What Are Stock Quotes?
Stock quotes are representations of the value of a share of stock.
So what is “stock” anyway?
A stock is a share in the ownership of a publicly traded company.
Stock is a claim on that company’s assets and earnings power. When a person acquires more and more stock, their share of ownership in the company is larger. Other words for stock include “shares” and “equity”, but it’s all the same thing.
Stock quotes, then, are numerical representations of the financial value of a single share of stock. During a day’s financial trading, the value of different stocks goes up and down as stock brokers buy and sell to earn profit. Stock quotes are available live, on stock tickers and on computer screens across the world, but they are most commonly examined in the newspaper or other paper report.
What Do Stock Quotes Represent?
A stock quote shows the financial value of a small part of a company. A share of stock used to be represented physically by a stock certificate, an elegant little piece of paper that looked something like a college degree. These days, this information is stored in brokerage firms’ computers as electronic records, so there’s no need for the fancy piece of paper. Shares are much easier to trade when they exist as electronic documents. Once upon a time, selling a large number of shares of stock required a physical transaction of these stock certificates. It is much easier to pick up your phone and sell shares of stock than it was to dump your stock into a wheelbarrow and wheel it down to Wall Street.
How to Read a Stock Quote
Reading stock quotes may seem complicated, but once you know what all the different figures mean, you’re in business.
Open up the financial section of your newspaper and look for the stock market section. You’ll see what looks like a million tiny numbers and words — these are stock quotes. They represent the value of different stocks at the end of the previous day’s trading.
Depending on your newspaper, there can be as many as twelve columns of numbers across the page for each stock that is listed. Here is what each column means.
Columns 1 & 2 — 52-Week High and Low
These numbers show the highest and lowest prices at which a share of this stock has traded over the last 52 weeks, or one year. It isn’t typical for the 52 week high and low to include the previous day’s trading, but it happens from time to time.
Column 3 — Company Name & Type of Stock
Here you’ll see the name of the company and symbols to indicate what type of stock it is.
Sometimes there are no symbols after the name of the company, and in this case the stock is considered “common.” There are different symbols for different types of stock, such as “pf” which stands for preferred stock.
Column 4 — Ticker Symbol
Every company that is publicly traded is assigned a ticker symbol. Rather than write out the long name of a company and clutter up the ticker, each company has a symbol they are known by. Knowing these symbols is crucial to reading stock reports, and over time you’ll recognize symbols as company names. It helps to know ticker symbols when you’re looking up stock quotes online. If you don’t know a particular company’s stock ticker, that information is easy to find online or by digging around in your newspaper’s stock report.
Column 5 — Dividend Per Share
This number indicates the annual dividend payment per share. Sometimes there will be no number in this column, and in that case, the company does not pay out dividends.
Column 6 — Dividend Yield
Dividend yield is simply a representation of the percentage return on the dividend. This number is calculated by dividing annual dividends per share by price per share.
Column 7 — Price/Earnings Ratio
The price to earnings ratio is another simple calculation that the financial page does for you — simply divide the current stock price by earnings per share from the last fiscal year. This is a key number for many investors as they see it as a marker for a stock’s potential future performance.
Column 8 — Trading Volume
This is a number reflecting the total amount of shares traded for that specific trading day, listed by the hundreds. To figure out the actual number of stocks traded, add “00” to the end of the number.
Column 9 & 10 — Day High and Low
These numbers show the price range for the stock’s day of trading. These two numbers are the high and the low prices that people paid for the stock during a day’s worth of trading.
Column 11 — Close
The close is the final trading price recorded after the close of the financial market. Most newspapers financial sections make it easy to see stocks that are moving up and down a ton by placing the stock quotes for companies whose stock has moved up or down by 5% or more in bold. The close is the simplest indicator of a stock’s recent past performance, and most of the time it will give you an idea of the stock’s value when trading opens again the next day. Remember that the financial market continues to fluctuate even when trading is closed, so don’t expect to buy a stock for the close price listed in your local newspaper.
Column 12 — Net Change
Net change represents the dollar value fluctuation in a stock’s value from the previous day’s close. If a stock is “up for the day”, the net change was positive. A negative net change means the stock was down for the day.
Being able to read stock quotes is critical for success in the world of investments. Even if you are only lightly invested in mutual funds or stocks, you should have the ability to check up on your investments by glancing at the newspaper.
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