Glossary Flashcards
(607 cards)
0
Q
Accredited Investor
A
SEC Regulation D (federal private placement rule) defines an ‘accredited investor’ as a natural person that has a net worth in excess of $1,000,000, alone or with their spouse.
1
Q
Accelerated Depreciation
A
IRS approved methods used in the depreciation of fixed assets when the Accelerated Cost Recover System (ARCS) became mandatory.
2
Q
Accretion
A
Adjustment of the difference between the price of a bond bought at an original discount and the par value of the bond.
3
Q
Accrual Basis
A
Accounting method whereby income and expense items are recognized as they are earned or incurred, even though they may not have been received or actually paid in cash. The alternative is cash basis accounting.
4
Q
Accrued Interest
A
Interest that has accumulated between the most recent payment and the sale of a bond or other fixed-income security.
5
Q
Accrued Market Discount
A
Increase in market value of a discount bond that occurs because of its approaching maturity date (when it is redeemable at PAR) and not because of declining market interest rates.
6
Q
Active Market
A
Heavy volume of trading in a particular stock. The spread between bid and asked prices is usually narrower in an active market than when trading is quiet.
7
Q
Additional Bonds Test
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Test limiting the amount of new bonds that can be issued.
8
Q
Adjusted Basis
A
The price from which to measure capital gains or losses upon sale of an asset like stock or bond.
9
Q
Ad Valorem
A
Latin term meaning according to value and referring to a way of assessing duties or taxes on goods or property.
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Q
Advance-Decline
A
Measurement of the number of stocks that have advanced and the number that have declined over a particular period.
11
Q
Advance Refunding
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Sale of new bonds (the refunding issue) in advance, usually by some years, of the first call date of the old bonds (the issue to be refunded).
12
Q
Affiliated Person
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Individual in a position to exert direct influence on the actions of a corporation.
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Q
Agency Securities
A
Securities issued by government-sponsored entities and federally-related institutions. ‘Agency Securities’ are exempt from SEC registration requirements.
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Q
Aggressive Growth Mutual Fund
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Mutual fund holding stocks of rapidly growing companies. While these companies may be large or small, they all share histories of and prospects for above average profit growth.
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Q
Agreement Among Underwriters
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Contracts between participating members of an investment banking syndicate.
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Q
All Or None (AON)
A
Buy or sell order marked to signify that no partial transaction is to be executed.
17
Q
Alpha
A
‘Alpha’ measures a stock’s (or portfolio’s) return that is in excess of the expected return predicted by an equilibrium model suca as the capital asset pricing model.
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Q
Alternative minimum Tax (AMT)
A
Federal tax aimed at ensuring that wealthy individuals and corporations pay at least some income tax.
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Q
American Depository Receipt (ADR)
A
Receipt for the shares of a foreign-based corporation held in the vault of a U.S. bank and entitling the shareholder to all dividends and capital gains.
20
Q
Amorization
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Accounting procedure that gradually reduces the cost value of a limited life or intangible asset through periodic charges to income.
21
Q
Annuitant
A
Individual receiving benefits from an annuity.
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Q
Annuitize
A
To begin a series of payments from the capital that has built up in an annuity.
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Q
Annuity
A
Form of contract sold by life insurance companies that guarantees a fixed or variable payment to the annuitant at some future time, usually retirement.
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Appreciation
Increase in the value of an asset such as a stock, bond, or real estate; also known as 'growth.'
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Arbitrage
Profiting from differences in price when the same security or commodity is traded in two or more markets.
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Arbitration
An alternative to suing in court to settle dispute between brokers and their clients and between brokerage firms.
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Articles of Incorporation
Document filed with a U.S. state by the founders of a corporation.
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Asset Allocation
Apportioning of investment funds among categories of assets such as cash equivalents, stock, fixed-income investments, and tangible assets like estate, precious metals, and collectibles.
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Asset Allocation Mutual Fund
Mutual fund that switches between stocks, bonds, and money market securities to maximize shareholders' returns and minimize risk.
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Assumed Interested Rate
Rate of interest that an insurance company uses to project the payout on a variable annuity contract; the higher the assumed interest rate, the higher the monthly payout will be.
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At Risk
Also known as "recourse loan." Investors in an oil drilling limited partnership can claim tax deductions only if they can prove that there is a chance of never realizing a profit and of losing their investment.
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Auction Market
System by which securities are bought and sold through brokers on the securities exchanges, as distinguished from the over the counter market, where trades are negotiated.
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Authorized shares
Maximum number of shares of any class that a company may legally create under the terms of its 'articles of incorporation.'
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Automated Order Entry System
Many orders that are processed on the floor of the NYSE occur in an automated format, instead of through the traditional open outcry auction process.
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Away From The Market
Expression used when the bid price on a limit order is lower or the offer price on a limit order is higher than the current market price for the security.
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Back-end Load
Sales charge an investor pays when withdrawing money from an investment.
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Backing Away
A broker/dealer's failure, when acting as a market maker in a given security, to make good on its published bid or ask prices for a minimum quantity (one round lot - 100 shares).
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Balanced Mutual Fund
Fund that buys common stock, preferred stock, and bonds in an effort to obtain the highest return consistent with a low-risk strategy.
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Balance of Payments
System of recording all of a country's economic transactions with the rest of the world during a particular time period.
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Balance of Trade
Net difference over a period of time between the value of a country's imports and exports of merchandise.
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Balance of Trade
Net difference over a period of time between the value of a country's import and exports of merchandise.
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Balance Sheet
Financial report showing the status of a company's assets, liabilities, and owner's equity on a given date (usually the close of a month).
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Banker's Acceptance
Time draft drawn on and accepted by a bank; the customary means of affecting payment for merchandise sold in import/export transactions and a source of financing used extensively in international trade.
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Basis Price
Original cost that must be used when an investment is sold; it must also be used in calculating capital gains or losses.
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Basis Point
Smallest measure used in quoting yields on bills, notes, and bonds.
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Bear Market
Prolonged period of falling prices. A bear market in stocks is usually brought on by the anticipation of declining economic activity; a bear market in bonds is caused by rising interest rates.
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Bear Spread
Strategy in the options market designed to take advantage of a fall in the price of a security.
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Best Efforts
Underwriting agreement whereby investment bankers, acting as agents, agree to do their best to sell an issue to the public.
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Beta
A Beta factor measures the volatility of a stock in relation to the rest of the stock market.
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Bid
Price a prospective buyer is ready to pay. Term is used by dealer who make a market (maintain firm bid and offer prices) in a given security by standing ready to buy or sell round lots at publicly quoted prices and by specialists in a stock who performs similar functions on an exchange.
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Bid and Asked
In reference to a mutual fund, the 'bid' is the highest price that a prospective buyer is prepared to pay at a particular time for a trading unit of a given security; 'asked' is the lowest price acceptable to a prospective seller of the same security.
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Blind Pool
Limited partnership that does not specify the properties the general partner plans to acquire.
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Block
Large quantity of stock or large dollar amounts of bonds held or traded.
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Blue Chip
Common stock of a nationally known company that has a long record of profit growth and dividend payment and a reputation for quality management, products, and services.
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Blue List
Published by S&P, it mainly contains data on municipal bonds.
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Blue-Sky Laws
Laws passed by various states to protect investors against securities fraud.
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Bond
Any interest-bearing or discounted government or corporate security that obligates the issuer to pay the bondholder a specified sum of money (usually at specific intervals and to repay the principal amount of the loan at maturity.
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Bond Anticipation Notes (BAN)
Short-term debt instruments issued by a state or municipality that will be paid off with the proceeds of an upcoming bond issue.
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Bond Buyer
A daily publication containing key news, sales data, statistics and indexes used in the municipal bond market
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Bond Counsel
Independent attorney or law firm that prepares the legal opinion for a municipal bond issue.
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Bond Discount
Amount by which the market price of a bond is lower than its face value. Outstanding bonds with fixed coupons are discounted when interest rates rise.
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Bond Rating
Method of evaluating the possibility of default by a bond issuer. S&P's, Moody's investors Service and Fitch's Investors Service analyze the financial strength of bond's issuer whether it is a corporation or a government body.
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Bond Swap
Simultaneous sale of one bond issue and purchase of another bond issue; the purchase of a substitute bond effectively preserves the investment.
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Book-Entry Securities
Securities that are issued without a certificate. Purchases and sales of some municipal bonds are recorded on customer's accounts without a certificate changing hands.
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Borrowing Power of Securities
Amount of money that customers can invest in securities on margin as listed every month on their brokerage account statements.
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Breakout
Rise in a security's price above a resistance level (commonly its previous high price) or drop in a security's price below a support level (commonly the former lower price).
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Breakpoint Sale
In mutual funds, the dollar investment required to make the investor eligible for a lower sales charge.
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Broker
Person who acts as an intermediary between a buyer and a seller usually charging a commission.
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Broker Loan Rate
Interest rate at which brokers borrow from banks to cover the securities positions of their clients.
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Bull Market
Prolonged rise in the prices of stocks or bonds. Bull markets usually last a few months, or even years, and are characterized by high trading volume.
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Bull Spread
Options strategy executed with puts or calls that will be profitable if the unerlying stock rises in value. Three varieties of a bull spread: 1) Vertical Spread, Horizontal (Calendar) Spread, & Diagonal Spread.
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Business Cycle
There are four phases of the 'business cycle,' what is unknown is how long each phase will last. Four Phases: Expansion, Peak, Contraction, and Trough.
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Buying Power
Buy order marked to be held until the market price rises to the stop price.
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Buy Stop Order
Buy order marked to be held until the market price rises to the stop price.
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Calendar Spread
Options strategy that entails buying two options on the same security with different maturities. Also called a "horizontal spread."
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Callable
Redeemable by the issuer before the scheduled maturity date.
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Call Option
In exchange for a premium, the right to buy 100 shares of a particular stock or stock index at a pre-determined price before a preset deadline.
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Call Premium
Amount that the buyer of a call options has to pay to the seller for the right to purchase a stock or stock index at a specified price and by a specified date.
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Call Price
Price at which a bond or preferred stock with a 'call provision' or 'call feature' can be redeemed by the issuer.
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Call Protectioin
Length of time during which a security cannot be called by the issuer.
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Cap
Short for "capitalization" or the total current value of a company's outstanding shares in dollars.
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Capital Asset
Almost everything owned and used for personal or investment purposes is a capital asset.
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Capital Asset Pricing Model
The CAPM is used to determine the required rate of return of an asset, given the asset's non-diversifiable risk, if it is going to be added to an already diversified portfolio.
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Capital Gains Distribution
Mutual fund's distribution to shareholders of the profits derived from the sale of stocks or bonds.
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Capital Gains Tax
Tax on profits from the sale of capital assets. The tax law has traditionally specified a minimum 'holding period' after which a capital gain was taxed at a more favorable rate (15% max) than ordinary income.
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Capital Growth
On a risk specturm, investments that are on the riskier side will offer an investor greater potential for 'capital growth.'
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Capital Structure
Corporation's financial framework, including long-term debt, preferred stock and net worth.
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Cash Account
Brokerage firm account whose transactions are settled on a cash basis.
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Cash Dividend
Cash Payment to a corporation's shareholders; it is distributed form current earnings or accumulated profits and is taxable as income.
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Cash Flow
Net income plus depreciation and other non-cash charges. Investors focus on cash flow from operations because of their concern with a firm's ability to pay dividends.
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Cash Settlement
Settlement in cash on the trade date rather than on the settlement date of a securities transaction.
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Catastrophe Call
The premature redemption of a municipal revenue bond because a catastrophe destroyed the source of the revenue backing the bond.
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Chartist
Technical analyst who charts patters of stocks and bonds in order to make buy and sell recommendations to clients.
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Chinese Wall
Imaginary barrier between the investment banking, corporate finance, and research departments of a brokerage house and the sales and trading departments.
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Churning
Excessive trading in size and/or frequency within a client's account.
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Class
Options of the same type (put or call) and of the same underlying security.
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Closed-end Fund
A 'closed end fund' is a type of investment company that issues a fixed number of shares
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Closing Purchase
Option seller's purchase of another option having the same features as an earlier one.
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Closing Sale
Sale of an option having the same features (of the same series) as an option previously purchased
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Code of Procedure
Financial Industry Regulatory Authority (FINRA's) guide for its District Business Conduct Committees in hearing and adjudicating complaints filed between or against FINRA members under its Rules of Conduct (fair practice)
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Coincident Indicators
Economic indicators that coincide with the current pace of economic activity.
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Collateralized Mortgage Obligation (CMO)
Mortgage-backed bond that separates mortgage pools into different maturity classes called tranches.
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Collateral Trust Bond
Corporate debt security backed by other securities usually held by a bank or other trustee.
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Commercial Paper
Short-term obligations with maturities up to 270 days issued by banks, corporations, and other borrowers.
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Common Stock
Units of ownership of a corporation. Owners are typically entitled to vote on the selection of Directors and other important matters as well as receive dividends on their holdings, if declared.
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Companion Bonds
One class of a Collateralized Mortgage Obligation (CMO). Companion bonds are the first to be paid off when the underlying mortgages are prepaid as interest rates fall.
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Competitive Bid
Sealed bid containing price and terms submitted by a prospective underwriter to an issuer.
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Concession
Selling group's per share or per bond compensation in a corporate underwriting.
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Consolidated Tape
Combined tapes of the New York Stock Exchange and the American Stock Exchange.
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Constant Dollar Plan
Method of accumulating assets by investing a fixed amount of dollars in securities at set intervals.
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Constant Dollars
Dollars of a base year used as a gauge in adjusting the dollars of other years in order ascertain actual purchasing power. "Indexing"
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Consumer Price Index (CPI)
Measure prices of a fixed basket of goods bought by a typical consumer.
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Contingent Deferred Sales Load
Sales charge levied by a mutual fund if a customer redeems fund shares within a specified number of years.
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Contra Broker
Broker on the opposite side of the trade: the buy side of a sell order or the sell side of a buy order.
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Contractual Plan
Plan by which fixed dollar amounts of mutual fund shares are accumulated through periodic investments for 10 years.
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Control Stock
Shares owned by holders who have a controlling interest.
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Conversion Parity
Common Stock price at which a convertible security is exchangeable for common shares of equal value.
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Conversion Price
The dollar value at which convertible bonds, debtures, or preferred stock can be converted into common stock as stated on the certificate.
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Conversion Ratio
Relationship that determines how many shares of common stock will be received in exchanged for each convertible bond or preferred share when conversion takes place.
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Convertible
Corporate securities (usually preferred shares or bonds) that are exchangeable for set number of common shares at a stated price.
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Cooling-off Period
Interval between the filing of a registration statement with the SEC and the offer of the securities to the public; usually 20 days in length.
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Corporate Bond
Debt instrument issued by a private corporation (as distinct from one issued by a government agency or a municipality). Corporates typically have four distinguishing features: Taxable, Par 1,000, Term Maturity, Traded on Major Exchanges.
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Cost Basis
Original price of an asset used in determining capital gains.
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Covered Option
Option contract backed by the shares underlying the option.
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Covered Writer
Seller of covered options. In other words, an owner of stock who sells options against it in order to collect premiums (income).
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Credit Ratings
Are opinions about relative credit risk.
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Credit Risk
Financial risk that an obligation will not be paid and a loss will result.
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Credit Spread
Difference in the value of two options; when the value of the option that was sold exceeds the value of the option that was purchased; more money is coming in than going out.
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Cum Dividend
With dividend included; said of a stock whose buyer is eligible to receive a declared dividend.
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Cum Rights
With rights attached; said of a stock that entitles the purchaser to buy a specified amount of stock that is yet to be issued.
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Cumulative Preferred
Cumulative preferred stock is a type of preferred stock whose dividends when omitted, either because of insufficient earnings or for any other reason, accumulate until paid out.
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Cumulative Voting
Voting method that improves minority shareholders' chances of naming representatives on the Board of Directors.
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Current Assets
Cash, accounts receivable, inventory, and other assets that are likely to be converted into cash, sold, exchanged, or expensed in the normal course of business and usually within a year.
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Current Income
Investments that provide income including debt instruments, such as bonds, and preferred stock.
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Current Liability
Debt or other obligation coming due within one year.
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Current Ratio
Current assets divided by current liablities.
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Current Yield
Annual interest on a bond divided by market price.
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Custodial Account
Account that is created for a minor usually at a bank, brokerage firm, or mutual fund.
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Cyclical Stock
Stock that tends to rise quickly when the economy turns up and that tends to fall quickly when the economy turns down.
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Dated Date
Date from which accrued interest is calculated on new bonds. The buyer pays the issuer an amount equal to the interest accrued from the dated date to the issue's settlement date.
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Date of Record
Date on which a shareholder must officially own shares in order to be entitled to a dividend.
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Day Order
Order to buy or sell securities that expires on the day it is placed unless it is executed or cancelled.
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Dealer
Individual or firm acting as a principal in a securities transaction. Principals trade for their own account and risk.
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Debenture
Debt obligation backed only by the general credit of the issuer and documented by an agreement called 'indenture.'
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Debit Spread
Difference in the value of two options: When the value of the option that was purchased exceeds the value of the option that was sold; or more money is going out than is coming in.
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Debt Retirement
Repayment of debt. The most common method of retiring corporate debt is to set aside money each year in a 'sinking fund.'
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Declaration Date
Date on which a company announces the amount and date of its next dividend payment.
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Deep In/Out of the Money
Call option whose exercise price is either well below the market price of the underlying stock (deep in the money) or well above the market price or the underlying security (deep out of the money).
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Default Risk
Risk that debtholder will not receive interest and principal when due.
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Defensive Securities
Low Beta stocks and/or bonds that are more stable than average and provide a safer return on an investor's money.
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Delivery Date
Third business day following a regular way transaction of stocks and/or bonds.
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Depletion
Accounting method available to companies that extract oil and gas, coal, or other minerals; usually in the form of an allowance that reduces taxable income.
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Depreciation
Amortization of fixed assets (like plants and equipment) so as to allocate the cost over their depreciable life.
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Derivative
A contract whose value is based upon the performance of an underlying financial asset, index, or other investment.
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Designated Market Maker
Designated market makers' (DMMs) work on the floor of the NYSE. DMMs are required to maintain a fair and orderly marketplace for a company's stock.
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Developmental Drilling Program
Drilling for oil and gas in an area with proven reserves to a depth know to have been productive in the past.
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Diagonal Spread
Strategy based on a long and short position in the same class of option (two puts or two calls in the same stock) at different strike price and different expiration dates.
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Dilution
Effect on earnings per share and book value per share if all convertible securities were converted or if all warrants or stock options were exercised.
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Direct Participation Program
Program allowing investors to participate directly in the cash flow and tax benefits of the underlying investments.
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Discount Bond
Bond selling below its par value
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Discount Rate
Interest rate that the Federal Reserve charges member banks for loans, using government securities or eligible paper as collateral.
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Discretionary Account
Account allowing a broker or adviser to buy and sell without the client's prior knowledge or consent; requires a written power of attorney.
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Disintermediation
Movement of funds from low-yielding accounts at traditional banking institutions to higher-yielding investments in the general market.
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Diversification
The spreading of risk by putting assets in several categories of investments including stocks, bonds, money market instruments, precious metals, several different industries, and/or a mutual fund with a broad range of stocks in one portfolio.
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Diversified Investment Company
Mutual fund or unit investment trust that invests in a wide range of securities.
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Dividend
Distribution of earnings to shareholders. The amount is decided by the Board of Directors and is usually paid quarterly.
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Dividend Payout Ratio
Percentage of earnings paid to shareholders in cash. In general, the higher the payout ratio, the more mature the company.
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Dividend Yield
Annual percentage of return earned by an investor on a common or preferred stock. The yield is determined by dividing the amount of the dividends per share by the current market price of the stock per share.
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Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
An Act designed to create a sound economic foundation to grow jobs, and protect consumers. The Act was designed to rein in Wall Street and its big bonuses, to end bailouts and too big to fail.
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Dollar Bond
Municipal revenue bond quoted and traded on a dollar price basis instead of on a yield to maturity basis.
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Dollar Price
Bond price expressed as a percentage of face value (normally $1,000) rather than as a yield.
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Do Not Reduce (DNR)
Instructions on a limit order to buy, instructions on a stop order to sell, or instructions on a stop-limit order to sell and not to reduce the order when the stock goes ex-dividend.
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Double-Barreled
Municipal revenue bond whose principal and interest are guaranteed by a larger municipal entity.
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Double Taxation
Taxation of earnings at the corporate level and again as stockholder dividends.
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Dow Jones Industrial Average (DJIA)
Price-weighted average of 30 actively traded blue chip stocks. The DJIA is calculated by adding the trading prices of the component stocks and using a divisor that is adjusted for stock dividends and stock splits.
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Due Bill
A statement of money owed. Commonly used to adjust a securities transaction when dividends, interest, and other distributions are reflected in a price but have not yet been disbursed.
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Due Diligence Meeting
Meeting conducted by the underwriter of a new offering at which brokers can ask representatives of the issuer questions about the issuer's background, financial reliability, and the intended use of the proceeds.
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Earnings Per Share
Portion of a company's profits allocated to each outstanding share of common stock.
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Economic Growth Rate
Rate of change in the gross domestic product as expressed in an annual percentage.
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Effective Date
Date when an offering registered with the SEC may commence; usually 20 days after filing the registration statement.
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Electronic Municipal Market Access (EMMA)
Maintained by the MSRB, EMMA is a comprehensive, centralized online source of free access to documents, data and educational materials on municipal securities.
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Employee Retirement Income Security Act (ERISA)
1974 law governing the operation of qualified private pension and benefit plans
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Equipment Trust Certificate
Bond, usually issued by a transportation company such as a railroad or airline, used to pay for new equipment.
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Equity
Ownership interest possessed by shareholders in a corporation. Stock is equity; bonds are debt.
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Equity Indexed Annuity (EIA)
Equity-indexed annuities are financial instruments in which the issuer (usually an insurance company) guarantees a stated interest rate and some protection from loss of principal, and provides an opportunity to earn additional interest based on the performance of a securities market index.
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Equivalent Taxable Yield
Comparison of the taxable yield on a corporate or government bond and the tax-free yield on a municipal bond.
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Estate Tax
Tax imposed by a state or the federal government on assets left to heirs in a will. Under the Economic Recovery Tax Act of 1981, there is no estate tax on transfers of property between spouses.
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Eurodollar
U.S. currency held in bank outside of the United States (mainly in Europe) and commonly used for settling international transactions.
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European-Style Exercise
System of exercising options contracts in which the option buyer can exercise the contract only on the last business day prior to expiration (normally Friday).
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Excess Margin
Equity in a brokerage firm's customer account, expressed in dollars, above the Regulation T minimum for a margin account.
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Exchange Privilege
Right of a shareholder to switch from one mutual fund to another mutual fund within the same fund family often at no additional charge.
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Exchange Traded Fund (ETF)
An exchange traded fund (ETF) is most similar to a closed end mutual fund. ETFs trade in the secondary market.
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Exchange Traded Note (ETN)
An exchange traded note (ETN) is an unsecured debt security package that offers exposure to a certain area. The ETN trades in the secondary market or may be held by the investor until maturity.
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Ex-Dividend Date
According to FINRA rules, shares of common stock go ex-dividend, in a regular way transaction, two business days prior to the record date.
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Exempt Securities
Stocks and bond exempt from certain Securities and Exchange Commission and Federal Reserve Board rules.
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Exercise Limit
Limit on the number of options contracts of any one class that can be exercised in a span of five business days.
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Exercise Notice
Notification by a broker that a client wants to exercise a right to buy the underlying stock in an options contract.
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Exercise Price
Price at which the stock underlying a call or put option can be purchased (call) or sold (put) over the specified period.
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Expense Ratio
Amount, expressed as a percentage of total assetss, that shareholders pay annually for mutual fund operating expenses and management fees.
200
Exploratory Drilling Program
Search for an undiscovered reservoir of oil or gas; a very risky undertaking.
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Ex-Rights
Without the right to buy a company's stock until a particular date at a discount from the prevailing market price which was distributed.
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Extraordinary Call
Early redemption of a muni revenue bond by the issuer due to the elimination of the source of revenue to pay the stipulated interest.
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Face-Amount Certificate
Debt security issued by face-amount certificate companies, one of three categories of mutual funds defined by the Investment Company Act of 1940.
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Face Value
Value of a bond or other security as given on the certificate. Corporate bonds are usually issued with $1,000 face value; Municipal Bonds are usually issued with $5,000 face value; Federal Government bonds are usually issued with $10,000 face value.
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Fannie Mae (Federal National Mortgage Association)
Publicly owned, government-sponsored corporation established to purchase both governement-backed and conventional mortgages from lenders.
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Federal Agency Security
Debt instrument issued by an agency of the federal government such as the Federal National Mortgage Association.
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Federal Funds
Funds, including those in excess of bank reserve requirements, deposited by commercial bank at Federal Reserve Banks.
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Federal Funds Rate
Interest rate charged by banks with excess reserves at a Federal Reserve district bank to banks needing overnight loans to meet reserve requirements.
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Federal Gift Tax
Federal tax imposed on the transfer of securities, property, or other assets. The donor must pay the tax based on the fair market value of the transferred assets.
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Federal Home Loan Mortgage Corporation (FHLMC)
Publicly chartered agency that buys qualifying residential mortgages from lenders, packages them into new securitie backed by those pooled mortgages, provides certain guarantees, and then resells the securities on the open market.
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Federal National Mortgage Association (FNMA)
Publicly owned, government-sponsored corporation chartered to purchase mortgages from lenders and resell them to investors.
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Federal Open-Market Committee (FOMC)
The Committee decides whether to increase or decrease interest rates through open-market operations of buying or selling government securities.
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Federal Reserve Board (FRB)
Governing board of the Federal Reserve System. The Board establishes Federal Reserve System policies.
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Fill Or Kill (FOK)
Order to buy or sell a particular security which, if not executed immediately, is canceled.
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Financial Industry Regulatory Authority (FINRA)
FINRA is the largest independent regulator for all securities firms and registered securities representatives doing business in the U.S.
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Firm Commitment
Arrangement whereby investment bankers make outright purchases from the issuer of securities to be offered to the public; also called 'firm commitment underwriting.'
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Firm Quote
Term referring to any round lot bid or offer price of a security as stated by a market maker and not identified as a nominal (or subject) quote.
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First Call Date
First date specified in the indenture of a corporate or municipal bond contract on which all or part of the bond may be redeemed at a set price.
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Five Hundred Dollar Rule
Regulation T provision of the Federal Reserve that exempts deficiencies in margin requirements amount to $500 or less from margin calls.
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Five Percent Rule
One of FINRA's Rules of Conduct. It proposes an ethical guideline for commissions in brokerage transactions including proceeds sales and risk-less transactions.
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Fixed Annuity
Investment contract sold by and insurance company that guarantees fixed payments to an annuitant either for life or for a specified period.
222
Flat
In bond trading, without accrued interest. This means that accrued interest will be received by the buyer if and when paid but that no accrued interest is payable to the seller.
223
Floor Broker
Member of an exchange who is an employee of a member firm and executes orders for clients as an agent on the floor of the exchange.
224
Floor Trader
Member of a stock exchange who trades on the floor of that exchange for his or her own account.
225
Flow of Funds
Statement found in the bond covenants of municipal revenue issues showing the priorities by which municipal revenues will be applied.
226
Foreign Currency Options
Options contracts based on foreign currencies such as the Japanese yen, the Deutsche mark, the British pound, or the French franc.
227
Forex
The Foreign Exchange Market (Forex) is an OTC marketplace that is open 24 hours a day (except on weekends). The main traders in this marketplace are large banks, central banks, multinational corporations and hedge funds.
228
Forward Pricing
Securities and Exchange Commission requirement that open-end investment companies, whose share prices are always determined by the net asset value of the outstanding shares.
229
Fourth Market
Direct trading of large blocks of securities between institutional investors to save brokerage commissions.
230
Fractional Share
Unit of stock less than one full share. If a shareholder is in a dividend reinvestment program and the dividends being reinvested are not adequate to buy a full share at the stock's current price, the shareholder will be credited with a fractional share until enough dividends accumulate to purchase a full share.
231
Front Load
Sales charge applied to an investment at the time of initial purchase. For example, there may be a front load on a mutual fund sold by a broker.
232
Frozen Account
Brokerage account under disciplinary action by the Federal Reserve Board for violation of Regulation T.
233
Full Faith and Credit
The full taxing and borrowing power plus revenue other than taxes is pledged in payment of interest and repayment of principal of a bond issued by a government entity.
234
Fully Diluted Earnings per Share (Common)
Figure showing earnings per common share after assumming the exercise of warrants stock options and the conversion of convertible bonds and preferred stock.
235
Fundamental Analysis
Analysis of the balance sheet and income statements of companies in order to forecast their future stock price movements.
236
Fund Family
Mutual fund company offering funds with many investment objectives. A fund family may offer several types of stocks, bonds, and money market funds and allow free switching among other funds (although gains are taxable)
237
General Obligation Bond
Municipal bond backed by the full faith and credit (and taxing power) of a municipality. A 'GO bond' is repaid with general revenue as compared to the revenue from specific facility built with the borrowed funds (tunnel or a toll road).
238
General Partner
Managing partner of a limited partnership; responsible for the operations of the partnership and, ultimately, any debts taken in by the partnership.
239
Ginnie Mae Pass-Through
Security backed by a pool of mortgages and guaranteed by the Government National Mortgage Association (Ginnie Mae), an association which passes through to investors the interest and principal payments of homeowners.
240
Good Delivery
A certificate that has the necessary endorsements and meets all other requirements (signature guarantee, proper denomination, and other qualifications) so that title can be transferred by delivery to the buying broker who is then obligated to accept it.
241
Good Till Cancelled (GTC) Order
Brokerage customer's order to buy or sell a security, usually at a particular price, that remains in effect until executed or canceled.
242
Government National Mortgage Association (GNMA)
Nicknamed Ginnie Mae, a government-owned corporation that is an agency of the U.S. Department of Housing and Urban Development.
243
Governments
Securities issued by the U.S. Government including Treasury bills, bonds, notes and savings bonds.
244
Gross Domestic Product (GDP)
Market value of the goods and services produced by labor and property in the U.S.
245
Growth Fund
Mutual fund that invest in growth stocks. The goal is to provide capital appreciation for the fund's shareholders over the long term.
246
Growth Stock
Stock of a corporation that has exhibited rapid gains in earnings over the last few years and is expected to continue to show high levels of profit growth.
247
Guaranteed Bond
Bond on which the principal and interest are guaranteed by a firm other than the issuer.
248
Guaranteed Investment Contract
Contract between an insurance company and a pension plan that guarantees a specific rate of return on the invested capital over the life of the contract.
249
Guardian
Individual who has the legal right to care for a minor child or to act as an administrator of the assets of a person declared incompetent for mental or physical reason.
250
Head and Shoulders
Patterns resembling the head and shoulders outline of a person and used to chart stock price trends. The pattern signals the reversal of a trend.
251
Hedge Fund
Hedge funds are private investment pools subject to the term of an investment agreement and entered into by the sponsor of the fund and their investors.
252
Hedging
Strategy used offset investment risk. For example, a stockholder worried about declining stock prices can hedge his or her holding by buying a put option on the stock or selling a call option.
253
Hidden Load
Sales charge which may not be immediately apparent to an investor. For example, a 12b-1 mutual fund assesses an annual asset-based charge to cover marketing, distribution, and promotion expenses incurred by the fund.
254
Holding Period
Length of time an asset is held by its owner. Capital assets held more than 12 months qualify for special capital gains tax treatment since they are considered long-term.
255
Horizontal Spread
Options strategy that involves buying and selling the same number of options contracts with the same exercise price but different maturity dates.
256
House Maintenance Requirement
Rules of individual broker/dealers with respect to a customer's margin account. House maintenance requirements set levels of equity that must be maintained in order to avoid a margin call or having collateral sold out.
257
Hypothecation
Pledging of securities to brokers as collateral for loans made to purchase securities or to cover short sales or margin loans.
258
Immediate Family
When involved in underwriting a new issue the definition of 'immediate family' includes the following: the registered representative's parents, mother-in-law, father-in-law, spouse, brother or sister, brother-in-law or sister-in-law, son-in-law or daughter-in-law, and children of an employee or associated person of a member.
259
Immediate or Cancel Order
Order requiring that all or part of the order be executed as soon as the broker enters a bid or offer; the portion not executed is automatically canceled.
260
Immediate Annuity
Annuity contract bought with single payment and with a specified payout plan that starts right away.
261
Income Bond
Obligation on which the payment of interest is contingent on sufficient earnings from year to year.
262
Income Mutual Fund
Mutual fund designed to produce current income for shareholders. All distributors from income funds are taxable in the year received by the shareholder unless the fund is held in a tax deferred account such as an IRA or Keogh or the distributions come from tax-exempt bonds such as with a municipal bond fund.
263
Indenture
Formal agreement, also called a 'deed of trust,' between an issuer of bonds and the bondholder.
264
Index Fund
Mutual fund that has a portfolio matching that of a broad-based portfolio.
265
Index Options
Calls and puts on indexes of stocks. Broad-based indexes cover a wide range of companies and industries; narrow-based indexes consist of stocks in one industry or sector of the economy.
266
Indication of Interest
Securities underwriting term meaning a dealer's or investor's interest in purchasing securities that are still in registration with the SEC.
267
Individual Retirement Account (IRA)
An IRA is a personal retirement account available to any person who has earned income. There are two types of IRAs: the traditional IRA and the Roth IRA.
268
Inflation
A rise in the price of goods and services that is a result of increased spending relative to the supply of goods on the market.
269
Initial Margin
Amount of cash or eligible securities required to be deposited with a broker before engaging in margin transactions.
270
Initial Public Offering (IPO)
Corporations' first offering of stock to the public. IPOs are an opportunity for existing investors to make profits because for the first time, their shares will be given a market value reflecting expectation for the company's future growth.
271
Inside Information
Corporate data that has not yet been made public. Under SEC rules, an insider is not allowed to trade on the basis of such information.
272
Inside Market
Highest bid or lowest asked quotes between dealers trading for their own inventories.
273
Institutional Communication
FINRA's communication rules define "institutional communication" as written (including electronic) communication that is distributed or made available only to institutional investors.
274
Institutional Investor
Organization that trades large volumes of securities such as mutual funds, banks, insurance companies, and pension funds.
275
Insured Bonds
Municipal bonds that are insured against default by a municipal bond insurance company.
276
Interest Rate Options
Options contract based on an underlying debt security. Options give buyers the right, not the obligation, to buy the underlying bond at a fixed price and before a specific date in the future.
277
Interest-Rate Risk
Interest rate changes that will adversely affect the value of an investor's securities portfolio.
278
Interpolation
The estimation of an unknown numbers between known numbers.
279
Interpositioning
Placement of a second broker in a securities transaction between two principals or between a customer and a market maker.
280
In The Money
Options contract on a stock whose current market price is above the exercise or strike price of a call option or below the exercise or strike price of a put option.
281
Intrastate Offering
Securities offering limited to one state in the U.S.; exempt from federal registration under SEC rule 147
282
Intrinsic Value
Difference between the exercise or strike price of an option and the marke value of the underlying security.
283
Inverted Yield Curve
Unusual situation in which short-term interest rates are higher than long-term interest rates; also known as a 'negative yield curve.'
284
Investment Advisers Act
Legislation passed by Congress in 1940 that requires all investment advisers to register with the SEC and/or the state.
285
Investment Company Act of 1940
Legislation passed by Congress that require the registration and regulation of investment companies by the SEC.
286
Investment Grade
Bond with a rating of BBB or better.
287
Investment Letter
In the private placement of new securities, a letter of intent between the issuer and the buyer establishing that the securities are being bought as an investment and are not for resale.
288
Investment Objectives
When making a recommendation to a client, a key consideration is the client's investment objective. Capital, current income, capital growth and total return.
289
Issued and Outstanding
Shares of a corporation authorized in the corporate charter which have been issued and are outstanding.
290
Issuer
Legal entity that has the power to issue and distribute a security. Corporations, municipalities, and foreign and domestic governments and their agencies.
291
Joint Account Agreement
Form needed to open a joint account at a brokerage. Signed by two parties.
292
Joint-and-Survivor Annuity
Annuity that makes payments for the lifetime of two or more annuitants, often a husband and wife.
293
Jointly and Severally
Term used to refer to municipal bond under-writings where the account is undivided and the syndicate members are responsible for unsold bonds in proportion to their participants.
294
Joint Tenants with Rights of Survivorship
When two or more people maintain a joint account with a brokerage firm or a bank, it is normally agreed that, upon the death of one account holder, the ownership of the account and its assets passes on to the remaining account holder(s)
295
Junk Bond
Bond with a credit rating of BB or lower. Junk Bonds are issued by companies without long track records of sales and earnings or by those with questionable credit strength.
296
Keogh Plan
Tax deferred pension account designed for employees of unincorporated businesses or for people who are self-employed. Eligible people can contribute up to 25% of earned income up to a specified maximum limit.
297
Keynesian Economics
Body of economic thought originated by the British economist, Joh Maynard Keynes. Keynes believed that active government intervention in the marketplace was the only method of ensuring economic growth and stability.
298
Know your Customer
Effective July 2012, the new FINRA rule 2090 titled 'Know Your Customer' is modeled after the former NYSE rule and requires firms to use reasonable diligence in regard to the opening and maintenance of every account and to know the essential facts concerning every customer.
299
Lagging Indicators
Economic indicators that lag behind the overall pace of economic activity. The six components of lagging indicators are:
1) Unemployment Rate
2) Business Spending
3) Unit Labor Costs
4) Bank Loans Outstanding
5) Bank Interest Rates
6) Book value of manufacturing and trade inventories
300
Leading Indicators
Leading Indicators Includ:
1) Manufacturers' new orders for consumer goods and materials
2) Contracts and order for plants and equipment
3) Building permits
4) Stock prices
5) Money supply
301
Long-Term Equity Anticipation Securities (LEAPS)
Anticipation Securities. LEAPS are long-term equity options traded on U.S. exchanges and over the counter. LEAPS expire in two or three years, thus giving the buyer a longer time for his or her strategy to work.
302
Legal List
Securities selected by a state agency, usually a banking department, as permissible holdings of mutual savings banks, pension funds, insurance companies, and other fiduciary institutions.
303
Legal Opinion
Statement as to the legality of a municipal bond issue, usually written by an independent law firm specializing in public borrowings.
304
Letter of Intent
Promise by a mutual fund shareholder to invest a specified sum of money over 13 months; in exchange, the shareholder is entitled to receive a lower sales charge.
305
Leverage
The relation of debt to equity in a firm's capital structure. Leverage is long-term debt, preferred stock, and shareholder's equity as measured by the debt to equity ratio.
306
Level Load
Sales charge that does not change over time. In mutual funds, level load shares are called 'C class shares.' 'A class shares' are for up front loads and 'B class shares' are for back-end loads.
307
Limited Liability
Liability is limited to an investor's original investment; underlying principle of a corporation and/or limited partnership in the U.S.
308
Limited Partnership
Organization made up of a general partner who manages a project and limited partners who invest money but have limited liability and are not involved in the day-to-day management.
309
Limit Order
Order to by or sell a security at a specific price or better. The broker will execute the trade only within the price restriction.
310
Limit Price
Price set in a limit order. For example, a customer might put in a limit order to sell shares at 45 or to buy shares at 40.
311
Listed Security
A stock or bond that has been accepted for trading by one of the organized and registered securities exchanges in the U.S.
312
Load
Sales charge paid by an investor who buys shares in a load mutual fund. Loads are usually charged when shares are purchased.
313
Loan Value
With respect to Regulation T of the Federal Reserve Board, the maximum percentage of the current market value of eligible securities that a broker can lend a margin account customer; currently set at 50%.
314
London Interbank Offered Rate (LIBOR)
A daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market.
315
Long Coupon
Bond issue's first interest payment covering a longer period than the remaining payments. Most bond schedules call for interest payments at six month intervals.
316
Long Position
Ownership of a security. The investor may transfer the ownership to someone else either by sale or gift.
317
Long-Term Gain
Gain on the sale of a capital asset where the holding period was mor than 12 months; any profit is subject to the long-term capital gains tax.
318
Long-Term Loss
A capital loss can be used to offset a capital gain plus $3,000 of ordinary income.
319
Loose Money
Policy by the Federal Reserve Board to make loans less expensive and more widely available in the economy. The Fed implements a loose credit policy by reducing interest rates and buying Treasury securities.
320
Maintenance Call
Also known as a 'margin call;' this is a call for additional money or securities when a brokerage customer's margin account equity falls below the requirements of either FINRA or the brokerage firm.
321
Making a Market
To maintain firm bid and offer prices in a given security by standing ready to buy or sell round lots at publicly quoted prices.
322
Maloney Act
Legislation which provides for the regulation of the over the counter market by FINRA
323
Management Fee
A charge against investor assets for managing the portfolio of an open-or cosed-end mutual fund. The fee, as disclosed in the prospectus, is a fixed percentage of the fund's net asset value and is usually between 0.5% and 2% per year.
324
Managing Underwriter
Leading investment banking firm of an underwriting syndicate organized for the purchase and distribution of a new issue of securities.
325
Margin
Amount a customer initially deposits with a broker when borrowing from the broker to buy securities. Regulation T, or the minimum amount that a customer must deposit, is currently set at 50% of the purchase or short sale price with a minimum of $2,000.
326
Margin Account
Brokerage account allowing customers to buy securities with borrowed money. Margin accounts are governed by Regulation T of the Federal Reserve, by FINRA, and by individual brokerage house rules.
327
Margin Agreement
Form that spells out the rules governing a margin account including the hypothecation of securities, how much equity the customer must keep in the account, and the interest rate on margin loans.
328
Margin Call
Demand that a customer deposit enough money or securities to bring a margin account up to the minimum maintenance requirements.
329
Margin Requirement
Regulation T of the Federal Reserve Board requires a minimum of $2,000 or 50% of the purchase price for eligible securities bought on margin or 50% of the proceeds from short sales.
330
Mark-Down
Amount subtracted from the selling price when a customer sells securities to a dealer in the over the counter market.
331
Market Order
Order to buy or sell a security at the best available price
332
Market Out Clause
Escape clause sometimes written into firm commitment underwriting agreements; it essentially allows the underwriters to be released from their purchase commitment if material adverse developments affect the securities markets.
333
Market Price
Last reported price at which a security was sold on an exchange. For stocks or bonds sold over the counter, it is bid and offer prices available at any particular time from those making a market in the stock.
334
Mark to the Market
Adjusting the value of a security to reflect the current market value. Margin accounts are marked to the market to ensure compliance with maintenance requirements.
335
Matched Orders
Illegal and manipulative practice of offsetting buy and sell orders to create the impression of activity in a security and cause an upward price movement that benefits the participants.
336
Maturity
The date at which a debt instrument is due and payable.
337
Mill
One tenth of a cent; the unit most often used in expressing property tax rates.
338
Minimum Maintenance
The NYSE and FINRA both require that a margin be maintained equal to 25% of the market value of securities in the margin account.
339
Mixed Account
Account in which some securities are owned (long positions) and some securities are borrowed (short positions).
340
Monetarist
Theory that the money supply is the key to the ups and downs in the economy.
341
Monetary Policy
Set by the Federal Reserve Board. To make the economy grow faster, the Feds can lower the member bank's reserve requirements or lower the discount rate.
342
Money Market Fund
An open-ended mutual fund that invest in commercial paper, banker's acceptances, repurchase agreements, government securities, certificates of deposit, and other highly liquid and safe securities.
343
Money Supply
Total amount of money in the economy; consists primarily of the currency in circulation and the deposits in savings and checking accounts.
344
Moody's Credit Rating
Moody's corporate debt ratings are both upper and lower case letters. The highest Moody's rating would be Aaa and the lowest would be a C.
345
Mortgage Bond
Bonds secured by a mortgage on the issuer's property. Most first mortgage bonds are specific real property and represent secured claims on the general assets of the firm.
346
Municipal Revenue Bond
Bond issued to finance public works such as bridges, tunnels, or sewer systems and supported by the revenues of the project.
347
Mutilated Security
Certificate that cannot be read for the name of the issue or the issuer, or for the detail necessary for identification and transfer, or for the exercise of the holder's rights.
348
Mutual Fund Custodian
Commercial bank that provides safekeeping for the securities owned by a mutual fund; may also act as a transfer agent making payments to and/or collecting investments from shareholders.
349
Naked Option
Option for which the seller has no underlying security position.
350
NASDAQ Capital Market
The lowest NASDAQ listing tier; Capital Market securities must have three market makers during the initial listing phase and a minimum of two market makers for continued listing.
351
NASDAQ Composite Index
Market value-weighted index that measures all securities listed on the NASDAQ Stock Market.
352
NASDAQ Global Market
The second tier of listing in the NASDAQ stock market; Global Market securities listing requirements include three to four market makers during the initial listing phase and two to three for continued listing.
353
NASDAQ Global Select Market
The NASDAQ Global Select Market has the highest listing requirement found in the world.
354
NASDAQ Stock Market
NASDAQ OMX operates the NASDAQ Stock Market, the largest single cash equities securities market in the US, in terms of listed companies, and the largest in the world, in terms of share value traded.
355
National Market System
System of trading over the counter stocks under the sponsorship of FINRA and NASDAQ.
356
Negative Yield Curve
Usually, short-term rates are lower than long-term rates because those who invest their money for longer periods are taking more risk.
357
Negotiable Certificate of Deposit
Large dollars amount, short-term certificates of deposit. Issued by large banks and bought mainly by corporations and institutional investors.
358
Negotiated Underwriting
Underwriting of a new securities issue in which the spread between the purchase price paid to the issuer and the public offering price is determined through negotiation rather than competitive bidding.
359
Net Asset Value (NAV)
In mutual funds, the value of a fund share or the 'bid price.' In the case of no-load funds, the NAV, the market price, and the offering price are all the same.
360
Net Investment Income Per Share
Net income received by an investment company from dividends and interest on securities investments divided by the number of outstanding shares; net income is the income minus management fees and administrative expenses divided by the number of outstanding shares.
361
Net Realized Capital Gains Per Share
Amount of capital gains that an investment company realized on the sale of portfolio securities.
362
Net Working Capital
Current assets minus current liabilities.
363
Net Worth
Amount by which assets exceed liabilities. For a corporation, net worth is also known as 'stockholders equity' or 'net assets.'
364
New Issue
Stock or Bond being offered to the public for the first time. New issues may be initial public offerings (IPOs) or additional stock or bond issues by already public companies that are often on the exchanges.
365
No-Load Fund
Mutual fund offered by an open-end investment company that imposes no sales charge on its shareholders.
366
Nominal Yield
Annual dollar amount of income received from a fixed income security divided by the par value of the security and stated as a percentage.
367
Non-Accredited Investor
Investor who does not meet the net worth requirements for SEC Regulation D.
368
Non-Rated
Bonds that have not been rated by one or more of the major rating agencies such as Standard & Poor's, Moody's Investor Services, or Fitch Investor Services.
369
Non-Recourse Loan
Type of loan used by limited partners in a direct participation program whereby the limited partners finance a portion of their participation with a loan secured by their ownership in the underlying venture without further personal liability.
370
Normal Trading Unit
Standard size of a trading unit for a particular security; also called a 'round lot.'
371
Not Held
An indication on a market order to buy or sell securities; such an indication means that the customer has given the floor broker both the time and price discretion in executing the best possible trade, but will not hold the broker responsible if the best deal is not obtained.
372
Odd Lot Theory
Theory that the ODD LOT investor who trades in less than 100 share quantities is usually wrong and that profits can be made by acting contrary to odd lot trading patterns.
373
OEX
Is the trading symbol for the Standard & Poor's 100 stock index
374
Offering Scale
Prices at which different maturities of a serial bond issue are offered to the public by an underwriter.
375
Official Notice of Sale
Notice published by a municipality inviting investment bankers to submit competitive bids for an upcoming bond issue.
376
OPD
Ticker tape symbol designating the first transaction of the day in a security after a delayed opening.
377
Open-end Fund
Investment company that sells mutual funds to the public; also known as an 'open-end management company.'
378
Open End Management Company
Investment company that sells mutual funds to the public.
379
Open-Market Operations
Open-Market operations represent one of three basic way that the Federal Reserve implements the monetary policy.
380
Open Order
Buy or sell order for the securities that has not yet been executed or canceled; a good-till-cancelled order (GTC).
381
Options
Securities transaction agreement tied to stocks or to stock indexes. Options are traded on many exchanges. A "call option" gives the buyer the right to buy 100 shares of the underlying security at a fixed price before a specified date in the future (usually three, six, or nine months).
382
Options Account
Account at a brokerage firm that is approved for option positions or trades. The clients must be given a copy of "Characteristics and Risks or Standardized Options Contracts," known as the 'options disclosure documetn,' before the account can be approved.
383
Options Agreement
Form filled out by a brokerage firm's customer when opening an options account.
384
Options Holder
Someone who has purchased a call or put option but has not yet exercised or sold it.
385
Options Premium
Amount per share paid by a options buyer to an options seller for the right to buy (call) or sell (put) the underlying security at a particular price and within a particular period.
386
Options Price
Market price at which an options contract is trading at any particular time. The options price is determined by many factors including its intrinsic value, time to expiration, volatility of the underlying stock, interest rates, dividends, and marketplace adjustments for supply and demand.
387
Options Clearing Corporation (OCC)
Corporation that is owned by the stock exchanges and that handles option transactions on those exchanges.
388
Options Series
Options of the same class (puts and calls) with the same underlying security and the same exercise price and maturity month.
389
Options Writer
Person that sells put or call options. The writer of a put option contracts to buy 100 shares of stock from the put option buyer by a certain date and for a fixed price.
390
Original Issue Discount (OID)
Discount from par value at the time a bond is issued. The most extreme version of an original issue discount is a 'zero coupon bond.'
391
OTC Bulletin Board
The OTC bulletin board (OTCBB) is a regulated quotation service that displays real-time quotes, last-sale prices and volume information in over the counter (OTC) equity securities.
392
OTC Margin Stock
Shares of certain large firms traded over the counter that qualify as margin securities under Regulation T of the Federal Reserve Board.
393
OTC Pink
The bottom tier of the OTC market, OTC Pink is an open marketplace that helps broker/dealers get the best prices for investors.
394
Out Of The Money
Term used to describe an option whose strike price for a stock is either higher than the current market value, in the case of a call, or lower than the current market value in the case of a put.
395
Overlapping Debt
Municipal accounting term that refers to a municipality's share of the debt of its political sub-divisions.
396
Over the Counter (OTC)
Market in which securities transactions are conducted through a telephone and computer network that connects dealers in stocks and bonds.
397
Owner's Equity
Paid-in capital plus retained earning less the liabilities of a corporation.
398
Planned Amortization Class (PAC) Bond
PAC is a tranche class offered by some collaterized mortgage obligations (CMOs).
399
Paid-In Capital
Capital received from investors for stock. The paid-in capital account includes the contributions of stockholders in excess of par value received from the sale of capital stock in the primary market.
400
Par
The nominal or face value of a security. A bond selling at par is worth the same dollar amount that it was issued for.
401
Participating Preferred stock
Preferred stock that gives the holder the right to participate with the common stockholders in addition distributions of earnings in addition to paying a stipulated dividend.
402
Passive
Income or loss from activities in which a taxpayer does not materially participate such as a limited partnership.
403
Pass-Through Security
Mortgage-backed certificate, usually government-guaranteed, where homeowners' principle and interest payments pass from the originating bank or savings and loan institution through a government agency or investment bank to investors on a monthly basis.
404
Pegging
Stabilizing the price of a security by intervening in a market.
405
Per Capita Debt
Total bonded debt of a municipality divided by its population
406
Annuity Certain
Annuity that guarantees payments to an annuitant for a particular period of time.
407
Periodic Payment Plan
Plan to accumulate capital in a mutual fund by making regular investments on a monthly basis.
408
Pink Sheets
Daily publication of the National Quotation Bureau that details the bid and asked prices of over the counter (OTC) stocks not carried in the daily NASDAX OTC newspaper listings.
409
Placement Ratio
Compilation of the Bond Buyer indicating the percentage of the past week's new municipal bond offerings that have been bought from the underwriters.
410
Position Limit
Maximum number of exchange-listed options contracts that can be owned or controlled by an individual holder or by a group of holders acting jointly in the same underlying security and on the same side of the market.
411
Positive Yield Curve
Interest rates are higher on long-term debt securities than on short-term debt securities of the same quality. A positive yield curve exists when 20 year Treasury Bond yields 10% and three month Treasury bills yield 7%.
412
Pre-Emptive Right
Right giving existing stockholders the opportunity to purchase shares of a new issue before it is offered to others.
413
Preferred Stock
Class of stock that pays dividends at a specified rate and that has preference over common stock in the payment of dividends and the liquidation of assets.
414
Premium Bond
Bond with a market price above par value
415
Presale Order
Order purchase part of a new municipal bond issue that is accepted by an underwriting syndicate manager before an announcement of the price or coupon rate and before the official public offering.
416
Preservation of Capital
Investments that preserve capital include fixed income securities.
417
Price/Earning (P/E) Ratio
Price of a stock divided by its earnings per share; used to deter if a stock is either under priced or overpriced when compared to other stocks in the same industry.
418
Primary Distribution
Sale of a new issue of stocks or bonds; distinguished from a secondary distribution which involves previously issued stock.
419
Primary Market
Market for new issues of securities; distinguished from secondary market where previously issued securities are bought and sold.
420
Prime Rate
Interest rate that banks charge on commercial loans their best and most creditworthy customers.
421
Private Placement
Sale of stocks, bonds, or other investments directly to an investor.
422
Private Purpose Bond
A type of municipal bond; distinguished form a public purpose bond because 10% or mor of the bond's benefit goes to private activities.
423
Proceeds Sale
Over the counter securities sale in which the proceeds are used to purchase another security.
424
Profit and Loss (P&L) Statement
Also called the 'income statement,' the profit and loss statement is the summary of the revenues, costs, and expenses of a company over a period of time.
425
Progressive Tax
Income tax system in which those with higher incomes pay taxes at higher rates than those with lower incomes; opposite of a regressive tax.
426
Project Note
Short-term debt issue of a municipal agency, usually a housing authority, to finance the construction of public housing.
427
Prospectus
Written offer to sell securities; an investor needs a prospectus to make an informed buying decision.
428
Proxy
The SEC requires that shareholders of a company whose securities are registered under Section 12 of the Securities Exchange Act of 1934 receive a proxy statement prior to a shareholder meeting (either an annual or special meeting).
429
Public Housing Authority Bond
Obligation of local public housing agencies that are secured by the federal government.
430
Public Offering Price
Price at which a new issue of securities is offered to the public by underwriters.
431
Public Purpose Bond
Category of municipal bond; exempt from federal income taxes as long as it provides no more than a 10% benefit to private parties.
432
Purchase power
Value of money as measured by the goods and services it can buy.
433
Put Bond
Bond that allows its holder to redeem the issue at specified intervals before maturity and receive the full face value.
434
Put Option
Contract that grants the right to sell a specific number of shares by a certain date and at a certain price.
435
Quick Ratio
Cash, marketable securities, and accounts receivable divided by current liabilities.
436
Range
The high and low price for a security over period of time. Newspapers publish the 52 week high and low price range for stocks traded on the New York Stock Exchange and the over the counter markets.
437
Rate Covenant
Provision in municipal revenue bond agreements covering the rate users will be charged for their use of the facility being financed.
438
Real Estate Investment Trust (REIT)
Company that manages a portfolio of real estate investment in order to earn profits for shareholders. Patterned after investment companies, REITs make investments on a diverse array of real estate.
439
Realized Profit
Profit resulting from the sale of a security. Capital gains taxes may be due when profits are realized.
440
Real Rate of Return
Return on an investment adjusted for inflation
441
Recession
Downturn in economic activity; defined by many economists as at least two consecutive quarters of decline in a county's gross domestic product.
442
Recourse Loan
Loan made to a direct participation program or limited partnership whereby the lender, in addition to being secured by specific assets, has recourse against the limited partners.
443
Redemption Fees
Fees charged by a mutual fund to shareholders who redeem fund shares within a short period of time.
444
Refunding
Replacing an old debt with a new debt usually in order to lower the interest cost of the issuer.
445
Registered Bond
Bond recorded in the name of the holder on the books of the issuer or the issuers's registar.
446
Registar
Along with the transfer agent, the registar keeps current files of the owners of a bond issue and the stockholders in a corporation, often a commercial bank.
447
Registration Statment
Document detailing the purpose of a proposed public offering of securities as required by the Securities Act of 1933
448
Regressive Tax
Income tax system in which those with lower incomes pay taxes at higher percentage rates than those with higher incomes; opposite of a progressive tax.
449
Regular Way Settlement
Completion of a securities transaction on the third full business day following the date of the transaction.
450
Regulated Investment Company
Mutual fund eligible under Subchapter M of the internal Revenue Service to pass capital gains, dividends, and interest earned on fund investments directly to it shareholders to be taxed at the personal level.
451
Regulation A
SEC provision for the simplified registration of small issues of securities.
452
Regulation D
SEC rules concerning private placements and defining related concepts such as an 'accredited investor.'
453
Regulation S-P
Title V of the Gramm-Leach-Biley Act (GLBA) required that the SEC and certain other Federal agencies adopt rules relating to the privacy of nonpublic personal information of consumers and customers.
454
Regulation T
Federal Reserve Board regulation covering the extension of credit to customers by securities brokers, dealers, and members of the national securities exchanges.
455
Regulation U
Federal Reserve Board limit on the amount of credit that a bank may extend to a customer for purchasing and carrying margin securities.
456
Rehypothecation
When a broker/dealer pledges securities in a margin account as collateral for a loan.
457
Reinvestment Prviliege
Right of a shareholder to reinvest dividends in order to buy more shares in the company or mutual fund usually at no additional sales charge.
458
Reinvestment Risk
When an investment reaches maturity, an investor has reinvestment risk.
459
REMIC
Acronym for "real estate mortgage investment conduit," a pass-through vehicle created to issue mult-class mortgage-backed securities.
460
Repurchase Agreement (REPO)
Agreement between a buyer and a seller, usually of U.S. government securities, whereby the seller agrees to repurchase the securities at a stated price and usually at a stated time.
461
Reserve Requirement
Federal Reserve rule mandating the financial assets that member banks must keep in the form of cash and other liquid assets as a percentage of demand deposits and time deposits.
462
Resistance Level
Price ceiling at which technical analysts note persistent selling of a security.
463
Restricted Account
Margin account in which the equity is less than the initial margin requirements set by Regulation T.
464
Retail Communication
FINRA's communication rules a "retail investor" as any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 calendar-day period.
465
Retail investor
Under FINRA's communication rules a "retail investro" includes any person other than an institutional investor, regardless of whether that person has an account with the firm.
466
Retained Earnings
Net profits kept to accumulate in a business after dividends are paid.
467
Reverse Split
Procedure whereby a corporation reduces the number of shares outstanding.
468
Risk
Chance of loss. Risks can be divided into two categories: systematic risk and non-systematic risk.
469
Inflation Risk
Inflation risk is a direct investment risk meaning uncertainty regarding the future purchasing power of invested dollars.
470
Interest Rate Risk
Interest rate risk involves the competitive cost of money. This term is generally associated with bond prices, but it applies to all investments.
471
Liquidity Risk
Possibility that an investor will not be able to buy or sell a security quickly enough or in sufficient quantities because buying or selling opportunities are limited.
472
Political Risk
Possibility of unfavorable government action. A type unsystematic risk that can be avoided by diversification.
473
Repayment (Credit) Risk
Chance that a borrower or trade debtor will not repay an obligation as promised. A subset of business risk. Business risk is a type of non-systematic, or stock specific, risk.
474
Risk of Principle
Chance that invested capital will drop value.
475
Risk-Free Return
The three month Treasury bill is considered a risk-less investment because it is a direct obligation of the U.S. government and its term is short enough to minimize the risks of inflation and interest rate changes.
476
Riskless Transaction
Concept used in evaluating whether or not dealer mark-ups and mark-downs in over the counter transactions with customers are reasonable.
477
Rules of Conduct
Code of ethics established by FINRA's Board of Governors. FINRA is a self-regulatory organization comprised of firms dealing in the over the counter securities market.
478
Same Day Substitution
Offsetting transaction in a margin account in the course of one day. A same day substitution results in neither a margin call nor a credit to the special memorandum account.
479
Savings Bond
A type of non-marketable U.S. government debt introduction in 1935. Series EE 'savings bonds' are safe, low-risk savings products that earn interest based upon a fixed rate, for up to 30 years.
480
Scale
Date for each of the scheduled maturities in a new serial bond issue. The scale included the number of bonds, the dates of maturity, the coupon rates, and the offering prices.
481
Secondary Distribution
Public sale of previously issued securities held by large investors; distinguished from a new issue or primary distribution where the seller is the issuing corporation.
482
Secondary Market
Exchanges and over the counter markets where securities are bought and sold after original issuance.
483
Secured Bond
Bonded backed by the pledge of collateral. The exact nature of the collateral is spelled out in the indenture.
484
Securities Act of 1933
Requires the registration of securities prior to public sale and the adequate disclosure of financial and other data in a prospectus in order to permit an informed analysis by potential investors.
485
Securities Investor Protection Corporation (SIPC)
Non-Profit corporation designed to protect customers of insolvent broker/deals.
486
Self Regulatory Organization (SRO)
SROs enforce the conduct and trading practices of the securities industry. SROs include all of the national securities exchanges as well as FINRA and the Municipal Securities Rule Making Board (MSRB).
487
Sell Out
Action by a broker when a customer fails to pay for the securities purchased and the securities received from the selling broker are sold to cover the transaction.
488
Seller's Option
Securities transaction in which the seller, instead of making regular way delivery, is given the right to deliver the security to the purchaser on or before the date that the seller's options expires.
489
Selling Concession
Discount at which securities in a new issue offering are allocated to the members of a selling group by the underwriters.
490
Selling Dividends
Unethical practice whereby a customer is induced to buy shares in a mutual fund in order to get the benefit of a dividend scheduled in the near future.
491
Selling Group
Group of dealers appointed by the syndicate manager of an underwriting group to act as agent for the other underwriters and to market a new or secondary issue to the public.
492
Selling Short
Sale of a security not owned by the seller in order to take advantage of an anticipated decline in the price or to protect a profit in long position.
493
Senior Security
Senior securities are repaid before junior securities in the event of liquidation.
494
Serial Bond
Muni bond issue with various maturity dates scheduled at regular intervals until the entire issue is retired.
495
Series of Option
Either all call options or all put options on the same underlying security; all options have the same exercise price and maturity date.
496
Settlement Date
In a regular way delivery of stocks and bonds, the settlement date is three business days after the trade is executed.
497
Shareholder's Equity
Total assets minus total liabilities of a corporation. Also known as Net Worth.
498
Shares Authorized
Number of shares provided for in the articles of incorporation of a company. A corporation cannot legally issue more shares than are authorized.
499
Shelf Registration
Allows a corporation to comply with registration requirements for up to three years prior to a public offering of securities.
500
Short Coupon
Bond interest payment covering less than the usual six month period.
501
Short Interest Theory
Based on the reasoning that even though short selling reflects a belief that prices will decline, the fact that short positions must eventually be covered is a source of upward price pressure.
502
Short Sale Rule
The short sale rule (also called the 'alternative uptick rule') is designed to restrict short selling from further driving down the price of a stock that has dropped more than 10% in one day.
503
Short-Term Gain or Loss
For tax purposes, the profit or loss realized from the sale of securities or other capital assets held for one year or less.
504
Single Premium Deferred Annuity (SPDA)
An investor makes a lump-sum payment to an insurance company selling the annutiy
505
Sinking Fund
Money accumulated on a regular basis that is used to redeem debt securities.
506
Small Cap
Small capitalization stocks or mutual funds holding such stocks.
507
Sepcialist
A historical term for the person found on the floor of the NYSE who was in charge of maintaining a fair and orderly marketplace for a company's stock.
508
Specialist's Book
Historically called the specialist, the specialist on the floor of the NYSE today is called a DMM (Designated Market Maker). The specialist's book is the book that includeds all of the orders that are away from the current market price, including stop and limit orders.
509
Specialized Mutual Fund
Mutual fund concentrating on one industry.
510
Special Memorandum Account (SMA)
Memorandum account of the funds in excess of the Regulation T margin requirement.
511
Special Tax Bond
Municipal revenue bond that will be repaid through excise taxes on such purchases as gasoline, tobacco, and liquor.
512
Split
Increase in a corporation's number of outstanding shares of stock without any change in the shareholders' equity or in the aggregate market value at the time of the split.
513
Spot Market
Commodities market in which goods are sold for cash and delivered immediatley.
514
Spread Option
Spread position involving the 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.
515
SPX
Ticker symbol for the S&P's 500 stock index options traded on the Chicago Board Options Exchange (CBOE).
516
Stablization
Intervention in the market by a managing underwriter in order to keep the market price from falling below the public offering price during the offering period.
517
Standard & Poor's Index
Maintains many indexes. The S&P 400, 500, & 600
518
Standard & Poor's Credit Rating
The rating of stocks and bonds according to the risk issued by the Standard & Poor's Corporation. Investment grades: AAA, AA, A, and BBB.
519
Standard Deviation
The mean of the mean. 'Standard Deviation' is used in probability theory. It is the square root of a data set's variance. It is the average difference of the scores from the mean of distribution, that is, it measure how far away they are from the mean.
520
Standby Underwriter
Agreement between a corporation and an investment banking firm. The underwriter contracts to purchase any portion of a stock issue that is not subscribed to after being offered to current shareholder in a rights offering.
521
Statutory Voting
One share, one vote rule that governs voting procedures in most corporations.
522
Stock Dividend
Payment of a corporate dividend in the form of stock rather than cash.
523
Stock Option
Right to purchase or sell a stock at a specified price and within a specified period.
524
Stock Power
Power of attorney form transferring ownership of a registered security from one owner to another.
525
Stop-Limit Order
Order with instructions to buy or sell at a specified price or better but only after a given stop price has been reached or passed.
526
Stop Order
Order to buy or sell at the market price once the security has traded at a specified price called the 'stop price.'
527
Straddle
Long or short strategy consisting of an equal number of put options and call options on the same underlying stock, at the same strike price, and with the same expiration date.
528
Street Name
Phrase describing securities held in the name of the firm instead of in the name of the customer.
529
Strip
Brokerage house practice of separating a bond into its principle and interest, which are then sold separately as zero coupon securities.
530
Strong Dollar
Dollar that can be exchanged for a large amount of a foreign currency.
531
Student Loan Marketing Association (SLMA)
Publicly traded stock corporation that guarantees student loans traded in the secondary market.
532
Subchapter M
Internal Revenue Service regulation dealing with what is commonly called the 'conduit theory.'
533
Subchapter S
Section of the Internal Revenue Code giving a corporation that has 100 or fewer shareholders the option of being taxed as if it were a partnership.
534
Subscription Agreement
Application submitted by an investor seeking to join a limited partnership.
535
Subscription Price
Price at which existing shareholders of a corporation are entitled to purchase common shares in a rights offering.
536
Subscription Right
Privilege granted to existing shareholder of a corporation to subscribe to shares of a new issue of common stock before it is offered to the public.
537
Subscription Warrant
Type of security, usually issued together with a bond, which entitles the holder to buy a proportionate amount of common stock at a specified price, usually higher than the market price at the time of issuance, for a period of years.
538
Suitability
Effective as of July 9, 2012, the new FINRA rule 2111, Suitability, is modeled after former NASD Rule 2310.
539
Supply-Side Economics
Theory of economics contending that a drastic reduction in tax rates will stimulate productive investments by corporations and wealthy individuals to the benefit of the entire society.
540
Support Level
Price level at which a security tends to stop falling because there is more demand than supply.
541
Sweetner
Feature added to a securities offering in order to make it more attractive to purchaser.
542
Syndicate Manager
An underwriting firm that lead the syndicate
543
Systematic Risk
That part of a security's risk that is common to all securities of the same general class and cannot be eliminated by diversification; also known as 'market risk.'
544
Take a Position
Phrase used when a broker/dealer holds stocks or bonds in inventory. A position may be either long or short.
545
Targeted Amortization Class (TAC) Bonds
Bonds offered as a tranche class of collaterized mortgage obligations (CMOs).
546
Tax Advantaged Investments
Any time an investment offers tax deferral, that is an important consideration. Annuities offer tax-deferred earnings.
547
Tax Credit
Direct, dollar-for-dollar reduction in tax liability; distinguished from a tax deduction which reduces taxes only by the percentage of a taxpayer's tax bracket.
548
Tax Deduction
Deductible expense that reduces taxable income for individuals or businesses (such as contributions to qualified pension plans).
549
Tax Deferred
Term describing an investment whose earnings are free from taxation until investor takes possession of them.
550
Tax Equivalent Yield
Pre-tax yield that a taxable bond would have to pay to equal the tax free yield of a municipal bond in an investor's tax bracket.
551
Tax Exempt
This status is granted to municipal bonds paying interest that is totally free from federal taxes.
552
Tax Exempt Security
A municipal bond issued by a state government or by a country, town, or other political district or sub-division.
553
Tax Preference Item
Item specified by tax law that a taxpayer must include when calculating the alternative minimum tax (AMT).
554
Technical Analysis
Technical analysis' is also known as quantitative analysis. Technical analysts (also called quants) use historical price data to try to predict the future.
555
Tenancy in Common
Ownership of real or personal property by two or more persons.
556
Tender Offer
Offer to buy share of a corporation, usually at a premium above the shares' market price, for cash, securities, or both, often with the objective of taking control of a company.
557
Thin Market
Market in which there are few bids to buy and few offers to sell.
558
Third Market
Non-exchange member broker/dealers and institutional investors trading over the counter in exchange-listed securities.
559
Thirty Day Visibly Supply
Total dollar volume of new municipal bonds carrying maturities of 13 months or more that are scheduled to reach the market within 30 days as published in the Bond Buyer.
560
Thirty Day Wash Sale Rule
Internal Revenue Service rule stating that losses on a sale of stock may not be used as losses for tax purposes if equivalent stock is purchased within 30 days before or 30 days after the date of sale.
561
Tight Money
Economic condition in which credit is hard to secure; usually a result of Federal Reserve action to restrict the money supply by raising interest rates.
562
Time Horizon
The time horizon for a portfolio is the length of time the money will remain invested.
563
Time Value
That part of a stock option premium that reflects the time remaining on an options contract before expiration.
564
TIPS
Treasury Inflations Protected Securities. TIPS are a special type of Treasury note or bond that offers protection from inflation.
565
Tombstone
Advertisement placed in newspapers by investment bankers in a public offering of securities.
566
Total Return
Yield plus growth. The formula for 'total return' is the annual income plus the appreciation (or minus depreciation) divided by what the security cost.
567
Trade Date
Day on which a securities trade actually takes place. The settlement date usually follows the trade date by three business days buy may vary depending on the type of transaction and the method of delivery.
568
Tranches
Risk maturity dates into which a collateralized mortgage obligation (CMO) is split.
569
Transfer Agent
Agent, usually a commercial bank, appointed by a corporation to maintain records of stock and bond owners, to cancel and issue certificates, and to resolve problems arising from lost, destroyed, or stolen certificates.
570
Transfer on Death Account (TOD Account)
Transfer on Death (TOD) registration allows an investor to pass the securities he/she owns directly to another person or entity (the TOD beneficiary) upon death without having to go through probate.
571
Treasuries
Negotiable debt obligation of the U.S. government secured by its full faith and credit and issued at various schedules and maturities.
572
Treasury Stock
Stock reacquired by the issuing company and available for retirement or resale.
573
Trust Indenture Act of 1939
Federal Law requiring all corporate bonds to be issued under an indenture agreement approved by the SEC an providing for the appointment of a qualified trustee free of any conflict of interest with the issuer.
574
Twenty Bond Index
Index tracking the yields on 20 general obligation municipal bonds with 20 year maturities and an average rating equivalent to A1
575
Uncovered Option
A short call position is uncovered if the writer does not have long stock to deliver or does not own another call on the same security with wither the same or lower strike price and with the same or longer time of expiration; a 'naked position.'
576
Underlying Security
Security that must be delivered if a put or call option contract is exercised.
577
Underwrite
To assume the risk of buying a new issue of securities from the issuing corporation or government entity and reselling them to the public either directly or through dealers.
578
Underwriter
Investment banker who agrees to purchase a new issue of securities from an issuer and distribute it to investors; earns a profit on the underwriting spread.
579
Underwriting Agreement
Agreement between corporation issuing new securities to be offered to the public and the managing underwriter as agent for the underwriting group.
580
Uniform Practice Code
FINRA rules regarding the standards and procedures for the handling of over the counter securities transaction such as delivery, settlement date, and ex-dividend date.
581
Uniform Prudent Investor Act
Sets forth the guidelines for a trustee managing a trust. Major points include: The trustee shall manage the trust for the benefit of the beneficiaries, the trustee is evaluated on investment decisions made as they pertain to the portfolio as a whole.
582
Uniform Transfers to Minors Act (UTMA)
A law that is similar to the Uniform Gifts to Minors Act (UGMA) but different in that it prohibits the minor from taking control of the assets until age 21 (versus age of 18 UGMA)
583
Unissued Stock
Shares of a corporation's stock that are authorized in its charter but not issued. Unissued stock may be issued by an action of the Board of Directors.
584
United States Government Securities
Direct government obligations such as Treasury bills, notes, and bonds and Series EE and Series I savings bonds; distinguished form government sponsored agency issues.
585
Unit Investment Trust
Investment vehicle that purchases a fixed portfolio of income-producing securities such as corporate, municiple, or government bonds.
586
Variable Annuity
Life insurance annuity contract whose value fluctuates with that of an underlying securities portfolio.
587
Variable Life Insurance
Whole life insurance that allows the cash value of the policy to be invested in stocks, bonds, or money market portfolios.
588
Variable Rate Demand Obligations (VRDOS)
A variable rate demand obligation is a municipal security for which the interest rate resets on a periodic basis and holders are able to liquidate their security through a put or tender feature, at par.
589
Vertical Spread
Option strategy that involves simultaneously purchasing an option at one strike price while selling another option of the same class at the next higher or lower strike price; both options have the same expiration date.
590
Vesting
Right an employee acquires by length of service to receive employer-contributed benefits such as payments from a qualified plan.
591
Visible Supply
Dollar volume of municipal bonds scheduled to be issued over the next 30 days.
592
VIX
The CBOE's "volatility index' (VIX) measure the 30 day expected volatility of S&P 500 index.
593
Volatility
Characteristic of a security or market to rise or fall sharply in price within a short period of time.
594
Wash Sale
Purchase and sale of a security either simultaneously or within a short period of time.
595
Wasting Asset
Security with a value that expires at a particular time in the furtue.
596
Weak Dollar
U.S. dollar that has fallen in value against foreign currencies.
597
When issued
A conditional transaction made because a security has not yet been issued.
598
Wildcat Drilling
Looking for oil and/or gas in an unproven area.
599
Wilshire 5000 Equity Index
Broadest of all the indexes, the Wilshire Index is a market value weighted index and represents the value of all U.S. headquartered equities on the NYSE, the AMEX, and the NASDAQ National Market system for which quotes are available.
600
Writer
Person who sells put and call options contracts and collects premium income.
601
Yield
Nominal rate of interest divided by the purchase price; called 'current yield.'
602
Yield Curve
Chart plotting the yields of all bonds of the same quality with maturities ranging from the shortest to the longest available.
603
Yield to Call
Yield on a bond assuming that the bond will be redeemed by the issuer at the first call date specified in the indenture agreement.
604
Yield to Maturity (YTM)
Measurement of the rate of return an investor will receive if a long-term bond is held to its maturity date.
605
Z-Bond
The fourth tranche of bonds in the structure of a collateralized mortgage obligation (CMO).
606
Zero Coupon Security
Security that make no periodic interest payment but is sold at a deep discount from its face value.
