Understanding stocks can be complex, but with this guide, you'll have a solid foundation for making informed investment decisions. Stocks represent ownership in companies and give shareholders a claim on a portion of their profits.
Key Concepts
- Earnings Per Share (EPS): The profit earned per outstanding share of a company's stock, often used to evaluate a company's financial health and dividend yield.
- Price-to-Earnings Ratio (P/E Ratio): A measure of how much investors are willing to pay for each dollar of earnings per share, helping investors gauge the value of a stock.
The market volatility can impact the price of stocks. A sudden surge in demand or supply can cause prices to fluctuate wildly.