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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Volatility

Definition:

Ups and downs (in the finance world, it's referring to the market).

Sometimes, volatility is called beta and is measured in numbers. If the market moves 2% and your stock moves 4% on average, it's beta is 2, roughly.

Example

Here's a volatile stock chart. And here's one that's (relatively) a dead man's pulse.

Why the diff? Well, Netflix has more ups and downs because investors are less sure about the company. The company doesn't pay a dividend and it has monster competitors. GM, on the other hand, is a slowly dying-ish company. It has relatively steady (albeit scant) earnings, and it pays a dividend, which keeps its stock price stable.

For a better encapsulation of volatility, we suggest Real Housewives.