Stock Market Terminology And Research Essay

2106 words - 8 pages

Section A - Stock market Conceptsa. A Bull Market is a term used to describe long-term growth in the stock market. It is caused by confident investors who spend a lot of money and are willing to take risks. The economy is tends to be going strong and with low unemployment so consumers are more ready to spend, which increases profits of companies, which draws in investors. As the supply of stocks falls, the demand rises, pushing the price up.b. A Bear market is a term used to describe the opposite, a decline in the stock market. It begins with a sharp drop in the market and then there is usually a period where stocks rise and then they fall again by a lot. In a bear market, investors and consumers lose confidence and so they spend less, which decreases company profits and so stocks fall. Investors want to sell of their stocks before they fall too much. This only fuels the fire because it makes the share price fall even more.a. The All Ordinaries Index is a measure of the movement of share value when stocks are sold and bought. It is also used to show the overall performance of the share market, and current trends. It is measured by calculating the Aggregate Market Value (AMV) of selected companies. AMV is calculated by he number of shares on issue multiplied by the current price of the share.b. London - FTSE 100 IndexTokyo - Nikkei 225New York - Dow Jones IndexesHong Kong - Hang Seng IndexesThere are two ways an investor can earn an income from shares: Dividends and increases in the share price. Dividends are payments to a shareholder from the company that they have invested in. The company pays the dividend from the profit it through the year. If the company doesn't make a profit, it's unlikely that the shareholder will receive a dividend. The dividend is normally paid in two parts, an interim and a final dividend.Another way to make an income is if the stock that you have invested in rises. Stock prices rise and fall because of supply and demand. The more people that want the stock, the higher the price climbs. If people start selling, then the price falls. Investors can achieve the most income through this method by investing in companies that are have a low price and then sell when the price goes up. This is a very risky method because the price could continue falling or you might buy in or sell at the wrong time.a. An Investment Portfolio is a list of a mix of companies that an investor has invested in. It is designed according to how long the investor wants to invest, how much risk he is willing to take and how much money he is willing to spend. It is used to decrease or limit the risk that comes with investing.b. Dividend Yield is a ratio that is used to show how much a company has to pay out in dividends each year, relative to its price. It's a way to measure how much money you're getting paid in dividends for every share you have bought. It is calculated by dividing the annual dividend by the current stock price.c. The price-earning ratio...

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