Glossary Flashcards
(125 cards)
1
Q
Accumulation Units
A
Units of ownership in a variable annuity or separate account in the tax-deferred or accumulation period, prior to pay out.
2
Q
Acid Test
A
Synonym for Quick Ratio (Current Assets - Inventory)/Current Expenses
3
Q
Accredited Investor
A
A high net value investor worth $1 million or annual income of $200,000 individual, $300,000 Joint
4
Q
Accrete
A
Add straight line to the adjusted base of a discount bond
5
Q
Adjusted Basis
A
In DPPS(Direct Participation Programs) Limited Partnerships & Bonds. Adjusted basis is the investors tax basis when determining capital gain or loss.
6
Q
Advertising
A
Any written communication (Except: Official Statement, Preliminary Statement, and listing of Dealers Inventory)
7
Q
Affiliated Person
A
Any member of a corporations board of directors with access to insider information. Includes any officer, director or 10% or more shareholder & their immediate families.
8
Q
After Hours
A
Trading occurring off-floor of NYSE outside of 9:30-4:00pm Eastern Time Each Day
9
Q
Agent
A
Acting as broker or intermediary, paid commission
10
Q
All or None (AON)
A
Order that specifies the entire issue must be sold or trade is cancelled.
11
Q
American Depository Receipt (ADR)
A
Certificate issued by the bank that represents shares of foreign stock. (Domestic Trading Foreign goods)
12
Q
American Style
A
Options that can be exercised at any time, prior to expiration date.
13
Q
Arbitration
A
Method of dispute resolution, no appeal, binding on both parties
14
Q
Ask Price
A
Price at which Customer Buys and Dealer Sells
15
Q
Associated Person
A
Anyone associated with the firm (Registered Reps & Principals are associated persons)
16
Q
Auction Market
A
A stock exchange with competitive buyers & sellers
17
Q
Authorized Shares
A
Total number of shares authorized to be issued
18
Q
Balance Sheet
A
Corporate financial statement showing assets, liabilities, and Shareholder Equity (Assets- Liability= Shareholder Equity)
19
Q
Banker’s Acceptance
A
short-term fixed rate loans used finance trade related transactions
20
Q
Basis Points
A
$.10 cents, a change of 1 basis point is equal to a change of 10 cents of interest paid on a bond with a par value of $1,000
21
Q
Broker/Dealer
A
A firm in the business of executing securities trades either for itself or others
22
Q
Bear Market
A
A period of declining security prices, with more sellers then buyers, negative investment sentiment
23
Q
Best Efforts
A
An underwriting where the syndicate acts as an agent , Issuer assumes the risk and is left with unsold shares
24
Q
Blue-Chip
A
Stock of large, well established financially stable company with a history of steady growth. Considered conservative and relatively safe
25
Bid
Price at which a Dealer buys and Customer Sells
26
Blue-Sky Laws
State Securities Regulations designed to protect investors against fraud
27
Bond Indenture
The trust indenture is a series of covenants or promises between the issuer and trustee, who act on behalf of the bond holder
28
Bond Rating
Reflects the issuers ability to meet interest or principal payments. SPAA Highest is AAA, Lowest D. Moody's Highest is Aaa, Lowest C
29
Book Value
Equals NAV, only in redeemable securities (mutual funds, variable annuity)
30
Breakpoints
Quantity discounts for large mutual fund purchases
31
Broker
Firm that acts as an agent, charges commission, assume no risk, take no positions, must fully disclose trade
32
Bull Market
A market in which the price appreciates more buyers then sellers
33
Buy Stop
A 2 tick order elected or stop activated at or above the stop price. Once the stop is off, the order becomes a market order and is executed immediately. Most bullish of all orders
34
Call Option
An options contract that gives the buyer the right to buy at the strike price and obligates the seller to sell at the strike price. Buyer pays a premium, Seller receives a premium
35
Call Price
The stated price at which the issuer may call or refund a bond issued and trading in the secondary market
36
Call Protection
A bond feature that prevents the issuer from calling the bond for a specified number of years. (call provisions specifies the call date and price)
37
Call Risk
The risk assumed by the holder of a callable bond is that the issuer will call the bonds and redeem them prior to maturity.
38
Capital Asset
Any asset considered to have a life of one year
39
Capital Gain/Loss
Difference between the cost basis and current market value of an asset, such as a security
40
Cash Account (or Special Cash Account)
A traditional brokerage account in which securities purchased must be paid in full. No short position or uncovered stock
41
Cash Flow
Difference between Cash Generated & Cash used by a corporation
42
CBOE (Chicago Board Options Exchange)
Largest Options Exchange in U.S. , owned by CBOE Global Markets
43
CD (Certificate of Deposit)
A time deposit with a fixed maturity date and fixed interest rate. It is a money market instrument.
44
CRD
FINRA's Central Registration Database- Form U4 + U5 stored
45
Chinese Wall
An ethical barrier between departments in a financial firm supported by internal procedures that limit and control the passing of sensitive non-public information
46
Churning
Illegal activity of excessive buying and selling of securities in order to generate commission
47
Clearing Firm
A broker/dealer that physically clears trades, either for itself or others. Has large back office, to issues confirmations, accept and reject security shipments and deliveries, handle cash and payments, and ensure correct settlements and accounting
48
Closed End
Management Companies that are capitalized in the same way as corporations. Issues a fixed number of shares through an IPO, thereafter those shares trade in the secondary market
49
Code of Procedure (COPS)
FINRA's sanctioning member firms and associated persons for violations of Rules of Fair Practice.
50
Collateralized Mortgage Obligation (CMO)
A derivative instrument that is backed or collateralized by a pool of GNMA, FNMA, FHLMC mortgages
51
Commercial Paper
A short-term unsecured money market instrument issued by investment grade corporations to finance short-term credit needs. Maturities range from 30 days to 270 days.
52
Commingling
illegal practice of combining or mixing customers cash and securities with the firms cash and securities.
53
CUSIP
A number assigned to a security by the Committee of Uniform Securities Identification Procedures for identification purposes and to facilitate clearing and settlement of trades
54
Competitive Bid
An underwriting process where various underwriters bid on a security issue and the issuer selects the best bid.
55
Consolidated Tape
high speed electronic system that reports the latest price and volume data on sales of exchange-listed stocks generated by all securities exchanges
56
CPI (Customer Price Index)
Gauages inflation
57
Conversion Price
The price at which a convertible bond or other convertible security can be exchanged for common stock.
58
Convertible Security
A bond or preferred stock that can be converted into shares of common stock
59
Covered Call
An option position consisting of writing a standardized call on a long stock position
60
Covered Put
An option position consisting of writing a standardized put ona short stock position
61
Cumulative Voting
Shareholder can pool votes all into one position if desired
62
Current Yield
This is calculated by dividing the annual interest by the current market value.
63
Cyclical Stock
Stock that performs well in a bullish market and poorly in a bearish market
64
Day Order
An order that expires at the end of day if not filled
65
Dealer
Broker/dealer acting as a Dealer or Principal that sells out of its own inventory
66
Debenture
An Unsecured bond backed only by the full faith and credit of the issuer
67
Debt Service
Principal and interest payments by the issuer on a bond
68
Default
Failure to pay bond interst and/or principal when due
69
Defensive stock
Non-cyclical, non-volatile stock, performs during all business cycles. Consumer Staples
70
Defferred Annuity
Purchased single lump sum or through periodic payments. Grows tax deffered, payments begin sometime after 1 year
71
Deficiency Letter
A document sent out by the SEC after their initial review of preliminary registration statement requesting more information
72
Depletion
Similar to depreciation, reduction of a products reserved, cost recovery system for wasting natural resources
73
Depreciation
deduction allowed for the use of real or tangible assets
74
Depression
Eight Consective Quarters (2 years) in economic decline
75
Derivative
security which derives its value from an underlying security. (options, futures, forwards)
76
Diluted earnings per share
Adjusts the basic earnings per share downward, due to larger number of outstanding shares, which would include potentially dilutive securities, such as convertibles, employee stock options, rights, and preferred stock.
77
Direct Participation Program (DPP)
Usually a limited partnership, in which all gains and losses directly flow through to the owners or investors.
78
Disclosure
Delivery of material information to investors, SROS, and the SEC
79
Discount Bond
A bond that is priced below its par value, or less than $1,000
80
Discretion
RRs exercise discretion over customer accounts when they control one or more of the three A's: Asset, Activity, Amount
81
Diversification
An investment strategy used to minimize portfolio risk by investing in various asset classes, industry, sectors and stocks
82
Dividend
Distribution of portion of company's earnings paid to stockholders, usually quarterly
83
Dividend Exclusion
One U.S. corporation receiving the dividends of another U.S. corporation can exclude 50% from corporate income
84
Dollar Cost Averaging
Systematic Investment of a fixed amount of money at regular intervals in a stock or mutual fund to take advantage of changes in market price over long period of time
85
Due Dilligence Meeting
In the course of underwriting a security, it is a meeting held for the purpose of discussing the terms of the issue, preparing a final prospectus, and negotiating a final agreement between the issuer and syndicate member
86
Earnings Per Share (EPS)
A commonly used ration that measures how many dollars of net income have been earned by each share of common stock
87
Electronic Communications Network (ECN)
Part of the fourth market, ECNs facilitate agency cross services, taking the shares from the seller and providing them to the buyer electronically, and provide confirmation records to each institution
88
Employee Retirement Income Security Act (ERISA)
The act that established the IRA, Pension Benefit Guarantee Corp, and guidelines for the funding, setup, and conduct of qualified retirement plans and accounts
89
EURO
The dingle-European currency that replaced the national currencies that replaced the national currencies of many of the European Union countries
90
Eurodollar Bond
A bond issued overseas by a domestic issuer. Pays interest and principal in U.S dollars
91
European Style
Options that can only be exercised during a specific time period, usually the last trading day before expiration.
92
Exchange Privilege
Investors can redeem shares in one fund and reinvest the proceeds in another fund, wihin the same family of funds.
93
Exchange Rate
The rate at which one currency exchanges for another
94
Ex-dividend date (Ex-date)
The first trade date on which the stock purchaser is not legally entitled to receive the dividend.
95
Exempt Security
Security that is exempt from registration. (Governments & agencies, Municipal debt, Money Market instruments, Nonprofits)
96
Expense Ratio
Net expenses divided by Nav
97
Expiration Date
For the vast majority of options, those traded on CBOE the expiration date is the third Friday of the Expiration Month
98
Face Amount Certificates
May be redeemed for a fixed amount on a specified date; have a maturity of at least 24 months
99
Face Value
Also called par value, this is typically $1,000 for a bond and $100 for preferred stock
100
Family of Funds
A group of mutual funds offered by the same principal underwriter with a variety of investment objectives, such those offered by Fidelity or American Funds
101
Federal Deposit Insurance Corporation (FDIC)
Insures bank deposits for up to 250,000
102
Federal Home Loan Mortgage Corporation (FHLMC) Freddie Mac
government-sponsored enterprise that buys mortgages and packages them into mortgage-backed securities, helping to create liquidity in the mortgage market. Stock is publicly traded
103
The Federal National Mortgage Association (FNMA) Fannie Mae
Government-sponsored enterprise that securitizes or pools mortgage loans and issues mortgage-back securities. Exchange Listed Stock
104
Federal Open Market Committee (FOMC)
Federal Reserve Systems top monetary policy making body
105
Federal Reserve Board
Board of Governors of the Federal Reserve System
106
Federal Reserve System (Fed)
The Federal Reserve is the central bank of the U.S
107
Fed Funds
Excess reserves that banks deposit at region Federal Reserve banks that can be lent to other banks
108
Fed Funds Rate
Rate member banks charge each other for borrowing to maintain their required reserves
109
Fidelity Bond
Private security bond that protects against employee theft and loss of customer securities
110
Fiduciary
A trustee; the basis of client and registered rep relations; a relationship involving confidence and trust
111
Financial Industry Regulatory Authority (FINRA)
SRO for securities industry. Designated examining authority or DEA. Broker/dealers and their associated persons are members of FINRA and therefore governed by FINRA by-laws.
112
Firm Commitment
An underwriting agreement involving a syndicate or principal commitment by the underwriters to buy the shares of a new issue from the issuer and reoffer them to the public. Syndicate takes the risk, agrees to buy any unsold shares
113
Firm Qoute
The actual price at which the municipal dealer is willing to buy or sell the securities at the stated price and in the amount specified. Good for a specific time period.
114
First in, First Out (FIFO)
Method of establishing cost basis in a taxable account in which the first securities bought are the first to be sold, usually creating the greatest tax obligation
115
Fixed Income
a type of security that pays the investor fixed interest payments.
116
Floor Broker
Brokers on the floor of NYSE
117
Foreign Currency
Currency of any foreign company
118
Foreign Exchange Rate
Rate at which one currency can be exchanged for another
119
Forward rate
a foreign currency exchange rate quoted and traded today, but for delivery and payment at a future date
120
Futures
A standardized contract traded in Chicago and New York regulated by the CFTC in Washington D.C., based on but limited to wheat, pork bellies, T-bonds, indexes and foreign currencies
121
Gift Tax
A donor is subject to gift tax for gifts in amounts about the specified annual amount ($15,000 for most atm)
122
General Obligation Bond (GO Bond)
backed by taxes, subject to debt limits. Overlapping- multiple taxing authorities can tax the same real estate. Double Barrel- is backed by both revenue and taxes
123
Good Delivery
Negotiable, or legible and in proper denominations.
124
Good-Till-Cancelled (GTC)
a type of order that is live until canceled by the broker/dealer with consent of the customer
125
Government National Mortgage Association(GNMA)
government owned corporation within the Department of Housing and Urban Development. Only agency backed by full faith and credit of US gov
