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What's more, the volume of trading rose enormously. While trading of 5 million shares was considered a hectic day on the New York Stock Exchange in the 1960s, more than a thousand-million shares were exchanged on some days in 1997 and 1998. On the Nasdaq, such share days were routine by 1998.
     Much of the increased activity was generated by so-called day traders who would typically buy and sell the same stock several times in one day, hoping to make quick profits on short-term swings. These traders were among the growing legions of persons using the Internet to do their trading. In early 1999, 13 percent of all stock trades by individuals and 25 percent of individual transactions in securities of all kinds were occurring over the Internet.
     With the greater volume came greater volatility. Swings of more than 100 points a day occurred with increasing frequency, and the circuit-breaker mechanism was triggered on October 27, 1997, when the Dow Jones Industrial Average fell 554.26 points. Another big fall -- 512.61 points -- occurred on August 31, 1998. But by then, the market had climbed so high that the declines amounted to only about 7 percent of the overall value of stocks, and investors stayed in the market, which quickly rebounded.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Glossary 

 

Acceleration clauseA stipulation in a loan contract stating that the entire balance becomes due immediately if other contract conditions are not met.

Accrued interest
Interest that has been earned but not received or recorded.

Amortization
Liquidation of a debt by making periodic payments over a set period, at the end of which the balance is zero.

Annuity
A series of equal payments made at regular intervals, with interest compounded at a specified rate.

Appreciation
An increase in the value or price.

Asset
Anything an individual or business owns that has commercial or exchange value.

Balance
The amount owed on a loan or credit card or the amount in a savings or investment account.

Balance sheet
A financial statement showing a "snapshot" of the assets, liabilities and net worth of an individual or organization on a given date.

Bankruptcy
A legal proceeding declaring that an individual is unable to pay debts. Chapters 7 and 13 of the federal bankruptcy code govern personal bankruptcy.

Budget
An itemized summary of probable income and expenses for a given period.

Capital
Cash or other resources accumulated and available for use in producing wealth.

Cash flow
Money coming to an individual or business less money being paid out during a given period.

Certificate of deposit (CD)
A type of savings account that earns a fixed interest rate over a specified period of time.

Collateral
Assets pledged to secure a loan.

Common stock
A kind of ownership in a corporation that entitles the investor to share any profits remaining after all other obligations have been met.

Compound interest Interest computed on the sum of the original principal and accrued interest. 

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