General Terminology

• Dividend
  • Getting a periodic payment from a stock (kinda like a coupon)
• Buying on a margin
  • Buying a stock on borrowed money (paying it now and hoping to pay it off with some other investment later)
  • Since the broker can call the margin at any time (want their money back), the buyer must hold some minimum balance with the broker before the broker calls the margin
• Positions in a stock
  • Long position: Buying the asset
  • Short position: Selling
• Bid price
  • The price at which the buyer is ready to purchase
• Ask price
  • The price at which the broker is ready to sell
• Bid-ask spread
  • The profit from the buyer or the broker POV is tied to the difference between the two prices (assuming they are doing it for the minimum such that each of them make a profit)

Short Sale

• Shorting
  • Selling a security that you don’t own
• Covering the short
  • Buying back an asset to cover what you sold
• Margin
  • Minimum needed in an account needed to make trades