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Investment DictionaryAsset- Any item of value. Examples are cash, securities, accounts receivable, inventory, office equipment, a house, a car and other property. Asset Allocation Fund: Similar to a Balanced fund, but typically without specific minimums and maximums for asset classes.
Average Annual Compound Rate of Return: Another term used for "historical rate of return" normally used in reporting historical performance for mutual funds. Accounts payable: Amounts owed by an individual or company to a creditor for merchandise or services purchased on an account.
ACCRUED INTEREST: Interest accrued on a bond or other fixed income security since the last interest payment was made.
Bid Price:
The highest price anyone has declared that he wants to pay for a security at a given time. Balanced Fund: A mutual fund that seeks to provide a mixture of safety, income and capital appreciation. corporations, but guaranteed as to principal and interest by their banks.
Bond: A certificate providing evidence of a debt of the issuer.
Capital
Accumulated money or goods used to produce income.
Capital Gain
The gain (selling price minus cost basis) on an asset.
Capital Markets
Markets where debt or equity securities are traded.
Cash Dividend
A cash payment to a company's stockholders out of the company's current earnings or accumulated profits. The dividend must be declared by the board of directors.
Commercial Paper
Short-term loans with maturities ranging from 2 to 270 days that are made to banks and corporations.
Commodity
Bulk goods such as metals, foodstuffs and grains which have the price determined by competitive bids and offers.
Common Stock
An equity security that represents ownership in a corporation.
Community Property
Form of ownership for assets accumulated by a married couple and belonging to them jointly.
Concentration
Margin account condition whereby one or two positions are heavily represented.
Coupon Rate
The actual interest rate stated on a bond, typically payable in semi-annual installments.
Dividend
A distribution of the earnings of a corporation Dividends may be in the form of cash, stock or property (other securities owned by the corporation).
Equity (in a brokerage account)
The market value of securities (long market value minus short market value) minus any debit balance and plus any credit balance.
Exercise Price
Also known as the strike price. The price that the owner (purchaser) of an option can buy (if calls are owned) or sell (if puts are owned) the underlying security by exercising his option.
Fast Market
A market condition characterized by wide price fluctuations and/or heavy trading volumes.
Federal Reserve System
The central bank system for the United States, commonly known as the Fed.
Fiscal Policy
The federal tax and spending policies set by Congress and/or the President.
Foreign
A non U.S. Company with securities trading in the U.S.
Forward Contract
A cash market transaction in which a future delivery date is specified.
Futures
Exchange-standardized contracts for the purchase or sale of a commodity at a future date.
Face Value: Face value is ordinarily the amount the issuer will pay at maturity. Face value is not an indicator of market value.
Fixed Income: investments that have some safety of principal and a potential for capital gains that typically account for 15% to 70% of a balanced portfolio.
Fixed Income Mutual Fund: An investment fund that uses the proceeds from units sold to investors to invest in securities that generate a reasonably predictable stream of interest or dividend income, such as bonds, debentures and preferred shares.
Growth Equities: A growth investment will have average risk, moderate capitalization and a potential for above average growth in earnings.
Growth Managers: Fund Managers whose style is to select stocks for growth or perceived growth potential with valuation typically being a secondary consideration.
Held
A situation where a security is temporarily not available for trading (e.g. Market Makers in OTC stocks or the Exchange in listed stocks are not allowed to display quotes).
Index
A statistic to measure market performance. A popular index is the Standard & Poor's 500, which incorporates a broad base of 500 stocks, including 400 industrial companies, 20 transportation companies, 40 utilities, and widely considered the benchmark for large stock investors.
Index Arbitrage
Trading in order to profit by temporary differences between the value of stocks in an index and the price of the future contract for a derivative index.
In-the-Money
Description of an option when the current value of the underlying security is above (for calls) or below (for puts) the exercise (strike) price.
Joint Tenants with Rights of Survivorship
Form of account where two or more account holders agree that, upon the death of one account holder, ownership of the remaining account assets passes to the remaining account holders.
Know your Customer
A concept both stated and implied by various securities regulatory bodies regarding suitability of investments for customers.
Last sale Reporting
An electronic entry by NASD members detailing the price and number of shares involved in a securities transaction.
Margin Account
Brokerage account allowing customers to buy securities with money borrowed from the broker.
Muncipal Bond
A debt security issued by a state, a municipality, or another subdivision (such as a school, hospital, sewer or other taxing district), to raise money to finance capital expenditures.
Management expense ratio: The management expense ratio (MER) shows the percentage of the fund's daily average net assets that was paid in management fees and other expenses during the year.
Moderate (to high) Risk: An investment that is not guaranteed and has a greater possibility of losing the principal that has been invested.
Naked Option
Option position that is not hedged from market risk, i.e.: an option position that is not offset by an equal and opposite position in the underlying security.
Net Change
The difference between today's last trade and the previous day's last trade.
Opening Transaction (OPTION)
Transaction in an option account which establishes a new option position.OPEN ORDER
Also known as Good 'til Canceled. An order to buy or sell a security that remains in effect until it is either canceled by the customer or executed. Open orders placed electronically expire automatically after one calendar month
Option
A right to buy (call) or sell (put) a fixed amount of a given stock n options.
Option Premium
The amount per share paid by an option buyer to the seller.
Penny Stocks
Low prices stocks trading in the over-the-counter market. Typically refers to shares trading below one dollar a share.
Previous Day's Close
The previous day's last reported trade.
Principal
When a brokerage firm sells securities from their own inventory for a mark-up they are acting as a principal.
Put Option
When purchased gives the buyer the right to sell a specific quantity of a security at a specific price until a specific date.
Return (on investment): The rate of increase for an invested amount of capital.
Settlement Date
Date on which a securities transaction must be settled.
Spread (OPTION)
Purchase of an option at one exercise price and the simultaneous sale of another option on the same underlying security at a different exercise price and/or expiration date.
Split
The multiplication of the outstanding number of shares of a corporation into a larger number of shares.
Stock Symbol
A unique letter symbol assigned to a security.
Style: The way a fund manager selects securities to buy, hold or sell in a mutual fund.
Systematic Risk: The risk associated with being invested in any market.
Term Deposits: Deposit instruments most commonly available from chartered banks, requiring a minimum investment at a pre-determined rate of interest for a stated term.
Term to Maturity: The length of time remaining until a bond's principal is to be repaid.
Venture Equities: Venture capital investments are high risk and generally have low capitalization.
Volatility: A measure of risk based on the standard deviation of investment fund performance over 3 years.
Zero-Coupon Bond
Bond that makes no periodic interest payments but instead is sold at a deep discount from its face value.
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