Stocks FAQs
A stock represents ownership in a company and entitles the holder to a portion of its assets and profits.
You can buy stocks through a brokerage account, either online or through a traditional brokerage.
Common stockholders have voting rights and may receive dividends, while preferred stockholders often have no voting rights but receive fixed dividends.
Dividends are payments made by some companies to shareholders as a portion of their profits.
Research companies, analyze financial statements, and consider factors like industry trends and economic conditions.
A stock exchange is a marketplace where stocks are bought and sold. Examples include the NYSE and NASDAQ.
A stock ticker symbol is a unique abbreviation used to identify publicly traded companies. For example, AAPL represents Apple Inc.
You can place a market order (buy/sell at current market price) or a limit order (buy/sell at a specific price or better).
Blue-chip stocks are large, well-established companies with a history of stable performance.
Blue-chip stocks are large, well-established companies with a history of stable performance.
Penny stocks are low-priced stocks, often trading for less than $1 per share, typically associated with higher risk.
A stock split is when a company increases the number of outstanding shares while reducing the share price proportionally.
A stock dividend is when a company distributes additional shares of stock to its existing shareholders.
A stock buyback is when a company repurchases its own shares from the open market, reducing the number of outstanding shares.
You can sell stocks through your brokerage account by placing a sell order.
A market order is executed immediately at the current market price, while a limit order is executed at a specific price or better.
Market capitalization (market cap) is the total value of a company’s outstanding shares and is calculated by multiplying the stock’s current price by its total shares.
Stock volatility measures the degree of variation in a stock’s price over time. Highly volatile stocks can experience rapid price fluctuations.
Stock prices are determined by supply and demand in the market, influenced by factors like company performance, news, and economic conditions.
A stock portfolio is a collection of stocks owned by an investor. Diversification involves spreading investments across different stocks to reduce risk.
Dividend yield is the annual dividend payment divided by the stock’s current price, expressed as a percentage.
ETFs FAQs
An ETF is a type of investment fund and exchange-traded product with shares that can be bought and sold on stock exchanges, similar to stocks.
ETFs pool money from investors and invest in a diversified portfolio of assets, such as stocks, bonds, or commodities, tracking an index or asset class.
ETFs offer diversification, liquidity, and lower expense ratios compared to many mutual funds.
ETFs can track various assets, including stock indices, bonds, commodities, currencies, and more.
You can buy ETFs through a brokerage account, just like stocks.
ETFs are traded on exchanges throughout the trading day, while mutual funds are typically priced and traded once daily after the market closes.
An index ETF aims to replicate the performance of a specific stock or bond index.
Unlike index ETFs, actively managed ETFs are managed by portfolio managers who make investment decisions to achieve specific goals.
An expense ratio is the annual cost of managing an ETF, expressed as a percentage of its assets under management.
ETF dividends are generally taxable, but tax treatment can vary depending on the type of ETF and the investor’s tax situation.
The bid-ask spread is the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept for an ETF.
Yes, you can short sell ETFs by borrowing shares from a broker and selling them with the intention of buying them back at a lower price.
The SPDR S&P 500 ETF Trust (SPY) is one of the largest ETFs by AUM and tracks the S&P 500 index.
Authorized participants help create and redeem ETF shares, helping to maintain the ETF’s price close to its net asset value (NAV).
Yes, you can hold ETFs in tax-advantaged retirement accounts, subject to the account’s rules and regulations.
Leveraged ETFs aim to amplify the returns of an underlying index, while inverse ETFs aim to profit from the decline of an index.
Yes, there are ETFs that track international indices, providing exposure to foreign stocks and bonds.
You can sell ETFs through your brokerage account by placing a sell order, similar to selling stocks.
Yes, there are brokerage commissions and potential bid-ask spreads when buying and selling ETFs.
Market makers help facilitate liquidity by quoting buy and sell prices for ETF shares on exchanges.
Toggle Content
Remember that investing in stocks and ETFs carries risks, and it’s important to conduct thorough research, diversify your portfolio, and consider your investment goals and risk tolerance before investing.