Skip to main content

BRASS Business Guide - FINANCE & INVESTMENTS: Start Here

Sponsored by the BRASS Education Committee.

Scope

Finance and investment are business disciplines concerned with the ways in which individuals and institutions can use money to make money. How values are determined and the related decision-making processes are also covered and specific areas include stocks, bonds annuities and trusts.

Terms and Definitions

All definitions are taken from Barron's Finance & Investment Handbook by John Downes and Jordan Elliot Goodman, Barron's Educational Series, Hauppauge, New York, 1998.

American Stock Exchange (AMEX) - primary marketplace in the U.S. for equities, bonds, options, and derivative securities. Located at 86 Trinity place in lower Manhattan, AMEX was known as the Curb Exchange until 1921. AMEX trades more than 900 issues on its primary list. The two main indices tracking AMEX stocks are the AMEX Composite Index and the AMEX Major Market Index.

Annuity - a contract sold by life insurance companies that guarantees a fixed or variable payment to the annuitant at some future time, usually retirement.

Bear Market - prolonged period of falling prices. A bear market in stocks is usually brought on by the anticipation of declining economic activity, and a bear market in bonds is caused by rising interest rates.

Bond - any interest bearing or discounted government or corporate security that obligates the issuer to pay the bondholder a specified sum of money, usually at specific intervals, and to repay the principle amount of the loan at maturity. Bondholders have an IOU from the issuer, but no corporate ownership privileges , as stockholders do.

Bull Marketprolonged rise in the prices of stocks, bonds, or commodities.

Capital Stock - stock authorized by a company's charter. The number and value of issued shares are normally shown, together with the number of shares authorized, in the capital accounts shown in the balance sheet.

Commodities - bulk goods such as grains, metals, and foods traded on a commodities exchange.

Common Stock - units of ownership of a public corporation. Owners are typically entitled to vote on the selection of directors and other important matters as well as receive dividends from their holdings.

Dividend - distribution of earnings to shareholders, prorated by class of security and paid in the form of money, stock, scrip, or rarely company products or property.

Equity - ownership interest possessed by shareholders in a corporation - stock as opposed to bonds.

Mutual Fund - fund operated by an investment company that raises money from shareholders and invests it in stocks, bonds, options, futures, currencies, or money market securities.

NASDAQ Stock Market - the first electronic stock market listing nearly 5,500 companies, operated by the NASDAG Stock Market Inc., a wholly owned subsidiary of the National Association of Securities Dealers.

New York Stock Exchange (NYSE) - founded in 1792, it is the oldest and largest stock exchange in the U.S. , located at 11 Wall Street in New York City; also known as the Big Board and The Exchange. More than 3,000 firms are on the NYSE , representing large firms that meet the exchange's stringent listing requirements.

Option - securities transaction agreement tied to stocks, commodities, or stock indexes. Options are traded on many exchanges.

Preferred Stock - class of capital stock that pays dividends at a specified rate and that has preference over common stock in the payment of dividends and the liquidation of assets.

Stock - ownership of a corporation represented by shares that are a claim on the corporation's earnings and assets.

Stock Exchange - organized marketplace in which stocks, common stock, and bonds are traded by the members of the exchange, acting both as agents (brokers) and as principals (dealers or traders).

Ticker - system that produces a running report of the trading activity on the stock exchanges, called the ticker tape.

Ticker Symbol - letters that identify a security for trading purposes on the consolidated tape, such as XON for Exxon Corporation.

Business Librarian

Previous Maintainers

Edited and updated each year, previous maintainers of this guide include: Susan Schreiner, Pittsburg State University,  Leticia Camacho, Brigham Young University, Shikha Sharma, University of Connecticut; Celia Ross (Columbia College, Chicago; Dennis Smith, University of Pittsburgh. It was originally compiled by Jennifer Boettcher, Georgetown University.

Creative Commons License Image Content on this site is licensed under a Creative Commons Attribution 4.0 International license.
 ©2000-2014 ALA RUSA BRASS.

BRASS acknowledges Sprinshare's generous support in hosting the BRASS Business Guides.