Getting the best return on investment through a combination of capital gains and dividends.

Smaller even than small caps, micro caps have market capitalizations of less than $300 million.

Companies with market capitalizations between $2 billion and $10 billion are considered mid caps.

Average price of a stock over a given period of time. For example, a 30-day moving average finds the average price of a stock over the past 30 trading days. The average is moving, since each day it is calculated, the oldest day in the time frame is dropped off and replaced by the most recent day.

Another term for price-to-earnings ratio.

A mutual fund is an investment company that pools the money of individual investors to buy and sell stocks and other securities. It is the easiest, most affordable way for individual investors to obtain diversification in their portfolios.

When someone writes a call for which they do not own the underlying stock, they are said to be writing a naked call. If the call is exercised, the naked call writer will have to buy the stock in the open market in order to sell it at a lower price to the investor who exercised the call. This is why writing naked calls is an extremely dangerous strategy.

The National Association of Securities Dealers Automated Quotations. The NASDAQ is not technically an exchange. The NASD developed the computer-based system of automated quotes to make it easier to trade to stocks that are not on an exchange. Unlike the New York Stock Exchange and the American Stock Exchange, the NASDAQ has no physical location.

The most prestigious stock exchange in the world, the NYSE is home to the majority of DJIA components.

Officers of a corporation are its executive managers - the CEO, the CFO, the COO, etc. They are the people who hire and fire other managers, and these lower managers typically manage the day-to-day operations of a business. The officers are accountable to the board of directors, who are ultimately accountable to the real owners of the company, the shareholders.

An option is the right, but not the obligation, to buy (or sell) a security within a given period of time. Options to buy are called calls, and options to sell are called puts.

An out-of-the-money option has no intrinsic value. In the case of a call, this means that the strike price is higher than the current share price. In the case of a put, this means that strike price is lower than the current share price. Since they have no intrinsic value, any value an out-of-the-money option has is considered time value.

Strictly a matter of opinion, a stock that is thought to be overvalued is considered to be too pricey relative to its peers. However, two analysts could disagree - one may think a stock is overvalued while the other thinks it is fairly valued or even undervalued.

Not to be confused with dividend yield, the payout ratio is the percentage of corporate earnings that are distributed as dividends. If a company profited by $2 billion and paid $1 billion to shareholders in dividends, it would have a 50% payout ratio.

A portfolio is simply the composition of an individual's investments. For example, someone might have shares of eBay, Microsoft, General Motors, and Pfizer in their portfolio.

When people talk about stock, 99.9% of the time, they're talking about common stock. In fact, common stock has become so common that the "common" part of it has mostly been dropped. Preferred stock is non-voting, but its shareholders are semi-guaranteed a semiannual dividend, and they are given preference if the company goes bankrupt. Because of tax implications, usually only other corporations buy preferred stock.

When investors are willing to pay more for a given stock, they are said to pay a "premium" for it.

The most famous stock equation, P/E ratio compares a stock's current share price to its earnings per share (EPS). If the equation uses the company's most recent EPS, it is considered a trailing P/E ratio. If it uses its projected future earnings, then it is a forward P/E ratio. Either way, when compared to the market multiple, a stock's P/E ratio lets investors see what kind of premium is being placed on a stock, and determine for themselves whether or not it deserves it.

Similar to P/E ratio, the price-to-sales ratio compares a stock's current share price to its company's sales per share.

The process by which supply and demand determine the appropriate price for a given security.