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Teacher Resource 9.5 Key Vocabulary: Stocks These are terms to be introduced or reinforced in this lesson. Term Definition An agreement in which an underwriter will use all efforts to sell as much of an issue as possible to the public. Securities representing part ownership in a corporation, providing voting rights, and entitling the holder to a share of the company’s success through dividends and/or capital appreciation. A portion of a company’s profits that is paid out to its shareholders. Dividends can be paid regularly or intermittently, and are usually paid out as cash, though they can be paid out as stocks. A company’s first (or initial) offering of stock for sale. The underwriter managing the sale sells shares into the primary market. A securities firm that helps corporations sell securities to the public. Capital stock that provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock. Like common stock, preferred stocks represent partial ownership in a company, although preferred stock shareholders cannot vote. The marketplace where an issue of stock is first sold. In a transaction here, the company is the seller. A document that must be filed with the federal Securities and Exchange Commission (SEC) and made available to potential investors before stock can be sold. The prospectus offers a detailed analysis of the company’s finances, its management team, and its products and/or services, and spells out potential difficulties the company may face in the future and the risks of investing in the company. The market in which an investor purchases a security from another investor rather than from the issuing company. A federal agency that regulates the US financial markets and securities industry. Someone who owns one or more shares of common or preferred stock. A market for the buying and selling of stocks. Copyright © 2007–2011 National Academy Foundation. All rights reserved. AOF Applied Finance Lesson 9 Stocks Term Definition A model in economics that determines the price and quantity of a product or service sold: If there is less of the product offered (“supply”) than consumers want (“demand”), the price will rise. If there is more of the product than consumers want, the price will fall. An investment bank or syndicate of investment banks that attempts to sell securities for an issuing company in the primary market. The process of selling securities for an issuing company in the primary market. Copyright © 2007–2011 National Academy Foundation. All rights reserved. AOF Applied Finance Lesson 9 Stocks Copyright © 2007–2011 National Academy Foundation. All rights reserved.