This list includes a few terms commonly used in world of investing. These terms help you access the potential for stock investments in general.

Annual Report Balance Sheet Bear Market Bull Market Common Stock Corporation Income Statement

Quarterly Report Reward Risk ROI Rule of 72 Shareholder Stock Split

 
Annual Report
Yearly report of the company's financial condition, required of every publicly traded company. The report describes the operations of the company and it includes the current balance sheet and income statement.

Balance Sheet
A snapshot of assets, liabilities and resulting equity. Equity is the net ownership value of the company at a point in time -- typically prepared quarterly and annually.

Bear Market
A prolonged fall in the price of stocks. The anticipation of declining economic activity usually brings on a Bear Market.

Bull Market
A prolonged rise in the price of stocks. Bull markets usually last at least a few months.

Common Stock
A share of stock represents a fractional ownership of a corporation. The shares are publicly traded in a market such as the New York Stock Exchange (NYSE). Buyers and sellers determine the market value of the stock.

Corporation
A unique form of business organization. Corporations can own property, incur debt, sue, or be sued. Corporations raise money by selling shares of stock to the public. Owners, or shareholders, have limited liability; they can lose only what they invest.

Income Statement
Also called the Profit and Loss Statement. It is a summary of revenues, costs, and expenses over a period -- typically prepared quarterly and annually.

Quarterly Report
Quarterly report (every three-month period) of the company's financial condition, required of every publicly traded company. The report describes the operations of the company and includes the current balance sheet and income statement.

Reward
A measurable possibility of gaining value. Invest in stock and you are potentially rewarded in two ways:

1. The stock price may rise adding to the value of your investment,
2. The stock may pay a dividend, normally every three months.

ROI
(Reurn on Investment) The amount, expressed in percentage, earned on a stock investment over time. You calculate ROI by dividing the increase or decrease in value of the stock by the initial cost of the stock. The increase or decrease in value includes stock price appreciation or depreciation and dividends earned. ROI is normally expressed as an annual compounded rate.

Rule of 72
A simple formula for approximating the time it will take for a given amount of money to double at a given compound ROI (Return on Investment). The formula is simply 72 divided by the interest rate. At 12% compounded interest rate, a $100 investment will double in six years (72 divided by 12 equals 6).

Shareholder
A shareholder is part owner of the company. Divide the number of shares owned by the number of outstanding shares and you know what portion of the company you own.