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How to Read Stock Quotes

Updated on March 13, 2008

If you invest in stocks, but don’t know how to read the stock quotes you could miss out on some important information. Most newspapers include stock tables to provide information about recent stock trading for thousands of companies.

People who invest in stocks use these numbers to decide which stocks to buy and sell. If you are new to investing or want to learn more about stocks, you should learn how to read a stock quote.

Financial Terms

  • Stock: a claim to partial owner ship in a firm or company. You sell and purchase stocks on the stock exchange.
  • Earnings: the amount of revenue a company or corporation receives for the sale of its products minus its costs of production.
  • Earnings Per Share: the company’s total earnings divided by the number of shares of stock outstanding.

Information Stock Tables Provide:

Price: The most important information about a stock you are interested in is the price of a share. The quote usually shows several prices. The last or closing price is the price of the last transaction that occurred before the stock exchange closed. Some quotes might also give the high and low prices throughout the day, and sometimes over the past year.

Volume: This is the number of shares sold during the day of trading- the daily volume.

Dividend: The dividend is the amount that corporations pay out of their profits to their stockholders. Some stock tables show the dividend paid over the previous year for each share of stock. Sometimes the dividend yield is provided, which is expressed as a percentage of the stock’s price.

Price-earnings Ratio: Often called the P/E, the price-earnings ratio is the price of a corporation’s stock divided by the amount the corporation earned per share over the past year. The typical price-earnings ratio is about 15. A higher P/E shows that a corporation’s stock is expensive in relation to its recent earnings, which might mean that people expect a future rise in earnings or that the stock is overvalued. A lower P/E indicates that a corporation’s stock is cheap in relation to its recent earnings. This might mean that people expect earning to fall or that the stock is undervalued.

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    • profile image

      trader 9 years ago

      Great Hub! Really informative.

    • Angela Harris profile image

      Angela Harris 9 years ago from Around the USA

      I almost attempted this subject, but ran out of time. I don't know how you've kept going for this long. Congratulations on your win today.

    • Woody Marx profile image

      Woody Marx 9 years ago from Ontario, Canada

      Helpful little hub! My Dad used to be able to read the 'ticker' as it scrolled across the screen on MSNBC. It's something I've always wanted to learn myself.

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