Blue-chip Stock
Shares of a large, well-established, financially sound company with a long track record.
Blue-chip companies are typically household names — leaders in their industries with stable earnings. Their shares are considered relatively steadier than those of smaller, newer companies.
'Relatively steadier' is not the same as risk-free: even blue-chips fall in a downturn. The term describes quality and size, not a guarantee of returns.
Key points
- Large, established, financially strong companies.
- Generally steadier than small-caps — but not risk-free.
- Describes quality, not a guarantee.
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Related terms
The total market value of a company's shares, calculated as the share price multiplied by the total number of shares.
DividendA share of a company's profits paid out to its shareholders, usually in cash.
Net Asset Value (NAV)The per-unit value of a mutual fund, calculated as the total value of its holdings minus expenses, divided by the number of units outstanding.
Expense RatioThe annual fee a mutual fund charges to manage your money, expressed as a percentage of your investment.