Occurs when a stock held for investment purposes is sold at a gain or loss. 

Dow Jones Industrial Average (DJIA)

An index of stock market activity based on the price movements of 30 large corporations. The average is price-weighted, which means each stock is effectively weighted by the magnitude of its price. 

Each stock, regardless of total market value or price, is weighted equally. It is as if there were $100 invested in every stock in the index. The Value Line Index is a prime example of an equal-weighted index. 

A condition placed on a transaction executed through a stockbroker to assure that securities will be sold only if a specified minimum price is received or purchased only if the price to be paid is no more than a given maximum. 

A market transaction in which an investor purchases securities with the expectation of holding the securities for cash income or for resale at a higher price in the future. Also see short position. 

A trading account maintained with a brokerage firm on which the investor may borrow a percentage of the funds for the purchase of securities. The broker lends the funds at interest slightly above the prime rate. 

A brokerage firm that executes transactions on its Internet Web site at a minimum cost to the customer. 

Each stock in the average is weighted by its price. The higher the price, the greater the relative weighting. The Dow Jones Industrial Average represents a price-weighted average. 

Russell 1000 Index 

The index includes the 1,000 largest firms out of the Russell 3000 Index. It is value-weighted. 

Russell 2000 Index 

The index includes the 2,000 smallest firms out of the Russell 3000 Index. It is value-weighted. 

Russell 3000 Index 

The index is composed of the 3,000 largest U.S. stocks as measured by market capitalization. It is value-weighted. 

A market transaction in which an investor sells borrowed securities in anticipation of a price decline. The investor's expectation is that the securities can be repurchased (to replace the borrowed shares) at a lower price in the future. Also see long position. 

Standard & Poor's 100 Index 

An index composed of 100 blue-chip stocks on which the Chicago Board Options Exchange currently has individual option contracts. 

Standard & Poor's 500 Stock Index 

An index of 500 major U.S. corporations. In 2004 there were 373 industrial firms, 15 transportation firms, 47 utilities, and 65 financial firms. This index is value-weighted. 

Standard & Poor's 600 SmallCap Index 

An index of the smallest capital stocks covered by Standard & Poor's. The stocks normally have a market capitalization of less than $1 billion (there is some overlap with the Standard & Poor's MidCap Index in terms of size). 

Standard & Poor's 1500 Stock Index 

An index that combines the S&P 500, the S&P 400 MidCap, and the S&P SmallCap 600. 

A mechanism for locking in gains or limiting losses on securities transactions. The investor is not assured of paying or receiving a particular price but rather agrees to accept the price prevailing when the broker is able to execute the order after prices have reached some predetermined figure. 

Tokyo Nikkei Average 

The most widely watched country index outside the United States. It covers 225 large Japanese companies. 

Value Line Average 

The index represents 1,700 companies from the New York and American Stock Exchanges and the over-the-counter market. Many individual investors use the Value Line Index because it more closely corresponds to the variety of stocks the average investor may have in his or her portfolio. It is an equal-weighted index, which means each of the 1,700 stocks, regardless of market price or total market value, is weighted equally. 

Each company in the index is weighted by its own total market value as a percentage of the total market value for all firms in the index. Most major indexes such as the S&P 500, S&P 400, and the NYSE Index, are value-weighted. With value-weighted indexes, large firms tend to be weighted more heavily than smaller firms. 

Wilshire 5000 Equity Index 

A stock market measure comprising 5,000 equity securities. It includes all New York Stock Exchange and American Stock Exchange issues and the most active over-the-counter issues. The index represents the total dollar value of all 5,000 stocks. By measuring total dollar value, it is, in effect, a value weighted measure.