Key Industry Terms

Ask/Offer

The price at which someone is willing to sell a security.

Bear Market

A declining market condition in which the prices of securities are falling.

Bid

The price a buyer is willing to pay for a security.

Bull Market

An advancing market condition in which the prices of securities are rising or expected to rise.

Closing Price

The price at which a security closed for the end of trading on a given day.

Consolidated Tape

The electronic market data feed that reports quote and execution transactions from all registered national stock exchanges.

Index

A benchmark against which financial or economic performance is measured, such as the BATS 1000 Index, Dow Jones Industrial Average or the S&P 500.

IPO

Initial Public Offering – the first public issue of a stock from a company or other entity that has not previously been publicly traded.

Limit Order

An order to buy or sell at a specific price or better. Limit buy orders are executed at or below the specified order price. Limit sell orders are executed at or above the specified order price.

Liquidity

The degree to which an asset or security can be bought and sold in the market without affecting the asset’s price. Assets that can be easily bought or sold are known as liquid assets.

Market Maker

A stock exchange member who provides liquidity for securities by buying and selling for his own account, generally using computers and algorithms.

Market Order

An order that is executed as quickly as possible at the best price available.

Opening Price

The price at which a security opened trading on a given day.

Option

A contract bearing the right, but not the obligation, to buy (for a call option) or sell (for a put option) a specific amount of given stock, commodity, currency, index or other securities, at a specified price (the strike price) during a specified period of time. For stock options, the amount usually represents 100 shares of the underlying stock.

Primary Market

The market for the issue of new securities or underwritings, in which companies offer shares directly to investors.

Secondary Market

The market where investors purchase existing securities or assets from other investors on an exchange rather than from a company itself.

SEC

The Securities and Exchange Commission (SEC) regulates the securities market to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.

Stock

A share representing an ownership interest of a particular company or corporation.

Symbol

A code (usually 1 to 5 letters), used to designate a security for trading on an exchange.

Underwriters

A group or individual, generally at an investment bank, which assists corporations or other entities in issuing new securities to the public.

Volume

The number of shares traded during a given period. This is also called trading volume.