EPS is found by dividing a company's earnings (profits) by its total number of shares outstanding. Practically, EPS is used to discuss a company's profitability, since it can be easily related to its share price.

Equity entails ownership. Sometimes stocks are referred to as "equities." Other times, you say "I have $50,000 of equity in my house," which means that there is a $50,000 difference between the market value of your house and the amount you owe the bank. Finally, the word equity can mean the difference between a company's assets and liabilities.

Exchange traded funds are sort of like mutual funds that trade on an exchange like stocks. They are funds that own other securities, and therefore, when you buy an ETF, you indirectly own whatever the ETF owns.

When an option is exercised, it means that the person holding the option exercised their right to buy (call) or sell (put) the underlying stock. If you are the seller of the option, this means that you must either sell the stock to the exerciser (call) or buy it from him (put).

Options give their owners the right to buy or sell a stock within a set period of time, at the end of which the option contract expires. In the United States, all stock options expire on the third Friday of their expiration months.

Fundamental analysts try to determine what a stock's true value is. Stocks selling for more than what they consider to be the fair value are said to be over-valued, while stocks selling for less are undervalued. Stocks selling very close to an analyst's target price are thought to be fairly valued.

When companies want to expand, they often need more money than their operations can provide. Sometimes they take out loans or issue bonds. This is known as debt financing.

Companies that are financed by operations do not issue bonds or take out loans to fund their growth. Instead, they just plow their cash provided by operations (sales, etc.) back into the company, and are therefore said to be financed by operations. Companies like this are unlikely to issue dividends.

Each year, Fortune magazine issues a list of the top 500 public corporations by sales volume. This is known as the Fortune 500.

A forward P/E ratio is a price-to-earnings ratio that uses the company's projected future earnings instead of its most recent earnings.

Fundamental analysis is the act of reviewing a company's financial data in order to make an assessment of its growth prospects. This differs greatly from technical analysis, which relies primarily on charts.

When someone sells shares that they do not own, they are said to be going short. Their hope is to buy back the shares later in order to realize a profit.

Gross profit is calculated by subtracting the cost of goods sold from total sales. Gross profit does not take into account various operating and marketing expenses, but simply looks at the profit margin a company is making on each sale of their product or service.

Growth investors prefer companies with high price-to-earning ratios with great potential for future growth. Growth investing is more risky than value investing, and thus it is not recommended for investors with short time horizons.

Hedging is the practice of buying two offsetting assets, or simultaneously going long and short on two similar assets.

An in-the-money call option has a strike price lower than the current share price. An in-the-money put has a strike price higher than the current share price. In-the-money options have intrinsic value as well as time value, whereas out-of-the-money options have only time value.

Incorporating is the act of transforming another form of business, most likely a sole proprietorship, into a corporation. Corporations are legally distinct entities that file their own taxes and even have the equivalent of Social Security numbers. Corporations are entirely separate from any human beings, even their founders, and are controlled by their shareholders.

This term is used to distinguish between large institutional investors, who control the vast majority of stock, and the "little guy" investors.

A semi-specific field of business. For example, Intuit, the maker of Quickbooks, is in the software industry. Industries differ from sectors because sectors encompass many industries. Software, hardware, the internet, etc., are all industries within the technology sector.

An IPO is how most companies transform from privately held corporations to public corporations. A large institutional underwriter conducts the IPO buy guaranteeing the company a set price for its shares. It then buys the shares from the company and sells them on the secondary market.