks will go up, he or she is called a “bull” and is said to have a “bullish outlook.”

A bear market is when the economy isn’t doing so well and stock prices are falling. If a person is pessimistic, believing that stocks are going to drop, he or she is called a “bear,” and said to have a “bearish outlook.”

The percentage of a dividend paid against the stock price. For example, if you receive a five dollar dividend on a $50 per share stock, your yield is 10 percent.

Knowledge is key, so it is wise to educate yourself about the risks and opportunities that the stock market can provide.  It may be helpful to seek the advice of a trusted financial adviser who will take into consideration your goals and risk tolerance.

Janice France-Pettit is a senior vice president and regional manager for Union Bank, overseeing the Simi Valley, Santa Clarita Valley, San Fernando Valley and Antelope Valley region. The foregoing article is intended to provide general information about the stock market and is not considered financial advice from Union Bank.  Please consult your financial or tax adviser. Ms. France-Pettit’s column represents her own views, and not necessarily those of The Signal. Visit for more information.


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