The financial world has developed a special investment-oriented language to help describe the stock market, investments, securities for the stock market, stock market analysis, and its conditions. At times you may be confronted with a term which is totally alien or has a completely different meaning from what you thought. Misunderstanding these terms can sometimes lead to the wrong conclusion, and that can cost you money!

What you don't know can hurt you.

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Target Price The price that one hopes a given security will reach.   Tax Rate The percentage of net income the company pays in income taxes.   Technical Analysis The practice of trying to define stock prices by examining trading patterns and comparing the shape of current charts to those from the past. Technical analysts use a variety of complex charting techniques, but some of the most basic involve plotting price movements in a stock over time on a fever chart. The shape of the chart is supposed to reveal something about whether the stock is headed up or down. A head and shoulders pattern, for instance, could imply a stock has topped out. Technicians look for stocks that have broken through their resistance level (on the upside). A stock that has broken through its support level (on the downside) is considered poised for further losses. Critics deride technical analysis as only so much hocus-pocus, not far removed from tea-leaf reading. Advocates insist that the stock market clearly moves in broad patterns, and that these can be recognized by careful charting and a knowledge of history. Whether or not technical analysis has any validity, it has a good many adherents, and on that basis alone influences stock prices.   Technical Analyst Technical analysts try to forecast price movements by examining and charting the patterns formed by price history, trading volume, the ratio of advancing stocks to declining stocks, and other technical data. Because technical analysts rely heavily on charts and graphs, they are often called chartists. Most brokerage firms employ at least one technical analyst.   Tender Offer An offer from a company to shareholders to buy their shares of stock. Companies sometimes make tender offers to buy back their own stock to reduce the number of outstanding shares. But often, a tender offer is a key element in one company's attempt to take over another. To entice you to sell, the company making the tender offer may be willing to pay an above-market price for your shares.