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A Few Related Terms

Ticker Symbol
P/E Ratio
Market Cap

Reading Stock Quotes
Date Added: September 1st, 2005
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"Hi, I am a young investor. I've been looking around on the Internet a few stocks that I have heard of such as Disney and Nike. But I don't understand what all this confusing information is. Can you help me?"

Our Response:

Absolutely...of course we can help. We would like to commend you on your decision to start investing at such a young age and we're glad that we can help you.

I'm sure most people feel confused when they read a stock quote for the first time but once you get the hang of it, it gets much easier to understand.

We're going to outline a few things you might find on a stock quote:

Last Trade: This is a number that tells you what the last trade of the day for that stock was. For example, if this number was 47.25, then the person bought each share of stock for $47.25. This number gives you an idea of what each share of stock costs.

Change: This is usually a number (and/or percent) that tells you how the stock did that day. If the stock went up, you'll see a positive number such as +1.5, meaning the stock went up 1.5 points that day.

Volume: This is the number of shares that traded during that trading day. This gives you an idea of how many people were buying and selling shares that day.

Bid/Ask: Without trying to get into too much detail, the bid price is the price that a person who wants to sell their shares can sell it at. The bid price is the price a buyer would have to pay in order to buy the stock.

Open: This is the price that the stock opened at in the morning of the trading day.

Market Capitalization: This number tells you how much all the shares of stock are worth. The equation to figure out a company's market cap is Stock price x shares outstanding.

P/E Ratio: This number gives you an idea of how "cheap" or "expensive" the stock is. This number is found by dividing the price by the amount of money the company earned per share. You can read more about them by clicking here.

Dividend Yield: This is the percent return that you can expect to be paid out each year in the form of dividends. For example, if XYZ stock has a dividend yield of 1.2% and you invested $1000 in it, you would get about $12 in dividends.

Market/Exchange: This tells you what stock exchange the stock is traded on. This might be the New York Stock Exchange (NYSE), the National Association of Securities Dealers Automatic Quotation (NASDAQ), American Stock Exchange (AMEX), or the Over the Counter exchange (OTC).

We hope this answered a few questions about the information found in stock quotes.

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