Below, you will find definitions of frequently-used financial terms.

American Depository Receipts (ADRs): Receipts for stocks that trade on exchanges outside the U.S. These ADRs act as substitutes for the original stock, making investment in foreign companies more accessible to investors who trade on the New York Stock Exchange (NYSE) and NASDAQ.

Contrarian Investing: Buying and selling stock of companies whose prices have significantly decreased because they are out of favor in the investment community. Contrarian investing tends to be compatible with, but is not the same as, value investing.

Dividend: The amount of money that a company pays it shareholders in a given time frame. Many companies pay dividends annually, semi-annually (twice a year) or quarterly (4 times a year). Some companies do not pay dividends. Other companies may temporarily or permanently suspend dividends if business conditions are difficult or for the greater benefit of the company.

Dividend Yield: The total amount in dividends per share received in a year from a stock, expressed as a percentage of the current share price. e.g. Company XYZ pays an annual dividend of $1/shareand the current share price is $10. This translates to a dividend yield of 10%.
($1 / $10) X 100% = 10%

Financial Statements: are documents that describe the finances of companies. The most important financial statements are the balance sheet, the income statment and the cash-flow statment.

Price/Book Ratio: is a stock’s current price divided by its equity per share.

Price/Earnings Ratio: is a stock’s current price divided by its earnings per share.

Price/Sales Ratio: is a stock’s current price divided by the sales/share.

Portfolio: is an investor’s ownership and/or information related to that ownership of stocks, bonds and cash. It includes information related to the number of shares of each stock and bond owned, their prices, as well as cash.

Portfolio Managment: is the buying and selling of stocks (and bonds) in an account in the pursuit of profits.

Value Investing: is the buying and selling stock of companies that are cheap relative to earnings, sales or assets. Value investing tends to be compatible with, but is not the same as, contrarian investing.