The Beginning Investor's Kit |
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Chapter 2: Be a Web Savvy Investor
Exercise: How to Read a Stock Quote
There's more to tracking a stock than just looking at its most recent trading price. This glossary of terms will help:
- Last: The most recent price at which the security was traded (all quotes are updated every 15 to 20 minutes).
- Open: The price of the stock's first trade of the day.
- High: The highest price at which the stock traded during that day.
- Bid: The highest price the market is willing to pay for the stock. The investor will sell for this price.
- 52 Week High: The highest closing price for the stock over the past 52 weeks.
- Earnings Per Share: Measures the company's last four quarters' reported earnings relative to the number of common shares outstanding. It is an especially useful figure when compared with previous years' EPS to determine an EPS growth rate.
- Shares Outstanding: Total number of common stock shares held by shareholders.
- Price Earnings Ratio (P/E Ratio): Measures the relative value of a stock by dividing the stock's price by its earnings per share. The P/E ratio lets investors gauge how cheap, expensive, or fairly valued a stock price. Compare this number to historical performance, competitors, or the market in general. Typically, faster growing companies have higher P/Es.
- Change: The difference between the previous day's closing price and the most recent price of the stock.
- Percent Change: The percentage of change between the previous day's closing price and the last trade.
- Low: The lowest price at which the stock traded during the trading day.
- Ask: The lowest price at which the market is willing to sell the stock. The investor will buy for this price.
- 52 Week Low: The lowest closing price for the stock over the past 52 weeks.
- Volume: How many shares traded that day.
- Market Capitalization: The total value of a company's outstanding shares calculated by multiplying the number of shares outstanding by the price per share.
- Exchange: The stock exchange where the stock is traded.
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