Beginner’s Guide to Key Stock Market Terms

The Indian stock market is in full swing because of the Trump tariffs saga. It’s important to have financial literacy in today’s world. Here are the key market terms to know..

Stock is the basic unit that allows you to buy a share of a small piece of ownership in a company. It represents ownership stakes in a corporation and allows you the right to vote in certain corporate decisions. 

The stock market is an exchange platform for companies to raise capital by issuing stocks. Investors buy and sell shares of publicly traded companies to trade stocks among themselves. 

Volatility refers to how quickly the price of a security changes. Higher volatility refers to rapid changes leading to risk, and lower volatility refers to stable price movements with limited price fluctuation.  

Dividends are payments or rewards typically distributed quarterly or annually to the company's stakeholders out of its profits.  

When the stock market is rising and in the green, that means the bull period is going on. Similarly, the bear's period is there when the stock market is falling and going red.  

Market Capitalisation is used to determine a company's outstanding stock shares, representing a company's size and market value. The sizes are divided into large, medium, and small.  

IPOs are shares that a company sells to the public for the first time. This raises the company's capital from public investors. IPOs significantly generated interest and volatility in the stock market.  

Stocks are considered safe investments in their industries and have a history of stable earnings and reliable dividends. These are usually market-leading companies like Apple, Microsoft, and Johnson & Johnson.

Dividend yield represents the return to show how much a company pays out in dividends each year to its stock prices. Higher dividends indicate the company's financial stability and good income investment.  

Mutual funds provide a pool of money for investors to purchase a diversified portfolio of securities. Professional Portfolio managers attempt to produce capital gains or income for the fund's investors.