A
Account
- A collection of investments, either taxable or tax-deferred.
Account can be real (contains investments actually owned) or
model (hypothetical). Account type can be brokerage, mutual fund,
or other (a mutual fund can be an account if the fund is purchased directly from fund company or it can be an investment
within an account, if purchased through a broker). Legally,
accounts are set up as taxable or tax deferred. The legal owner
of an account can be an individual, joint , corporate, custodian,
estate, or trust. See Real Taxable Accounts, Joint Accounts, and
Real Tax-Deferred Accounts.
Account Description
- Information that includes Account Type, Tax-deferred, Tax
Method, and Account Note. These items are primarily used to
classify accounts for tax purposes.
Account Note
- Descriptive text about an account that you can enter for your
information, such as "for College."
Account Type
- When placing an order through this site, you must be sure to
select the proper Account Type for the position you wish to
trade. If a particular position resides in your cash account, for
example, this site will automatically reject a sell order that
specifies your margin account, and vice versa.
Accrual Method
- Accounting method where income and expenses are recorded when
items are booked or billed. Contrast with a more common method,
cash method, where income and expenses are logged from the time
cash is actually spent or received.
Accrued Interest
- Interest earned but not yet paid. For most taxpayers, tax is
due in year accrued interest is paid. When buying a bond, buyer
pays seller any interest accrued since the last payment date.
When the buyer eventually sells the bond, the new buyer pays any
accrued interest. The accrued interest is subject to taxes for
the seller, but reduces the tax liability for the buyer. For
example, if a bond buyer paid $30 accrued interest to a seller,
then received $150 interest for the rest of the year, the buyer
needs to pay taxes on $150 - $30 = $120.
ADR/ADS
- Stands for American Depository Receipts or Shares. These
financial instruments allow stock in a foreign corporation to be
traded on a U.S. stock exchange in U.S. currency by representing
the actual shares from the native exchange.
Advances/Declines
- Advances are the number of issues on the New York Stock
Exchange that have risen in price since the previous trading
day's closing price. Declines represent those that have fallen in
price. Sometimes the advances and declines are expressed as a
ratio and plotted as a line graph. A rising A/D line indicates
that the market has good breadth (a majority of issues are rising
in price) and that a rising trend is more likely to be
sustainable.
After Tax Real Rate of Return
- The percentage gain on an investment, account, or portfolio
after taxes and inflation have been deducted. Note that the after
tax real rate of return for money market mutual funds is
frequently less than zero, so you should use these accounts only
as temporary cash accounts.
All or None Order
- In brokerage, order instruction, particularly for large
orders, to execute the total quantity or none.
Annual Report
- Written report to shareholders summarizing the past fiscal
year's financial results and news items of importance about
products, law suits, board members, etc. Prospective shareholders
should also review the annual report because it provides
important balance sheet information.
Annualized Return
- Projects the year to date return over a full 12 month calendar
year. Most useful for projecting return for money market funds,
CDs, and bonds. Annualized return for equities can be misleading
if YTD return is high and covers a short period of time. See
Total Return.
Annuity
- An insurance product that pays an income benefit on a specific
date, for a specific time, or for the lifetime of the person(s)
receiving the annuity (the annuitant). A fixed annuity guarantees
fixed payments with a constant rate of return. A variable
annuity's value fluctuates with that of the assets that are
backing it. There is no guaranteed rate of return for a variable
annuity; the annuitant bears the investment risk and receives the
return actually earned on invested assets less charges assessed
by the insurance company.
Arbitrage
- A financial transaction where an arbitrageur (arb)
simultaneously purchases in one market and sells in another where
there is a slight price differential. Often it is a full hedge,
and therefore, a risk-free transaction. Arbs play an important
role in keeping markets liquid and efficient.
Ask
- The lowest price at which a seller is willing to offer a
security at this time.
Asset
- Something of value that you own. Appreciating assets, such as
stocks, have the potential of increasing in value and/or
producing income. Depreciating assets, such as a car, lose value
over time. Assets minus liabilities (what you owe) equals net
worth.
Asset Allocation
- The process of deciding what kinds of assets you want to own,
and the percentage of each. Tactical asset allocation is a
sophisticated form of market timing in which an investor decides
how much to allocate to each asset class based on market
indicators, particularly interest rates. As conditions change,
the percent allotted to each asset class changes.
Asset Classes
- Appreciating assets are put into 7 asset classes: maximum
capital gain equity, long-term equity, international equity, U.S.
government bond, corporate bond, precious metals, and cash.
Average Annual Return
- The cumulative return divided by the number of years of the
life of the investment or account, with the compounding effect
factored in. In reverse, the average annual return times a given
number of years equals the cumulative return for that time frame.
AAR is used to compare returns of two or more investments of
unequal track records.
Average Daily Volume
- The consolidated trading volume for all exchanges averaged for
the last 20 trading days.
Average Cost
- The average price plus commission.
Average Price
- The total cost less total commission of all lots you own of a
particular security divided by the total number of shares owned.
Average Proceed
- The sum of net amounts received from all short open lots
divided by the total number of shares short for that security.
Average proceeds is for short investments what average cost is
for long investments.
B
Baby Bond
- One sold at face amount less than $1,000 to make it attractive
to smaller investors. See Bond.
Balance Sheet
- A listing of all assets and liabilities for an individual or a
business. The surplus of assets over liabilities is the net
worth, or what is owned free of debt.
Balance Sheet Return
- A view in the stock database that displays Sales/Price Ratio,
Price/Book Ratio, Book/Share, Return on Equity, Profit Margin,
and Reporting Date. These items are all measures of company value
and profitability.
Balance Sheet - Cash & Debt
- A view in the stock database that displays: Fiscal Year End,
QuickRatio, Debt/Equity Ratio, Current Ratio, and Cash/Share.
These items measure the financial health of a company,
particularly its assets and liabilities. Click each item in the
Glossary list for definitions of each of these items.
Balanced Equities
- A mutual fund whose holdings are split fairly evenly between
stocks and bonds. Balanced funds can change their asset
allocation according to market conditions. Balanced funds seek a
relatively steady return.
Bank Information
- Descriptive information about a given bank. A view in the CDs
and Money Markets database that displays: Minimum Deposit, City,
State, Phone, Out-of-state Indicator.
Basis
- An accounting term that refers to the cost of an asset
including all adjustments and improvements. For tax purposes, it
is the amount you subtract from the net sale price to determine
the realized gain or loss. For example, if you paid $150,000 for
your home, but added a porch for $25,000, your basis is now
$175,000. You have stepped-up the basis.
Basis Point
- The smallest measure used in quoting yields and interest
rates. One basis point equals .01%, so a 100 basis point move in
a U.S. Treasury bond yield is 1%.
Bearer Certificate
- A security whose owner is not registered on the books of the
issuer and which is, therefore, payable to the person possessing
the certificate. A bearer bond has coupons attached, which the
bondholder sends in or presents on the interest date for payment.
Bearer stock certificates are negotiable without endorsement.
Beta
A measure of risk commonly used to compare the volatility of mutual funds or stocks to the overall market . The S&P 500 Index is the base for calculating beta and carries a value of 1. Securities with betas below 1 are less risky than the market as a whole. Betas above 1 are more risky. A beta of 1.3 is 30% more volatile than the S&P 500. Betas with negative values are inversely related to the S&P 500.
Note: The beta of precious metals can be low but these funds have high price volatility. You cannot compare the beta of bond funds against the beta of equity funds, because the bond fund beta is calculated using the Shearson Long Bond Index rather than the S&P 500 Index.
Bid
- The highest price a buyer is willing to pay for a security at
this time.
Block Trade
- Usually, a trade of 10,000 shares or more. For bonds, a
$200,000 face amount or more. Block trades are often executed
through a special section of a brokerage firm called the Block
Desk. Using the Block Desk may result in a better price.
Bond
- A debt security that represents the obligation of the issuer
to pay interest to the creditor or bond holder and return the
principal at maturity. Bonds backed by collateral are termed
secured while those that are not secured are called debentures. A
sinking fund bond obligates the issuer to set aside some of its
earnings to retire bonds periodically. A bond is usually
identified by its maturity date and its coupon rate, which is the
interest rate stated on the bond. The price of the bond is equal
to its face value when issued, which is called the par price.
After that, the price fluctuates in the market. Bonds selling
above original price are selling at a premium to par while those
selling below original price are selling at a discount to par.
Prices vary inversely with interest rates, as the prices of old
bonds must adjust so that their current yield will stay
competitive with those of newly issued bonds. A bond does not
represent ownership. See Baby Bond, Callable, Junk Bond,
Municipal Bond, US Gov't Issues, Zero Coupon Bond, Convertible
Bond, Corporate Bond.
Bond Prices
- View in the bond database that displays: Maturity, Outstanding
Bond Amount, Latest Price, Current Year High and Low Prices. For
latest price, see Price (Trade) Bonds.
Bond Type
- The bond pays fixed interest amounts over its term. The bond
price, however, can change as prevailing market interest rates
change over time. Zero coupon bonds, or zeroes, do not pay
interest. They are sold at deep discount to their par value,
which is returned at maturity. Interest is internally compounded
to produce the stated yield to maturity. With floating rate, the
interest rate paid on the bond can change as prevailing market
interest rates change.
Book/Share
- The current fiscal year book value (or net equity for the
corporation) per share of common stock.
Broker/Dealer
- In the broadest sense, an agent who facilitates trades between
a buyer and a seller and receives a commission for his services.
Dealers buy and sell for their own account and keep their own
inventory of securities on which they can profit or incur losses.
Most stock brokerage firms really act as brokers and dealers.
Brokers are also classed as Full Service or Discount, the former
using a commission-based sales force and the latter using
salaried brokers only.
Broker Call Rate
- Interest rate at which brokerage firms borrow from banks to
finance their clients' security positions.
Business
- Describes the primary product or service offered by a given
corporation.
Buy(s)
- A transaction type for the purchase of a security. A buy
creates an open lot which is part of a holding of a given
security that you currently own. Buy(s) is also a filter for
displaying only buy transactions.
Buy-to-Cover
- A transaction type that is a closing transaction for a short
sell and which creates a closed lot. Buys-to-Cover is also a
filter for displaying only buy-to-cover transactions.
Buying Power
- Value of margin eligible securities that may be purchased in a
margin account. Determined by doubling the sum of the cash held
in the brokerage account and the loan value of margined
securities.
Call Option
- A call option gives the owner the right, but not the
obligation, to buy the underlying stock at a given price (the
strike price) by a given time (the expiration date). The owner of
the call is speculating that the underlying stock will go up in
value, hence, increasing the value of the option. The purpose can
be to speculate with the option (hope it goes up and sell for a
profit), to invest in the underlying stock at a locked in price
if the stock price goes high enough, or to generate income. Each
option contract equals 100 shares of stock. For example, an AAA
MAR 65 call, would give the owner the right to buy 100 shares of
AAA at $65 (strike price) per share between now and the third
Friday in March (expiration date).
Callable
- A security redeemable by the issuer before the scheduled
maturity. The issuer must pay the holder a premium price if the
security is retired early. Most Corporate and Municipal Bonds are
callable. US Government issues are generally not callable. They
are called when interest rates fall so significantly that the
bond issuer can save money by floating new bonds at the lower
rate. The first call date is the date to or after which a
specific call price will be offered by the issuer, usually a
premium price to par, as an incentive to the bondholder to redeem
the bond.
Canceled Order
- A buy or sell order that is canceled before it has been
executed. In most cases, a Limit Order can be can be canceled at
any time as long as it has not been executed. A Market Order may
only be canceled if the order is placed after market hours and is
then canceled before the market opens the following day.
Capital Gains
- The buying and selling of a security or other appreciating
asset that has increased in value during the time you owned it.
It is subject to capital gains tax, as listed on IRS Form 1040,
Schedule D.
Capital Stock
- Amount of money or property contributed by stockholders to be
used as the financial foundation for the corporation. It includes
all classes of common and preferred stock.
Cash Account
- Orders placed in a cash account are settled on a cash basis,
meaning that cleared funds must be in the account within three
(3) business days to cover purchases.
Cash Available
- The amount that may either be withdrawn in cash, or used to
purchase additional securities without creating a debit balance.
It is a combination of credit balances in all accounts and excess
credit balances in margin accounts.
Cash Balance
- Whenever a transaction occurs that affects cash, the cash
balance is debited or credited. The cash balance is usually
invested in a money market mutual fund that pays interest. Money
market funds can be taxable or tax-exempt. In brokerage accounts,
the balance in cash is swept into the money market daily.
Cash Flow
- Net income plus depreciation and other non-cash charges. A
strong cash flow is important for covering interest payments,
particularly for highly leveraged companies.
Cash/Share
- The amount of cash divided by total number of common stock
shares outstanding for a given stock. A corporation with a high
cash/share amount relative to the current price per share is said
to be "cash rich" and may be considered low risk or
undervalued.
Cash Market
- A market in which security or commodity transactions occur
within a few days of the trade date. Also called the spot market.
The opposite is the futures market, where transactions are
completed at a specified future date, price, and quantity, which
is determined in the present. Stock, bond, and mutual funds trade
in the cash market.
Cash Percent
- The percentage of a given mutual fund's total assets invested
in cash and equivalents. A high cash percent is usually good in a
declining market but can result in under performance in a rising
market.
CD Rate
- The current interest rate for a given CD (certificate of
deposit).
Certificate of Deposit
- Investment created by banks, which pays stated interest at
either fixed or variable rates. If sold directly by banks,
principal is returned at maturity subject only to penalties for
early cashing in. If sold through brokers (called Broker CDs),
principal value can vary like with bonds, and early cashing in
can fetch a principal lower than amount paid.
Change (in NAV)
- The change in the net asset value since the close of the
previous trading day. Negative values means the mutual fund has
dropped in price; positive values means the mutual fund has
appreciated in price.
Note: A way to calculate previous day's closing price, is to subtract the Change from the Current Price - add negative values.
Class A/Class B Shares
- Shares of stock issued by the same company but having some
difference, such as voting rights, or a dividend preference or
participation.
Clearinghouse
- A computerized facility that compares and reconciles both
sides of a brokerage trade.
Closed to New Accounts
- The mutual fund is currently closed to new investors. To be
sure, call the mutual fund for the latest information.
Closing Commission
- The commission deducted from the proceeds before calculating
realized gain or loss. It is the fee charged by your broker to
execute your trade. It may be a composite of several fees &
charges.
Closing Price
- The market price you receive when you sell or buy-to-cover
your security.
Commercial Paper
- Unsecured short-term debt, usually from 2 to 270 days, issued
by banks and corporations, which is generally safe and flexible.
It is usually a major component of money market fund investment
portfolios.
Commission
- Fee charged by broker to execute your trade. May be a
composite of several fees & charges. Commission is taken into
account when calculating realized gain or loss. The buy, or
opening commission, is added to the cost basis and the sell, or
closing commission, is deducted from the proceeds before
calculating realized gain or loss, therefore commissions reduce
taxable gains and increase losses. Total commission is the sum of
both buy and sell commission. Commission rates take into account
the quantity of the purchase, the unit price of the security (low
priced stocks may have higher commission rates), and the type of
investment (options have higher commissions).
Common Shares
- Represents the total number of common shares outstanding,
excluding treasury stock (stock issued but re-acquired by the
company through buy-backs). This number is expressed in
thousands, so add three zeros.
Common Stock
- Security representing partial ownership interest in a
corporation. Ownership may also be shares with Preferred Stock,
which has prior claim on any dividends to be paid and, in the
event of liquidation, to the distribution of the corporation's
assets. Common stockholders assume the primary risk if business
is poor, and realize greater gains in the event of success. They
also elect the board of directors that controls the company.
Confirmation
- A written notification from a broker to a client specifying
the details of a securities' transaction
Conversion Price
- The price at which convertible securities, such as bonds and
preferred stock, can be converted into common stock at a set
conversion ratio. For example, if the conversion ratio is 25 to
1, and you own a $1000 face value convertible bond, then the
conversion price is $40 per share. The conversion value is the
value of 25 shares at the current price per share. If you assume
$32 per share, then the current value is 25 x $32 = $800. In this
example, it is clearly better not to convert.
Convertible Bond
- A debt security that is exchangeable for a set number of
shares of another type of security, usually common stock, at a
predetermined price. See Bond.
Corporate Bond
-
A debt security
investment in obligations of U.S. corporations. Corporate bonds
are taxable and have a specific maturity date. They are often
traded on major exchanges. See Bond.
Covered Calls
- A covered call seller or writer is an investor who owns a
stock and sells a call option against it to generate additional
income, which comes from the premium received for selling the
option. If things work out right for the writer, the stock price
will stay below the strike price and the writer will retain both
the premium and the stock. However, if the stock price rises
enough, the stock will be called away by the call buyer who has
exercised the option and now gets the stock and pays the writer
the strike price . Whether the writer makes a profit or loss on
the stock that is called away depends on the purchase price (the
cost basis). See Call Option.
Credit Balance
- For cash accounts, it is the uninvested money in your account.
In a margin account, it is the money on deposit against a short
position.
Cumulative Return (12-Month, 10-Year)
- Measures the price change over the period of time indicated,
ending at the current date (or the date the price was last
updated). This measure includes any dividends paid and reinvested
during the period measured. Cumulative return can also be
referred to as total return. It is the most useful measure of
performance among different asset classes, such as stocks, bonds,
cash, and so forth.
Current P/E Ratio
- The ratio of current price divided by last two quarters
earnings per share (EPS) plus next two estimated quarters EPS.
See Price/Earnings Ratio.
Current Year High & Low Prices
- The highest and lowest price for a given bond during the
current calendar year.
Cumulative Return Through (Year)
- Includes the price change over the period of years indicated,
ending at the year shown, plus any dividend paid and reinvested
over the period shown. The bar graph represents the total value
of your portfolio.
Cumulative Return (1-Yr, 3-Yr, 5-Yr, 10-Yr)
- The price change over the time period shown, plus any
dividend, interest, or capital gains paid and reinvested over the
period shown for any given security. Note that for stocks, the
periods are complete calendar years, but for mutual funds,
periods are rolling up to the current month.
CUSIP Number
- An industry code which uniquely identifies nearly all traded
stocks and bonds.
Current Ratio
- A company's current assets divided by its current liabilities.
Current Yield
- For stock, the annual dividend divided by the current price
per share. For bond, the annual interest payment divided by
[current price divided by 100 times quantity]. A measure in
percentage terms of how much income you can derive from the
security. Of great importance to fixed income investors and of
minimal importance to growth investors. See Yield to Maturity.
Date
- The date at which the offering price and NAV prices apply.
Date is usually one day before the Last Update, more if Last
Update falls after a weekend or holiday. However, if there have
been no trades since the previous day, Date will display the Date
of the last trade.
Note: Mutual fund net asset values are calculated at the end of each trading day. Usually the results are obtainable around one or two hours after the market closes, 4:00 PM ET, depending on the size of the mutual fund. If a fund's total assets and holdings are large, it might take longer for the fund to calculate it's net asset value. This is why current mutual fund quotes are only available for previous trading day's close.
Date of Record
- Date on which a shareholder must own shares to be entitled to
a dividend payment. From the following day, until the day the
dividend is actually paid, the stock trades ex-dividend.
Debenture
- A bond issued by a corporation which is secured by the general
credit or promise to pay of the issuer. It is not backed by
collateral such as tangible assets.
Debit Balance
- Money owed by the client to the broker.
Debt/Equity Ratio
- Long-term debt plus current liabilities divided by the last
fiscal year net equity per share of common stock for a given
corporation. A ratio above 2:1 or 200% may be excessive and a
sign of strained corporate finances.
Debt Securities
- Securities representing money borrowed by an issuer that must
be paid back at a specific date. The security pays interest or is
purchased at a discount to face value.
Debt Service
- Cash required by a corporation or municipality to cover all
interest and principal payments due in a given year, including
sinking fund payments.
Discount Rate
- The lending rate that the Federal Reserve Bank charges on
loans made to other banks and financial institutions. Changes in
this rate tend to have large ripple effects on the rates banks in
turn charge their customers. The bond market and sometimes the
stock market react sharply to changes in this rate. You can
create market timing alerts with it.
Distributions
- Capital gains (long or short term), interest, or dividends
paid to bond holders and shareholders. These can be received as
cash or stock and they are treated as closed lots for tax
purposes. Return of capital is also a type of distribution, but
it is usually tax exempt. Distributions from mutual fund shares
are easily reinvested into more shares and the compounding of
reinvested shares can add substantially to the cumulative return
of a fund.
Dividend
- The periodic, usually quarterly, payment made by a corporation
to its shareholders, generally expressed as dividend per share.
Dividends represent earnings that are not reinvested by the
corporation. Some stocks pay no dividends and others, such as
utility companies pay substantial ones that represent a large
portion of the total return a shareholder will get from his
investment. Dividends are a type of distribution and are usually
taxable in year received.
Dividend Frequency
- Shows how often a given mutual fund pays a dividend
distribution.
Dividend Growth Rate (3 Yr and Current Year)
- The unweighted average annual growth rate of annual fiscal
year dividends for the last three fiscal years for a given
security.
Dividend/Share
- Indicates the annual dividend payment for the next 12 months
for a given security. Most companies pay dividends quarterly.
Dividend Year Started
- The year in which a given corporation started paying dividends
to stockholders.
Dow Jones Indices
- Indices tracked by the Dow Jones company, a highly reputable
information services company; publisher of The Wall Street
Journal, Barron's National Business and Financial Weekly, and
other influential publications.
Dow Jones Industrial Average (DJIA)
- The most commonly followed index of the U.S. stock market. It
is comprised of 30 corporations spanning many different
industries. It is price weighted, meaning that a $2 change in a
$100 per share stock will have a greater affect than a $2 change
in a $20 per share stock.
The Dow Jones Industrial Average measures (also defined in the glossary) can be used to gauge the health and direction of the stock market; see DJIA 200-Day Moving Average, DJIA Price/Earnings, DJIA Yield, DJIA Price/Book.
DJIA 200-Day Moving Average
- This value is calculated by averaging all the closing values
of the DJIA for the last 200 days. You can use this and the
following measures to create market timing alerts.
DJIA P/E (Price/Earnings)
- The latest DJIA value divided by the estimated current year
earnings per share (EPS), with the index multiplier taken into
account. Readings above 24 and below 8 are considered sell and
buy signals respectively by many analysts.
DJIA Yield
- The sum of all dividends of all stocks in the DJIA divided by
the latest value of the DJIA, adjusted by the multiplier.
Readings below 3 and above 6 are considered sell and buy signals
respectively.
DJIA Price/Book
- The latest value of the DJIA divided by the book value for all
DJIA stocks, adjusted by the multiplier. Readings above 2.5 may
be a sell signal.
Dow Jones Transportation Average (DJTA)
- A index of 20 corporations in the transportation sector,
including air, rail, and truck.
Dow Jones Utilities Average (DJUA)
- An index of 15 major utility corporations.
Duration of an order
- In brokerage, when trading stocks or options, it designates
whether a limit trade is valid for Good Until Canceled or Day
Only. Market orders all have a duration of Day Only by
definition, since they are executed as soon as possible at the
market price. It is possible that a market order could arrive
after the market close, in which case, it may remain valid at the
next market opening.
DVP/RVP Account
- If you have not taken special steps to establish a DVP/RVP
account with us, you must not select this account type. DVP/RVP
accounts relate mainly to institutional trading accounts.
E
Earnings Per Share
- The fiscal year earnings divided by common shares outstanding
for any given year for a given corporation. The estimated current
fiscal year earnings per share includes the actual EPS for
quarters that have already been reported plus estimates
calculated by the S&P Corporation for any quarters remaining
in the fiscal year. Earnings are the principal force behind stock
price appreciation. This view displays: Earnings Per Share, Mean
Estimate, and Projected 5-Year Growth Rate.
Effective Tax Rate
- The flat percentage rate equivalent of a given tax payer's
progressive rate. For example, if your taxable income is $55,000
in 1993, the first $22,100 would be taxed at 15%. the next
$31,400 at 28%, and the last $1,500 at 31%. The effective rate is
approximately 24% applied to the entire $55,000.
Equity
- The generic term for ownership interest in an asset. In real
estate, it is often used to describe the net of the current value
and the mortgage balance. It is also used to describe stock and
mutual funds, that is, investments that issue ownership shares.
Equity Security
- Instrument representing fractional ownership in a corporation.
Stocks are equity securities.
Exchange
- The principal exchange in which the stock is traded: NYSE =
New York Stock Exchange; AMEX = American Stock Exchange; and OTC
= Over the Counter. The OTC, unlike the other two, does not have
a physical location. It is a network of security dealers, most of
whom are connected by a computer link called NASDAQ (National
Association of Securities Dealers Automated Quotation System).
OTC stocks are found under the NASDAQ listings of your newspaper.
Exchange Call
- NYSE requires a margin account to maintain 25% equity. Equity
consists of funds and margin eligible securities in a margin
account. When the market value of margined securities is less
than the minimum equity, a margin call goes out to the client
requesting additional equity, i.e. securities or cash. Exchange
calls are due immediately.
Ex-Dividend
- When a stock trades ex-dividend (without dividend), it means
that a new buyer of the security will pay the price with the
dividend deducted. Also, the new buyer will not have a tax
liability for that dividend as does the buyer who bought on or
before the record date (the official date declared by the board
of directors to determine who is eligible for the dividend). The
actual payment date of the dividend may be a couple of weeks
after the record date. If a stock pays a large dividend, you
should try to make a purchase after the record date, so to avoid
the tax liability on the dividend.
Executed Order
- Completed buy or sell transactions.
Exit Fee
- A service charge that equals a percent of a share's NAV, which
you pay when you sell your mutual fund shares. Sometimes the exit
fee is a flat dollar charge.
Extended Hours Trading
- An extended trading session (on a matched order basis) for
NYSE and AMEX. Lasting from 4:15 p.m. to 5:00 p.m. EST, it uses
the closing price of a security at the conclusion of the regular
trading day to determine the transaction price of the matched
orders. Only securities listed on NYSE and AMEX are eligible for
the extended session.
F
Face Value
- The stated value of a bond certificate when issued and when
they are redeemed at maturity. Same as par value or principal.
The face value never changes but the current value does. Current
value for a bond is (face value x price) divided by 100. Bonds
are purchased as units of face value. For example, you buy a
$10,000 bond where the current value can be more or less than
$10,000, depending on market conditions.
Federal Call
- When a client makes certain types of transactions in their
margin account, the brokerage firm will issue a call notifying
the client if additional equity is required by the settlement
date in order to satisfy Federal Regulation T.
Fees & Charges
- These items relate to the costs of owning mutual fund shares.
This view displays: if it is a Closed fund, Sales Charges, Exit
Fee, Expense Ratio, 5-Year Fee, Phone Switch options.
First Call Provisions
- Some bonds can be called prior to the maturity date at the
issuer's discretion. These bonds are callable. The first call
provision describes the time period and the price offered for the
first call by the issuer.
Fiscal Policy
- A method where governments use taxes and budgeting to raise
revenue for public purposes. Another method is monetary policy,
which seeks to influence the money supply by raising or lowering
interest rates and thereby changing credit demand.
Fiscal Year
- Any continuous 12 months which is used by a business or
government as its annual accounting period. The U.S. government
fiscal year ends on September 30. A fiscal year is designated by
the year it ends. For example, an April - March fiscal year 1993
ended on March 31, 1993 and began on April 1, 1992.
Fiscal Year End
- Shows the last month of a corporation's fiscal year.
Five-Year Fee
- The total cost you might have to pay over 5 years for every
$1,000 investment in a given mutual fund. Five-year fee is the
best over-all measure for comparing fund costs if you intend to
hold onto the fund for at least 5 years.
Flexible Equities
- A mutual fund whose holdings can vary between a preponderance
of stocks or bonds, depending on market conditions. Flexible
funds seek to take advantage of changing market conditions.
Floating Rate
- Rather than a fixed interest or coupon rate, some bonds and
CDs have a floating interest rate which is adjusted periodically
to market conditions. It is also called Variable Rate.
Front-end Load
- The percentage of the purchase price that is charged and
deducted from the investment. Same as Sales Charge. For example,
if you invest $1000 in a 4% front-end load mutual fund, you only
purchase $960 worth of shares.
Futures
- Investment contracts which specify the quantity and price of a
commodity to be purchased or sold at a later date. On contract
date, the buyer must take physical possession or make delivery of
the commodity, which can only be avoided by closing out the
contract(s) before that date. Futures can be used for speculation
or hedging.
G
General Obligation Bond
- A municipal bond which is backed by the full faith and credit
of a municipality. It includes the authority to raise taxes
and/or borrow to pay back interest and principal. See Bond.
Ginnie Mae
- Nickname for Government National Mortgage Association (GNMA),
a wholly-owned corporation of the U.S. Government that functions
as part of the Department of Housing and Urban Development (HUD).
Also means a security that represents a pool of mortgages
exceeding $1 million that is packaged from individual home
mortgages and resold to investors who receive both principal and
interest, just like a bank that holds a home mortgage. These
securities are liquid and U.S. Government insured.
Glamour Stock
- A stock with a wide public and institutional following. You
may want to avoid investing in these stocks because they are
over-hyped and extremely vulnerable to a downward slide.
Global Bonds
- Mutual fund investing primarily in debt obligations (i.e.
bonds) of foreign governments and/or corporations. Global bond
funds can also be subject to foreign currency exchange risks.
Global Equities
- Stocks purchased from companies all over the world, including
the Unites States. Global equities can also expose you to foreign
currency risk.
Gold
- A precious metal usually sought after during times of rapidly
rising inflation. For mutual fund investors, gold can also refer
to the stock of gold mining companies, as well as bullion.
Government Bonds
- Mutual fund investing primarily in debt obligations (i.e.
bonds) of the U.S. government. Government bond funds can be
short-term, intermediate-term or long-term, reflecting the
average maturity of the bonds held in the portfolio.
Gross Domestic Product (GDP)
- A measure of the economy which includes the value of all
products and services produced by a nation in a given year. The
growth rate of GDP is used to compare the economic progress of
various nations.
Growth & Income
- A security purchased for long-term price appreciation (similar
to long-term growth) and also for potential dividend (or
interest) income.
Growth Rate
- The percentage rate of change in some financial characteristic
of a company. See Historical 5-year Growth Rate, Projected 5-year
Growth Rate, Dividend Growth Rate, Sales 3-year Growth Rate, and
Net Income 3-year Growth Rate.
H
Hedging
- An investment strategy of lowering risk by buying securities
that have offsetting risk characteristics. A perfect hedge
eliminates risk entirely. Hedging strategies lower return since
there is a cost involved in hedging. For example, a portfolio
manager could short a futures contract which will perfectly
offset any decrease in the value of the portfolio. Options and
short selling stock can also be used for hedging. Hedge funds are
investment pools that are free to use any hedging techniques they
desire and they often make large bets in a relatively small
number of different holdings.
Hidden Asset
- An asset that is omitted or understated in the balance sheet
of a company. Discovering hidden assets before the market does
can lead to appreciable price gains for savvy investors.
A highly speculative stock with a rising price and high volatility which makes it vulnerable to dramatic downswings.
High Flyer
- A highly speculative stock with a rising price and high
volatility which makes it vulnerable to dramatic crashes.
Holding
- All the shares (mutual funds & stocks), contracts
(options), or face amount (bonds) you own of an investment.
House Call
- A brokerage firm's notice to the client that the equity in a
margin account is below the firm's maintenance level and needs
additional funds immediately.
Hybrid Investment
- An investment which has the major characteristics of two or
more other investments. For example, a convertible preferred
stock generally pays a steady dividend and has steady principal
like a high quality corporate bond, but it can be converted into
common stock. Hybrids can be complicated to understand and are
best left to sophisticated investors.
I
Imputed Interest
- Interest which is not actually paid to bond holders but which
the IRS may tax anyway. Common with zero coupon bond interest.
See Interest and Bond.
Income
- Dividends or interest received by owners of equity or bonds
respectively. Dividends represent a portion of earnings paid to
shareholders while interest is compensation to bondholders in the
form of cash or more bonds for the lending of capital. Reinvested
income can significantly add to returns. See Projected Income.
Income Account
- An account that receives interest from bonds and credit
balances, or dividends from stock positions.
Indexing
- Constructing a portfolio to match the performance of a
specific index, such as the S&P 500. Individuals can do this
by purchasing shares in an index mutual fund.
Indices
- Click Dow Jones Indices and S&P Indices in the Glossary
list for these definitions.
Information
- See Stock Information for these definitions.
Institution
- The name of the institution issuing a CD or money market.
Institutions Holding
- The percentage of outstanding shares held by institutions for
investment purposes. Includes charitable trusts, pension funds,
mutual funds, brokerage firms, and banks.
Interest
- Compensation to bondholders in the form of cash or more bonds
for the lending of capital. Accumulated or accrued interest is
the interest due to the seller of a bond from the day after the
last interest payment to the day before the settlement date. It
is paid by the buyer of the bond. Imputed interest is not paid to
the bondholder but it is calculated as if it was so that taxes
can be paid on it anyway. Reinvested interest can significantly
add to returns.
Interest Dates
- Displays the frequency and dates that interest on a given bond
is paid. By carefully selecting interest dates, you can receive
income monthly from a group of bonds, with staggered interest
dates.
Investment
- An appreciating or income producing asset. An open investment
is one you currently own. A closed investment is one you once
owned. A long investment is an open investment that you bought. A
short investment is an open investment that you sold short -
i.e., you borrowed the investment from someone else, sold it,
pocketed the proceeds, you hope it decreases in value, and you
are obliged to buy it back in the future and return it to the
original owner. An investment can be short and long at the same
time if it contains both long and short lots. All investments are
classified by type as a way of organizing your investments. See
Holding.
Individual Retirement Account (IRA)
- An Individual Retirement Account is a personal, tax-deferred,
retirement account in which an employed person can contribute a
maximum amount per year. There are specific rules concerning
level of participation and eligibility for an a IRA and whether
an employee's contributions are tax-deductible. Consult a
financial consultant or tax advisor.
Inflation - CPI
- The rise in price of goods and services, or Consumer Price
Index (CPI), when too much money chases too few goods on the
market. Moderate inflation is a result of economic growth.
Hyperinflation (CPI rising at rates of 100% or more annually)
causes people to lose confidence in their economy and put their
money in hard assets such as gold and real estate.
Inflation Rate
- The annual percentage change in the price of goods and
services. At the consumer level, it is the Consumer Price Index
(CPI) and at the wholesale level it is the Producer Price Index
(PPI).
Intermediate Government Bonds
- A U.S. government debt instrument having a maturity of between
3 to 10 years.
International Equities
- Stocks purchased from companies based in countries other than
the Unites States. International equities can also expose you to
foreign currency risk.
Issuer
- The official name of the company issuing a given bond.
J
Joint Account
- A bank or brokerage account that two or more people own
jointly. Some joint accounts are set up so that all owners of the
account must sign checks and approve all withdrawals or brokerage
transactions. In others, any one party can take these actions on
his or her own. Joint accounts usually include rights of
survivorship (upon the death of one party , the other gets
complete ownership) or with tenants in common (the ownership of
the deceased party's half goes to his estate, not the other
party).
Joint and Survivor Annuity
- An annuity that pays two or more beneficiaries. When one of
them dies, the payments continue to the survivors but the
deceased's share is no longer paid.
Jumbo CD
- A certificate of deposit with a high minimum deposit required,
often $90,000 or more. They carry a slightly higher interest
rate; however, if the value of the CD plus interest held in the
account exceeds $100,000, this excess is not insured by the FDIC.
To be safe, you can hold several jumbo CDs at different banks.
Junior Security
- A security with a lower claim on assets in the event of a
company's liquidation. Normally, common stock is most junior to
all other corporate issues. Then, from junior to senior, the
order is preferred stock, debentures, and mortgage bonds. This
last item is a direct claim on real property and is the most
senior.
Junk Bond
- A junk bond (or high-yield bond) is one with a S&P credit
rating of BB or lower and that carries higher risk of interest or
principal default than better rated investment grade bonds. Junk
bonds are issued in leveraged buyouts and other takeovers by
companies without long track records of sales and earnings, or by
those with questionable credit strength.
K
Keogh Plan
- Tax-deferred pension account designated for employees of
unincorporated businesses or for persons who are self-employed,
either full -time or part-time.
Kicker
- A provision for equity participation which is often added to a
new debt issue to make it more attractive in the market. Rights,
warrants, and convertibility are common examples. Also called
sweeteners.
L
Leverage
- A company is leveraged when it has a high ratio of debt to
equity. If the company can use the extra debt to expand and
generate more than enough additional revenue to cover the higher
interest costs, then the leverage is beneficial to the current
shareholders, that is, each share has been leveraged.
Liabilities
- Total liabilities is the sum of your Short Market Value plus
your Debit Balances from the prior trading day. Short Market
Value is the market value of short positions held in your short
account as of the prior day's market close. Increases in this
figure mean that positions you have sold short are moving against
you, or up. Each Monday, your short account will be marked to the
market. The Short Market Value of the account is used to
recalculate the proper level of collateralization to secure the
short positions in the account. The Debit Balance reflects the
closing debit balance as of the close on the prior trading day.
Limit Order
- Order that sets a specific price (Limit Price) that is the
highest a buyer will pay or the lowest a seller wants to receive.
Buyer will accept price lower than limit and seller higher than
limit. It may be a Day or GT90 (Good Until Canceled) order. If no
price is indicated, the order is a market order by default.
Limited Partnership
- A business or investment where limited partners provide
capital, share in profits, have limited legal liability, and
leave the management of the business to general partners. Can be
tradable and listed on an exchange, packaged and sold by brokers
and not exchange tradable, or tradable to other partners only.
REITS (real estate investment trusts) are popular LPs. Most LPs
provide both income and appreciation. Some are highly liquid and
others not.
Liquidity
- The ability to turn an asset into cash. A highly liquid asset
is easy to sell because an active market exists that sets prices
which are continuously adjusted for supply and demand. An example
is a listed stock or mutual fund. A less liquid asset is real
estate or a collectible.
Loan Value
- Maximum percentage of current market value of margin eligible
securities that a brokerage firm can lend a margin account
client.
Long Investments
- Includes: Cash Balance, Current Value, Total Cost, and
Unrealized Gain/Loss. Long investments are investments that you
have bought with the goal of price appreciation and/or income
generation. Short investments, on the other hand, are first sold
and then bought back.
Long Position
- Securities owned by the client and held in the client's
account at the brokerage firm.
Long-Term Growth
- Securities whose price appreciation is anticipated over the
long term; i.e., a year or more. Long-term growth securities tend
to be more stable and appreciate at a slower, albeit steadier
rate than do maximum capital gains securities.
Lot
- A group of identical UNITS (for securities) or nearly
identical units (for collectibles) of an investment that are
traded at the same time and price. Open lots are the contents of
open investments and can be long (buys) or short (short sell).
Closed lots are the contents of closed investments and can be
long (sell) or short (buy to cover).
M
Maintenance Requirement
- The level of equity that must be maintained in a client's
margin account. When the market value of a margined security is
less than maintenance levels, a margin call is issued for the
investor to increase equity.
Margin Account
- An investment account which allows you to purchase securities
with funds borrowed from the broker at a specified interest rate.
Margin Balance
- A debit in your account secured with stocks and/or bonds which
regulators have authorized for use as collateral.
Margin Call
- A firm's demand of a client for additional equity in order to
meet maintenance requirements. If a client fails to deliver more
equity in the account, positions in the account may be
liquidated. There are three types of margin calls: House,
Exchange, and Federal. See House Call, Exchange Call, Federal
Call.
Margin Debt
- A debit in your account that is owed to the broker. The debit
is secured with stocks and bonds which regulators have authorized
for use as collateral. It excludes funds due which are debits
resulting from purchases in a cash account.
Margin Loan Availability
- The amount of money you may withdraw from your account using
margin eligible securities in your margin account as collateral.
Marginal Tax Rate
- The combined federal, state, and local tax rate applied to the
next additional dollar of income. For example, if your federal
tax bracket is 28%, and your state tax rate is 5%, when you earn
another dollar of income, it would be taxed at a 33% tax rate.
Mark to Market
- Determination of securities' value within a margin account to
ensure that the account is in compliance with maintenance
requirements.
Market Order
- An order to buy or sell a security at the next available
price.
Market Timing
- Attempting to buy and sell securities to ride up trends and
avoid down trends in the stock, bond, currency, or commodity
markets. In theory, this can dramatically increase your rate of
return, but practically, it is extremely difficult or impossible
to consistently make the right decisions at the right time over
the long term.
Market Value
The number of outstanding common shares of a given corporation times latest price per share. It is also referred to as market capitalization.
Note: ADRs and ADSs do not display Market Value.
Maturity
- The date a given bond will mature and pay off its principal in
full. A bond issued for $1,000 will pay off the $1,000 at
maturity. A single company can issue more than one series of
bonds. These bond series can be differentiated by their
maturities.
Maximum Capital Gains
- The attempt to maximize the positive difference between the
buying and selling price of a security. Maximum capital gains
securities are typically more risky, or volatile, than the
average (S&P 500) security. They rise more during bull
markets but also fall more during bear markets and are typically
stocks of fast-growing small companies.
Mean Estimate
- The average of analysts' earnings per share estimates for the
current fiscal year for a given corporation.
Minimum Deposit
- The minimum deposit accepted by the Institution for the
particular CD. Jumbo and MiniJumbo CDs indicate minimum deposits
of $100,000 for Jumbos and $25,000 and $50,000 for MiniJumbos.
Minimum Investment
- Minimum Initial indicates the minimum deposit required to open
a regular or IRA/SEP/Keogh tax-deferred account with the mutual
fund. Minimum subsequent indicates the minimum required to make
deposits in an already opened regular or tax-deferred account
with the mutual fund.
Mixed Lot
- The combination of round lot (100 shares) or multiple round
lots and an odd lot (99 shares or less), e.g. 163 shares.
Money Market Fund
- A mutual fund that invests in cash and equivalents. Generally,
has a stable $1 per share net asset value (NAV) and a variable
rate of return. Not federally insured but short term nature of
investments plus private insurance make them quite safe.
Dividends are paid periodically and are automatically reinvested
in more shares. Available from banks, mutual fund companies, and
brokerage firms, these funds are used as a convenient place to
park cash and earn "interest" (really dividends, as
mentioned above). Most brokerage and mutual accounts have an
associated money market fund account. Money market funds can be
taxable or tax-exempt. Each day, the balance in the cash / margin
account, which comes from the proceeds of trades and
distributions, is swept into the money market fund. See Account.
Municipal Bond
- A bond issued by state or local government. Interest from
these bonds is generally tax-free to residents but in some cases,
interest is federally taxable if subject to Alternative Minimum
Tax. Note that any capital gain realized by trading a municipal
bond is subject to capital gains tax. Because of this hybrid tax
situation, municipal bonds are normally put in taxable brokerage
accounts since there is no special account for them. See Bonds.
Mutual Fund
- A company that pools money of individual investors and
purchases securities which become jointly owned by its
shareholders. The shareholders receive interest, dividends, and
capital gains (but not losses) from the ownership and sale of the
fund's securities. The fund's portfolio is managed by a
professional money manager. Open-end funds offer shares to the
public continuously (except when temporarily closed) while
closed-end funds offer a limited number of shares which then
trade on an organized exchange. A no-load fund charges no up
front or back end sales fee while a load fund may charge one or
both. Virtually all mutual funds charge annual expense fees that
reduce the investment return. Mutual funds can invest in equity,
debt, cash, real estate, options, and futures. There are over
4,000 mutual funds. Closed end funds are purchased just like
stocks. Full service brokers usually sell their own funds while
discount brokers sell mostly funds of other companies.
Mutual Fund Cash Level
- Measures the average percentage of cash held by managers of
mutual funds in their funds. When levels are over 11%, managers
are holding onto a lot of cash because they are bearish on the
market. Levels below 6% means they are bullish as they have spent
all their cash; fund managers usually need to keep about 5% cash
just to meet daily redemption requirements. This indicator is
usually considered a contrary indicator, as fund managers tend to
be wrong at market extremes.
N
NASDAQ Composite Index
- A market value weighted index comprised of about 3,500 stocks
traded on the NASDAQ exchange. Large technology stocks have a
major effect on this index value. NASDAQ represents the top tier
of the over-the-counter (OTC) market.
Net Amount
- Quantity times price, plus or minus commission.
Net Asset Value (NAV)
- The per share price of a mutual fund. For a no-load fund, NAV
is the price received by both buyers and sellers. For front
loaded mutual funds, NAV is equivalent of the bid price (what
shareholders can get for selling a share), while the offering
price is the price buyers must pay per share (and includes front
load). The NAV is usually calculated at the end of each trading
day by taking the closing prices of all securities owned plus
cash and equivalents and subtracting all liabilities then
dividing by the number of shares outstanding, which for open-end
funds, fluctuates depending on daily number of redemptions and
purchases. Many new funds are issued at a NAV of $10. After a
distribution, the NAV falls by the amount equal to the
distribution.
Net Income
- The net income after taxes but before payout of common and
preferred dividends for the indicated fiscal year for a given
corporation.
Net Income 3-Yr Growth Rate
- The unweighted average of the growth rate for net income over
the last three fiscal years for a given corporation.
No-load funds
- Mutual funds that have no initial sales charge. Beware that
some no-loads have other charges and expenses. The best measure
of all fees and charges is the five year fee. See Mutual Fund.
Non-callable Bonds
- Bonds which cannot be taken back by the issuer before
maturity. Most U.S. Treasury issues are non-callable. This is an
advantage to the lender since there is no interest rate risk.
With callable bonds, there is the risk of having to reinvest
before maturity at a potentially lower interest rate.
Non-marginable Securities
- Securities that may not be purchased or sold in a margin
account. All transactions involving them must be done on a full
cash basis.
O
Odd Lot
- Purchase or sale of less than the round lot unit of 100
shares.
Offering Price
- The net asset value plus the sales charge. Offering price is
what a buyer (you) would have to pay to buy one share of a given
mutual fund. See Mutual Fund.
Out-of-State Deposit
- Indicates whether an institution will accept out of state
deposits from customers.
Open Lot
- Open lots are the components that make up open investments and
can be long (buy) or short (short sell). A lot in general is a
group of identical units (for securities) or nearly identical
units (for collectibles) of an investment that are traded at the
same time and price. See lot.
Open Order
- Orders that have been placed with the broker but have yet been
executed or canceled.
Open Price
- The price at which a given stock opened for the current
trading day. For weekend days or holidays, this would be the
opening price for the previous trading day.
Opening Commission
- The commission added to the proceeds before calculating
realized gain or loss. It is the fee charged by broker to execute
your trade. May be a composite of several fees & charges.
Opportunity Cost
- The rate of return you likely would have achieved for capital
in an alternative investment from the one you chose. If the
current investment under performs the foregone investment, then
you have paid an opportunity cost greater than the current rate
of return and you made a bad choice.
Option
- A contract that gives the owner the right, if exercised, to
buy or sell a security or basket of securities (index) at a
specific price within a specific time limit. Usually, they are
traded as securities themselves, with buyers and sellers trying
to profit from price changes. They are generally available for 1
to 9 months, with some longer term options (called LEAPS) also
available for selected securities. Stock option contracts are
generally for the right to buy or sell 100 shares of the
underlying stock (100 is the multiplier). Trading in options
should only be undertaken by sophisticated investors.
Options
- An item in the stock database that indicates whether a given
stock also has options that can be traded. See Option.
Option Schedule
- In brokerage, a list of the options available for the
underlying stock symbol you enter.
OTC Stock
- A security not listed on a major exchange.
Outstanding Bond Amount
- The dollar amount of a bond outstanding as of the latest
available balance sheet of a given corporation.
P
Par
- The nominal or face value of a security. A bond selling at par
is worth the same dollar amount as it was issued for, or at which
it will be redeemed at maturity, usually $1000. For common stock,
par value is set by the company issuing the stock. Par value is
an assigned amount (usually $1) that is used in computing the
dollar value of the company's shares for accounting and reporting
purposes. See Bond.
Pay-Out Ratio
- Pay Out Ratio = Average of the past 3 years' dividends /
Earnings Per Share
Phone Switch
- Some mutual funds allow the client to sell his or her shares
and place proceeds in either a Money Market Fund or another Fund
in its family, simply by telephoning a number.
Pink Sheets
- The daily listing of stocks, prices, and market makers for
over-the-counter (OTC) stocks too small in capitalization to be
listed in the NASDAQ system.
Portfolio
- All taxable and tax-deferred investment accounts and their
contents (appreciating & income producing assets). More
broadly, your portfolio holds all your investments.
Portfolio %
- Indicates what portion of an account is invested in a given
security.
Precious Metals Equities
- Mutual fund investing primarily in stocks of companies who
mine precious metals, such as gold, silver, platinum, etc. The
stock prices of these companies can also reflect the rising or
falling values of the precious metals that the company mines.
Preferred Stock
- Stock that pays dividends at a stated rate and has priority
over common stock in dividend payments and asset liquidation.
Preferred stock does not ordinarily carry voting rights.
Price (52-Week High and 52-Week Low)
- The highest and lowest trade prices achieved during the past
52 weeks.
Note: Compare current price to the 52-week high or 52-week low to get an estimate of where the stock is trading in its year range.
Price (Trade)
- Bonds. The actual trading prices for listed bonds. For
over-the-counter bonds, the bid price is shown. Bonds are
generally listed in lots of 1,000. Therefore, if Price = 99.5
(=99.5% of $1,000) = $995, at maturity, the price = 100% of the
face value, or $1,000. Latest Price is from last trading day of
the indicated month. This view displays: Maturity; Outstanding
(millions); Latest, High, and Low Prices.
Stocks and Options. The last trade price. Stocks that do not trade frequently display the bid price in the Price column. Bid price is what the buyer is willing to pay for the stock or options. Stocks also show daily highs and lows.
Indices. The last value of a given index.
Price/Book Ratio
- The latest price per share divided by the last fiscal year
book value per share, for a given corporation.
Price (Date)
- The market price of an investment, at any given time. Current
price is the market price as of the latest price update. Average
price is the arithmetic average of the price of all lots of an
investment. See Cost.
Price/Earnings (P/E) Ratio
- The most commonly used measure of value for both markets and
individual stocks. It indicates how many times earnings an
investor is willing to pay to own a stock or market index,
therefore it is sometimes called the multiple. Current P/E is the
current price divided by the current fiscal year's estimated
earnings per share. Past P/E is the current price divided by the
actual earnings per share for the past 12 months. 12-month High
P/E is the 52-week high price divided by the EPS for the past 12
months. 12-month Low P/E is the 52-week low price divided by the
EPS for the past 12 months. Note: The past 12 months is not
necessarily past year.
Prime Rate
- The base rate on corporate loans posted by at least 75% of the
nation's 30 largest banks. This is a useful measure for current
lending rates, as most banks charge a few points above prime on
mortgages and other personal loans.
Principal
- The original amount or face value of a investment, typically
bonds and CDs, on which interest is owned or earned. Interest is
paid based on a percent of the principal (a stated interest or
coupon rate). At maturity, the entire principal is returned to
investor; however its purchasing value may be diminished by
inflation.
Principal Transaction
- A transaction in which the brokerage firm buys or sells a
security into or from its own account. Commission is not charged
for principal transactions. Instead the transaction is marked up
or down before it is entered to the customer's account.
Proceeds
- The sum of net amounts of all short open lots. Total proceeds
is the sum of net proceeds of all short open investments in a
given account. Average proceeds is for short investments what
average cost is for long investments. See Average Cost.
Profit Margin %
- The last fiscal year net income divided by the last fiscal
year's sales or revenues for a given corporation.
Projected 5-Year EPS Growth Rate
- The estimated average annual growth rate of fiscal year
earnings per share for the next five years for a given
corporation.
Projected Yield
- Projected income divided by current value of a given account.
Prospectus
- A formal written offer to sell securities to prospective
shareholders. It is very useful to read the prospectus for a
mutual fund before buying shares because it describes the
philosophy, past performance, and fees.
Purchase Price
- The market price you receive when you buy or sell short a
security. Same as opening price.
Put Option
- A put option gives the owner the right, but not the
obligation, to sell the underlying stock at a given price (the
strike price ) by a given time (the expiration date). The owner
is speculating that the option will go up in value and the
underlying stock will go down in value. The purpose can be to
either speculate with the option (hope it goes up and sell for a
profit) or trade the underlying stock at a locked in price if the
stock price goes down enough. For example, an AAA MAR 65 put
would give the owner the right to sell 100 shares of AAA at $65
(strike price) per share between now and the third Friday in
March (expiration date).
Q
Quantity
- The number of shares (stocks, mutual funds), contracts
(options, futures), or the face value of bonds.
Quick Ratio
- Cash and equivalents plus receivables divided by current
liabilities (i.e., debt) for a given corporation.
R
Regular Initial Minimum
- The minimum dollar amount required to open a regular account
with a given mutual fund.
Regular Subsequent Minimum
- The minimum dollar deposit accepted for an existing regular
account with a given mutual fund.
Reinvest Distributions
- In brokerage, feature where user requests that mutual fund
distributions be reinvested in more shares, or instead paid in
cash.
Rejected Order
- Order which is invalid or unacceptable.
Reporting Date
- The estimated date for the next report of quarterly financial
data for a given corporation.
Regulation T
- A regulation established by the Federal Reserve Board which
covers the extension of credit to clients by securities brokers,
dealers, and members of the national exchanges. It sets the
initial margin requirement and defines eligible, ineligible, and
exempt securities.
Regulation U
- A U.S. government regulation that covers the lending of money
by banks to their customers including brokerage firms.
Return of Capital
- For a long investment, when a portion of the quantity (for a
bond) or net amount (for a stock) of an investment is returned to
the buyer. Returns of capital are tax-exempt distributions and
reduce cost basis of an investment to a maximum of zero. Below
zero, any additional returns of capital are treated as capital
gains distributions and are taxable.
Return on Investment
- Return on investment gives you a return value for the life of
the investment, not just a gain or loss, or the year-to-date
return.
Right
- A security granted to shareholders of a corporation to
subscribe to new shares of common stock before it is publicly
offered. It is usually transferable and may be traded in the open
market.
Return on Equity %
- The current fiscal years estimated earnings per share (EPS)
divided by the book value per share.
Round Lot
- 100 shares of stock.
S
Sales
- The total sales or revenues for the indicated year for a given
security.
Sales Charge
- The percent of your investment capital that is subtracted
immediately to cover sales and promotion costs when purchasing
mutual funds. For example, if you invest $10,000 in a fund with
an 8% sales charge, a sales fee of $800 is subtracted and your
initial investment principal is $9,200. Also called Front Load
and Initial Load.
Sales/Price Ratio
- The last fiscal year's sales or revenues per share divided by
the latest price per share for a given corporation.
Sales 3-Year Growth Rate
- The unweighted average of the growth rate for sales or
revenues over the last 3 years for a given corporation.
Sector Equities
- Equities purchased from companies belonging to a specific
sector within an industry, such as airline or electronic stocks.
Security
- An investment that is represented by a negotiable document
issued by a corporation or governmental entity for the purpose of
raising capital. A listed security is one that is approved for
trading on an exchange. A delisted security is one that is
removed because of financial insufficiency or breaking of
exchange rule. Two main categories: equity (claims against the
earnings of a company by shareholders - includes stocks and
mutual funds) and debt (claims against the assets of a company or
government - includes bonds, notes, bills, and commercial paper).
Some securities have hybrid characteristics such as preferred and
convertible bonds. Securities are also classified by whether they
are taxable, or tax-exempt. Most securities can be identified by
unique ID numbers called CUSIP numbers or by symbols. Note: The
term investment is more generic than security.
Sell(s)
- A Transaction Type for the selling of a security. A sell
creates a closed lot since it is the closing transaction for an
open lot.
Send Trade
- This will direct your order to us for review. If approved, it
will be immediately directed to the appropriate exchange for
execution.
Series E Bond
- U.S. Government savings bond issued from 1941 to 1979.
Series EE Bond
- U.S. Government savings bond with a 10-year maturity and face
value of $50 to $10,000. It has properties of a zero coupon bond
since it is purchased at a discount to face value.
Series HH Bond
- U.S. Government savings bond available in denominations of
$500 to $10,000 in exchange for Series E or EE bonds.
Settlement Date
- Date by which an executed order must be settled. Buyers pay
for securities with cash, and sellers deliver certificates of
sold securities.
Short Account
- A margin account through which a client can sell stock which
he does not own. Sale proceeds are kept in the short account and
marked to the market at the close of each business day to
determine the account's credit balance.
Short Sells
- A trade where the investor borrows a security from the broker,
sells it at market price, and receives the proceeds of the sale
less commission. The short seller then hopes that the security
will go down in price so he or she can buy-to-cover the security
back and return it to the broker. However, if the price goes up,
the seller will eventually receive a margin call and be expected
to either buy at current price and take the loss or add more cash
or marginal securities to his account, and be vulnerable to a
further short squeeze. When you are long in a security, the worst
you can do is lose an amount equal to the cost of the security.
When you are short, theoretically, your risk is unlimited as a
security's price can keep rising forever.
Short Balance
- Total proceeds from all short open lots minus all net amounts
paid for covered trades in a given account.
Short Value
- The latest value of all short investments (or short open lots)
in a given account. See Short Sells.
Simplified Employee Pension Plan (SEP)
- Type of pension plan into which both employer and employee
contribute. It is easier to set up than a 401(k) or KEOGH and
allows greater annual contributions than an IRA.
Small Stock Index
- An index measuring a basket of small-capitalization stocks
(companies whose revenues are typically under $500 million) which
are thought to be representative of changes in the stock prices
of small companies as a whole.
S&P Indices
- Standard & Poor's Indices are broad-based measures of
changes in stock market conditions based on the performance of
widely held common stocks. Standard & Poor's, a division of
The McGraw-Hill Companies, Inc., provides a broad range of
investment services, including stock and bond ratings, composite
indices, a wide variety of investment advisory reports, and so
forth.
S&P 500
- The basket of 500 widely held stocks which are thought to
measure changes in stock-market conditions. The S&P 500 index
is a service of Standard & Poor's corporation, a financial
advisory, securities rating, and publishing firm. The index
tracks industrial, transportation, financial and utility stocks.
S&P 500 Index
- The S&P 500 index comprises 500 companies that account for
85% of the dollar value of all NYSE stocks. It is a broader and
more representative average than the DOW but both move in tandem
most of the time. The S&P 500 index does not include
dividends. It is capitalization weighted, meaning that stocks
with the highest value (number of shares outstanding multiplied
by the price per share) have the greatest affect on the index.
The S&P 500 index measures (also defined in the glossary) can
be used to gauge the health or direction of the stock market. See
S&P 500 200-Day Moving Average, S&P 500 P/E Ratio,
S&P 500 Yield.
S&P 500 200-Day Moving Average
- This value is calculated by averaging all the closing values
of the S&P 500 for the last 200 days. You can use this and
the following measures to create market timing alerts.
S&P 500 Price/Earnings (P/E) Ratio
- The latest S&P 500 value divided by the last 4 quarters
earnings per share. Reading above 24 and below 8 are considered
sell and buy signals respectively by many analysts.
S&P 500 Yield
- The sum of dividends of all stocks in the S&P 500, divided
by the latest value of the S&P 500. Reading below 3 and above
6 are considered sell and buy signals respectively.
S&P 100 Index
- A subset of the 500 index. Options based on this index (OEX)
are very popular.
S&P Mid Cap 400
- An index comprised of 400 mid-sized corporations.
S&P Rank
- The computerized ranking system for stocks based on the last
10 years of dividend and earnings data of each company listed: A+
= Highest; C = Lowest; D = Company undergoing reorganization; LIQ
= Company in liquidation, NR = No ranking due to insufficient
data.
Special Subscription
- A form of margin transaction in which a client can obtain
advantageous credit to acquire a margin security through the
exercise of a right or warrant.
Start Year
- The year a given mutual fund began operation.
Stock
- Ownership claims on a corporation's earnings and assets. See
Common Stock, Preferred Stock.
Stock Power
- Power of attorney form by which ownership of a security can be
transferred from the registered owner to another party.
Stock Split
- A change in the number of shares outstanding (in circulation).
The number of shares are adjusted by the split ratio, e.g. 2 to
1. In this case, 1000 shares splits to 2000 but the opening price
and current price are cut in half. The overall effect is to
maintain the same cost and current value of an investment while
increasing the number of shares and lowering the per share price.
Reverse splits reduce the number of shares. Splits are done to
reduce the cost per share to make it easier for small investors
to own the stock in round lots.
Stop Order
- An order to sell if and when the market price falls to a
specified price. A stop order becomes a market order when the
stop price is hit and the order will be executed at any market
price at, above or below stop price. A variation of this, the
stop-limit order, will only be executed at the limit price. If
the market falls quickly: a stop order might be executed at a
price much lower than the stop price and a stop-limit order might
not get executed at all. Some investors prefer to set Mental
Stops. When a stop order is executed an investor is said to be
Stopped Out.
Strike Price
- See Call Option.
Symbol
The official trading symbol used in actual transactions for stocks, options, mutual funds, or indices. A symbol uses letters, numbers, or a combination of the two. If the symbol contains any numbers, it means that it is a mutual fund that has not been assigned an actual trading symbol by NASDAQ and there is no quote service on that fund.
For any stock traded on the NYSE, AMEX, or OTC, the symbol is the official trading symbol used in actual transactions. Preferred stock has a dash followed by the preferred stock class. For example, Company B Class A is displayed as BBB-A.
- Indices have their own symbols, which are shown in the Add
Index screen.
T
T-Bills
- T-Bills, the common name for a U.S. Treasury bill, are
short-term (with a maturity of up to a year) discounted
government securities sold through competitive bidding at weekly
and monthly auctions in denominations from $10,000 to $1 million.
They can also be purchased by individuals directly from a Federal
Reserve Bank in denominations of under $500,000.
Tax-Deferred
- Applies to an investment whose accumulated earnings are free
from taxation until the investor takes possession of them.
Usually, you cannot take possession of these investments without
penalty until you are 59-1/2 years old. Tax-deferred investments
are allowed by the IRS to save for retirement. See Real
Tax-Deferred Accounts.
Tax-Exempt Security
- An investment (generally a debt instrument, i.e., bond) whose
interest is exempt from taxation by federal, state, and/or local
authorities. Frequently called municipal bonds or munis, whether
they were issued by a state government or agency, or by any local
political district or subdivision. Tax-exempt securities are best
applied to Taxable Accounts as the yield is not competitive
enough to be used in tax-deferred accounts. Tax-exempt can be
taxable under certain circumstances. See Real Taxable Accounts
and Municipal Bonds.
Tax Method
- IRS defined system for determining which Open Lots to sell or
buy-to-cover when all lots of an investment are not sold or
covered at one time. FIFO means selling or covering the lots in
the same order by date as they were bought or shorted. Specific
Lot means selling or covering specific lots that have been
pre-selected before the trade is actually executed. Average Cost
means using the average cost of all shares as the cost basis
without the need to specify which lot is actually being traded.
Technical Short Value
- The market value of a security which the client has sold but
has not yet delivered to the broker.
10 Year Cum. Return
- See Cumulative Return (1-Yr, 3-Yr, 5-Yr, 10-Yr).
To/From Date
- Date to which the call may occur at the stated price for a
given callable bond or the data from which the call will be in
effect at the stated price. See Bond.
Total Assets
- Total assets owned by a given mutual fund including cash and
equivalents. As funds get very large, their performance may
suffer.
Total Cost
- The sum of cost of all long open investments in a given
account.
Total Liabilities
- The sum of your Short Market Value plus your Debit Balances
from the prior trading day.
Total Return
- Price appreciation plus interest, dividends, and capital gain
distributions for a given investment or account during a given
period. Year-to-date return is for a partial year. Also useful is
last quarter, last four quarters, and one month total return,
which cover the indicated time periods. Total return is the best
way to measure the performance of similar or different
investments.
Trade
- Transaction that adds (buy or short sell) or removes a lot
(sell or buy-to-cover) to or from open investments. Trade date is
the date on which the trade occurs. Settlement date is the date
by which the account must be debit or credited for results of the
trade and it is normally three business days after trade date.
Treasuries
- Debt securities of the U.S. government, issued at various
schedules and maturities, and secured by its full faith and
credit.
Turnover
- The percentage of all securities owned by a given mutual fund
which were sold in the last year. For example, a turnover of 200%
means that the entire portfolio of the fund turned over twice
completely in the last year.
12b-1 Fee
- An annual fee, expressed as a percentage of NAV, specifically
designated for marketing expenses for a given mutual fund. This
fee is included in the expense ratio.
12 Mth Cum. Return
- See Cumulative Return (1-Yr, 3-Yr, 5-Yr, 10-Yr).
U
Uncovered Options
- Selling a call option to open in which the seller does not own
the underlying security position. Also called naked options.
Underlying Security
- The security that must be delivered when another security is
exercised. For example, if a call option is exercised, then the
underlying stock is delivered to the call owner. Warrants,
rights, options, and convertible securities all have underlying
securities. For futures options, futures are the underlying
security.
Undervalued Security
- When a security's price is below what a market analyst
calculates based on fundamentals such as earnings potential, cash
flow, and hidden assets. These securities are prized by value
investors. These companies may become takeover targets.
Undistributed Earnings
- The same as retained earnings. It is earnings that are not
paid as dividends, but reinvested in the company.
Unissued Stock
- Stock authorized in a company's charter but for some reason,
not issued and not outstanding. Contrast with treasury stock,
which has been issued and then repurchased and is therefore not
outstanding.
Unit
- Smallest tradable component of an asset: share for stocks and
mutual funds, $1000 quantity for most bonds, and contract for
options and futures.
Unit Investment Trust
- A package of investments, usually bonds, sold to investors as
a unit which is a fractional ownership of the total package.
Unlike a mutual fund, the investments in a unit do not change and
are not replaced if they mature or are called. Usually sold by
brokers.
Unlisted Security
- A stock or bond not listed on an exchange (usually New York or
American) which trade in the over-the-counter market.
Unpaid Dividend
- A dividend that has been declared by a corporation but not yet
paid. It is carried as a liability until the payment date.
Unsecured Debt
- A bond issued by a corporation which is not backed by specific
collateral. Same as debenture. It is backed instead by the
general credit or promise to pay by the issuer.
U.S. Gov't Issues
- Debt issued by the U.S. Treasury or other government agencies
(Ginnie Mae, Fannie Mae, Freddie Mac, etc.). U.S. Treasury issues
include T-Bills (1 yr and less), T-Notes ( 1-10 yrs), and T-Bonds
(10 -30 yrs). They are generally not callable and not subject to
state and local taxes, and are considered the safest bonds
available as they are backed by the full faith and credit of the
U.S. government. The other agencies issue mostly pass- through
mortgage bonds that pay interest and return of principal and are
indirectly backed by the Treasury.
U.S. Savings Bond
- These bonds (series EE) are zero coupon-like bonds sold by the
U.S. government at 50% of face value that can be redeemed for
face value after 5 years.
V
Valueline Composite Index
- An equally weighted index of 1700 stocks on NYSE, AMEX, and
OTC exchanges. A broad-based index that is less volatile than the
more popular DJIA.
Variable Annuity
- A life insurance product whose value fluctuates and is tied to
the performance of a market index or a portfolio of securities.
Often has a tax-deferred feature and works like a mutual fund in
most cases. Your premium payments buy more shares.
Variable Interest Rate
- Interest rate that is adjusted as market rates change. Can be
found in adjustable rate mortgages, bonds, and certificates of
deposit.
Veribanc Rating
- See Rating for CDs and Money Markets.
Vesting
- The entitlement to full pension plan benefits. Normally
expressed as the number of months and years of employment
required to be vested.
Volatility
- The measure of the tendency of prices to fluctuate widely.
Prices of small companies tend to be more volatile than those of
large corporations. Beta is a measure of volatility. See beta.
Volume
- The number of shares of stock or options that have traded as
of the opening of a given trading day. Volume is the consolidated
volume, that is to say, it includes shares traded on all
exchanges.
For example, Apple Computer stock trades on both the over-the-counter (OTC) NASDAQ Exchange and the Pacific Exchange. For an Apple quote, volume would include shares as of the opening of both these exchanges.
Voting Right
- Most common stock entitles a shareholder to the right to vote
in person, or by proxy, on corporate elections and other related
matters. Some companies issue both voting and non-voting shares,
for example, Class A and Class B.
W
Warrants
- Similar to long term options, they give the holder the right
to convert the warrant at a set price, into a set number of
shares of the associated stock. They are often issued as bonuses
along with newly issued common stock or bonds, and in combination
these are called units. When sold ex-warrant, it is too late to
get the warrant that was attached to the stock.
Wash Sale
- When an investor buys substantially identical securities as
those he sold within the last or next 30 days, the sale of these
securities can not be used as a realized loss for income tax
purposes. For example, you sell your 100 AAA shares on October 1
for a loss of $1000. Then you buy 100 new shares of AAA on
October 10. You sell these new shares on December 12 for a $2000
realized gain. On your tax return, you must show a net realized
gain of $2000. The wash sale ($1000 loss) is disallowed as an
offset against the gain for income tax purposes.
When Issued
- A symbol next to the price in a newspaper stock or bond
listing which indicates that the price shown is for a security
that has been authorized but is not yet trading. Frequently used
to show after split price before a split has occurred.
Whipsaw
- A volatile market that can punish a trader who buys just
before prices fall and then sells first before prices recover.
Writer
- An investor who sells short put or call options, hoping to
retain the income derived from the short sale. A covered writer
owns the underlying stock and is hedged. See call and put option.
X
X or XD
- Symbol used in newspapers to indicate that a stock is trading
without a dividend. The symbol X also signifies without interest
in bond tables. In most cases, it is wise to find out when a
dividend paying stock will trade ex-dividend. By buying when the
stock is ex-dividend, you avoid the tax liability on the just
distributed dividend. Note that after a dividend is paid, the
stock's price falls by the amount of the dividend paid, plus or
minus any market adjustment. The same principle holds for mutual
funds paying distributions. Buy shares after distributions are
made. Stock mutual funds usually make distributions in December
or January.
Y
Year-End Values
- The market value of an account at any given year end. Used to
quickly gauge year-to-year changes.
Year to Date (YTD)
- Total return for a partial year. See Total Return.
Year Issued
- The year a particular bond series was issued.
Yellow Sheets
- A daily listing of bonds, prices, and market makers for
corporate bonds not listed on major exchanges.
Yield
- For a stock, the current yield is the annual dividend divided
by the current price per share. For a mutual fund, the 4 qtr
yield is the total dividends paid during the last four quarters
divided by the NAV at the end of the last quarter. For a bond,
the annual interest payment divided by [quantity x current price
divided by 100]. For a CD, the annual interest payment divided by
the face amount of the CD is the yield. It is a measure in
percentage terms of how much income you can derive from the
security. Of great importance to fixed income investors and of
minimal importance to growth investors. See Yield to Maturity.
Yield Curve
- Graph that shows a series of current interest rates, most
often of U.S. Treasury issues from 3 months to 30 years maturity.
A snap shot of the interest rate structure of the economy and
sometimes a predictor of economic trends. Normally, the yield
curve is moderately positive meaning that investors want higher
rates the longer the maturity to offset the risk of holding the
bond to maturity while rates go up for newly issued bonds. A
negative curve occurs when investors fear that in the short term,
rates will be high and money will remain "tight"
near-term. When a negative curve starts to flatten, a powerful
stock and bond rally usually ensues. A steep curve occurs when
investors don't fear inflation in the near-term but are concerned
about the long term. A sudden flattening of a steep curve in
which the short end rises can be a harmful sign for the stock and
bond markets.
Yield Spread
- Difference in yield between various bonds of equivalent time
to maturity. Since time to maturity is the same, the major
distinguishing variable is quality. For example, a 5-year U.S.
Treasury note will have a lower current yield than a comparable
5-year corporate bond. Also called quality spread.
Yield to Call
- Yield on a bond which will be called by the issuer at the
first call date. Important for corporate bonds.
Yield to Maturity
- Takes into account the annual dividend, current price,
redemption price, and time remaining to maturity. In effect, it
is the annual total return for a bond. See Yield.
Z
Zero Coupon Bonds
- Bonds that do not pay interest but which are instead sold at a
substantial discount to par so at maturity they return the face
amount. These bonds tend to be more volatile than regular bonds
so they are best held to maturity by most investors. They are
also called CATS or strips. The longer to maturity, the lower the
purchase price and the greater the leverage and sensitivity to
interest rates. U.S. Savings Bonds (series EE) are zero bonds
sold at 50% of face value that are redeemed for face value at
maturity.