Understanding Stock Market Terms

Bear market. Market in which stock values are going down.

Bonds. When a corporation or government agency needs money, it borrows from the general public. Bonds are essentially loans by the investor to the issuer in return for interest payments. Example: U.S. Savings Bonds.

Bull market. Market in which stock values are going up.

Index fund. A fund that invests in the securities that make up a specific stock or bond "benchmark," such as only large U.S. companies or only small ones. Example: Standard & Poor's 500 Stock Index, Russell 2000 Stock Index.

Mutual fund. A group of stocks, bonds and cash investments run by professional money managers, in which individuals hold shares.

Sales load. A commission paid to an investment advisor or fund salesperson.

Securities. Any kind of financial asset that can be traded, including stocks, bonds and more.

Shares. Equal parts into which a company's stock is divided.

Stocks. Shares of a company. When you own a share of stock, you become an owner of the company, which gives you a piece of its profits.

Stock exchange. A center for trading listed securities, such as the New York Stock Exchange, the American Stock Exchange and NASDAQ.