# What Do the Numbers on the Stock Exchange Mean?

The proliferation of financial information available to the general public has been both a blessing and a curse. While having more information is important when deciding on an investment, the shorthand used in the financial services industry can seem to be a confusing type of code. The numbers scrolling across the bottom of the screen on financial news stations provide a lot of information, but can be a mystery for those unfamiliar with them.

The numbers on the stock exchange for a given company's stock reflect the price of a single share of stock in that company. Typically, the last price that a stock traded at is the number reported to the general public. For example, if you see a list of stock numbers, and see "IBM 190" in the list, this means that the last price that IBM stock traded at was \$190 per share. While trade prices used to list in fractions, such as 190 1/4, stocks now trade in decimals, such as 190.25.

## Price Change

While some news outlets may only report the last trading price for a stock, others will also provide the change in the day's price for a given stock. If you see a listing that reads, "IBM 190 +2.25," it means that IBM's last stock trade was at \$190 per share, and that was \$2.25 higher than the final price for the previous day's trading. Some stock reports will also provide the percentage change for a stock on the day. Since billions of shares trade on the stock exchanges every day, these numbers will change from minute to minute, and even from second to second.

Two other important numbers on the stock exchange are the bid and ask prices. The bid price represents the highest price that any investor is willing to pay at a given moment for a particular stock. The ask price reflects the lowest price at which an investor is willing to sell the same stock. For example, if you have a detailed listing of a stock price, you might see that IBM's last trade was \$190 per share, but the current bid price is \$189.98 and the current ask price is \$190.01. That means that if you wanted to buy IBM stock right at that moment, you'd have to pay \$190.01 per share. If you wanted to sell at that moment, you'd only receive \$189.98 per share.

## Lot Size

In the interest of space, most stock quotes don't list the number of shares of a company's stock that trade at a given stock price. In the case of large lots, such as 1,000 or more shares, you may see a number showing how large a particular trade was. For example, if someone buys 10,000 shares of IBM all at once, the stock ticker might read, "10K IBM 190," representing a purchase of 10,000 shares of IBM at \$190 per share. This is known as "lot size" in the parlance of the industry.

## Stock Indices

The average price movements of stocks as a whole are reflected in the major stock market indices. The price of the Dow Jones index reflects the combined prices of its 30 component companies divided by a factor known as the "Dow Divisor." Each company has an equal weighting in the index. For the S&P; 500 Index and the Nasdaq Composite Index, larger stocks have a greater effect on the value of the index. For example, if Apple stock makes up 4 percent of the NASDAQ index, the movement of that stock will make up 4 percent of the total NASDAQ price change, far more than most companies in the NASDAQ. IBM, which is in the Dow Jones index, will only have the same effect as all other companies in the index, including the smallest-sized company.

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