Understanding stock market terminology is crucial for anyone new to investing. Here are 25 key terms that every beginner should know:

1. Stock (Share)
   • A share of ownership in a company, representing a claim on part of the company’s assets and earnings.
2. Bond
   • A fixed-income instrument representing a loan made by an investor to a borrower, typically corporate or governmental.
3. Stock Exchange
   • A marketplace where stocks and other securities are bought and sold. Examples include the NYSE and NASDAQ.
4. Broker
   • An individual or firm that acts as an intermediary between buyers and sellers of securities.
5. IPO (Initial Public Offering)
   • The process through which a private company offers shares to the public for the first time.
6. Dividend
   • A portion of a company’s earnings distributed to shareholders, usually in the form of cash or additional shares.
7. Market Capitalization (Market Cap)
   • The total market value of a company’s outstanding shares, calculated as share price times the number of shares.
8. Bull Market
   • A market condition characterized by rising stock prices and investor optimism.
9. Bear Market
   • A market condition where stock prices are falling, typically by 20% or more from recent highs, accompanied by widespread pessimism.
10. P/E Ratio (Price-to-Earnings Ratio)
    • A valuation ratio calculated by dividing a company’s current share price by its earnings per share (EPS).
11. EPS (Earnings Per Share)
    • A company’s profit divided by the outstanding shares of its common stock.
12. Bid Price
    • The highest price a buyer is willing to pay for a stock.
13. Ask Price
    • The lowest price a seller is willing to accept for a stock.
14. Spread
    • The difference between the bid price and the ask price.
15. Volume
    • The number of shares traded in a given period.
16. Liquidity
    • The ability to quickly buy or sell an asset without causing a significant impact on its price.
17. Volatility
    • The degree of variation in a trading price series over time, usually measured by standard deviation.
18. Blue-Chip Stock
    • Shares of a well-established, financially sound, and historically secure company, known for its reliable performance.
19. Penny Stock
    • A stock that trades at a very low price, usually below $5 per share, and has a small market capitalization.
20. Index
    • A statistical measure of the performance of a group of stocks, representing a particular market or sector. Examples include the S&P 500 and the Dow Jones Industrial Average (DJIA).
21. ETF (Exchange-Traded Fund)
    • A type of investment fund that is traded on stock exchanges, much like stocks, and holds assets such as stocks, commodities, or bonds.
22. Mutual Fund
    • An investment vehicle that pools money from many investors to purchase a diversified portfolio of securities managed by a professional.
23. Capital Gain
    • The profit from the sale of a security or investment.
24. Stop-Loss Order
    • An order placed with a broker to buy or sell once the stock reaches a certain price, used to limit an investor’s loss on a position.
25. Margin
    • Borrowing money from a broker to purchase stock, using other securities in the investor’s account as collateral.