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A

Account

A collection of investments, either taxable or tax-deferred. Account can be real (contains investments actually owned) or model (hypothetical). Account type can be brokerage, mutual fund, or other (a mutual fund can be an account if the fund is purchased directly from fund company or it can be an investment within an account, if purchased through a broker). Legally, accounts are set up as taxable or tax deferred. The legal owner of an account can be an individual, joint , corporate, custodian, estate, or trust. See Real Taxable Accounts, Joint Accounts, and Real Tax-Deferred Accounts.

Account Description

Information that includes Account Type, Tax-deferred, Tax Method, and Account Note. These items are primarily used to classify accounts for tax purposes.

Account Note

Descriptive text about an account that you can enter for your information, such as "for College."

Account Type

When placing an order through this site, you must be sure to select the proper Account Type for the position you wish to trade. If a particular position resides in your cash account, for example, this site will automatically reject a sell order that specifies your margin account, and vice versa.

Accrual Method

Accounting method where income and expenses are recorded when items are booked or billed. Contrast with a more common method, cash method, where income and expenses are logged from the time cash is actually spent or received.

Accrued Interest

Interest earned but not yet paid. For most taxpayers, tax is due in year accrued interest is paid. When buying a bond, buyer pays seller any interest accrued since the last payment date. When the buyer eventually sells the bond, the new buyer pays any accrued interest. The accrued interest is subject to taxes for the seller, but reduces the tax liability for the buyer. For example, if a bond buyer paid $30 accrued interest to a seller, then received $150 interest for the rest of the year, the buyer needs to pay taxes on $150 - $30 = $120.

ADR/ADS

Stands for American Depository Receipts or Shares. These financial instruments allow stock in a foreign corporation to be traded on a U.S. stock exchange in U.S. currency by representing the actual shares from the native exchange.

Advances/Declines

Advances are the number of issues on the New York Stock Exchange that have risen in price since the previous trading day's closing price. Declines represent those that have fallen in price. Sometimes the advances and declines are expressed as a ratio and plotted as a line graph. A rising A/D line indicates that the market has good breadth (a majority of issues are rising in price) and that a rising trend is more likely to be sustainable.

After Tax Real Rate of Return

The percentage gain on an investment, account, or portfolio after taxes and inflation have been deducted. Note that the after tax real rate of return for money market mutual funds is frequently less than zero, so you should use these accounts only as temporary cash accounts.

All or None Order

In brokerage, order instruction, particularly for large orders, to execute the total quantity or none.

Annual Report

Written report to shareholders summarizing the past fiscal year's financial results and news items of importance about products, law suits, board members, etc. Prospective shareholders should also review the annual report because it provides important balance sheet information.

Annualized Return

Projects the year to date return over a full 12 month calendar year. Most useful for projecting return for money market funds, CDs, and bonds. Annualized return for equities can be misleading if YTD return is high and covers a short period of time. See Total Return.

Annuity

An insurance product that pays an income benefit on a specific date, for a specific time, or for the lifetime of the person(s) receiving the annuity (the annuitant). A fixed annuity guarantees fixed payments with a constant rate of return. A variable annuity's value fluctuates with that of the assets that are backing it. There is no guaranteed rate of return for a variable annuity; the annuitant bears the investment risk and receives the return actually earned on invested assets less charges assessed by the insurance company.

Arbitrage

A financial transaction where an arbitrageur (arb) simultaneously purchases in one market and sells in another where there is a slight price differential. Often it is a full hedge, and therefore, a risk-free transaction. Arbs play an important role in keeping markets liquid and efficient.

Ask

The lowest price at which a seller is willing to offer a security at this time.

Asset

Something of value that you own. Appreciating assets, such as stocks, have the potential of increasing in value and/or producing income. Depreciating assets, such as a car, lose value over time. Assets minus liabilities (what you owe) equals net worth.

Asset Allocation

The process of deciding what kinds of assets you want to own, and the percentage of each. Tactical asset allocation is a sophisticated form of market timing in which an investor decides how much to allocate to each asset class based on market indicators, particularly interest rates. As conditions change, the percent allotted to each asset class changes.

Asset Classes

Appreciating assets are put into 7 asset classes: maximum capital gain equity, long-term equity, international equity, U.S. government bond, corporate bond, precious metals, and cash.

Average Annual Return

The cumulative return divided by the number of years of the life of the investment or account, with the compounding effect factored in. In reverse, the average annual return times a given number of years equals the cumulative return for that time frame. AAR is used to compare returns of two or more investments of unequal track records.

Average Daily Volume

The consolidated trading volume for all exchanges averaged for the last 20 trading days.

Average Cost

The average price plus commission.

Average Price

The total cost less total commission of all lots you own of a particular security divided by the total number of shares owned.

Average Proceed

The sum of net amounts received from all short open lots divided by the total number of shares short for that security. Average proceeds is for short investments what average cost is for long investments.

B

Baby Bond

One sold at face amount less than $1,000 to make it attractive to smaller investors. See Bond.

Balance Sheet

A listing of all assets and liabilities for an individual or a business. The surplus of assets over liabilities is the net worth, or what is owned free of debt.

Balance Sheet Return

A view in the stock database that displays Sales/Price Ratio, Price/Book Ratio, Book/Share, Return on Equity, Profit Margin, and Reporting Date. These items are all measures of company value and profitability.

Balance Sheet - Cash & Debt

A view in the stock database that displays: Fiscal Year End, QuickRatio, Debt/Equity Ratio, Current Ratio, and Cash/Share. These items measure the financial health of a company, particularly its assets and liabilities. Click each item in the Glossary list for definitions of each of these items.

Balanced Equities

A mutual fund whose holdings are split fairly evenly between stocks and bonds. Balanced funds can change their asset allocation according to market conditions. Balanced funds seek a relatively steady return.

Bank Information

Descriptive information about a given bank. A view in the CDs and Money Markets database that displays: Minimum Deposit, City, State, Phone, Out-of-state Indicator.

Basis

An accounting term that refers to the cost of an asset including all adjustments and improvements. For tax purposes, it is the amount you subtract from the net sale price to determine the realized gain or loss. For example, if you paid $150,000 for your home, but added a porch for $25,000, your basis is now $175,000. You have stepped-up the basis.

Basis Point

The smallest measure used in quoting yields and interest rates. One basis point equals .01%, so a 100 basis point move in a U.S. Treasury bond yield is 1%.

Bearer Certificate

A security whose owner is not registered on the books of the issuer and which is, therefore, payable to the person possessing the certificate. A bearer bond has coupons attached, which the bondholder sends in or presents on the interest date for payment. Bearer stock certificates are negotiable without endorsement.

Beta

A measure of risk commonly used to compare the volatility of mutual funds or stocks to the overall market . The S&P 500 Index is the base for calculating beta and carries a value of 1. Securities with betas below 1 are less risky than the market as a whole. Betas above 1 are more risky. A beta of 1.3 is 30% more volatile than the S&P 500. Betas with negative values are inversely related to the S&P 500.

Note: The beta of precious metals can be low but these funds have high price volatility. You cannot compare the beta of bond funds against the beta of equity funds, because the bond fund beta is calculated using the Shearson Long Bond Index rather than the S&P 500 Index.

Bid

The highest price a buyer is willing to pay for a security at this time.

Block Trade

Usually, a trade of 10,000 shares or more. For bonds, a $200,000 face amount or more. Block trades are often executed through a special section of a brokerage firm called the Block Desk. Using the Block Desk may result in a better price.

Bond

A debt security that represents the obligation of the issuer to pay interest to the creditor or bond holder and return the principal at maturity. Bonds backed by collateral are termed secured while those that are not secured are called debentures. A sinking fund bond obligates the issuer to set aside some of its earnings to retire bonds periodically. A bond is usually identified by its maturity date and its coupon rate, which is the interest rate stated on the bond. The price of the bond is equal to its face value when issued, which is called the par price. After that, the price fluctuates in the market. Bonds selling above original price are selling at a premium to par while those selling below original price are selling at a discount to par. Prices vary inversely with interest rates, as the prices of old bonds must adjust so that their current yield will stay competitive with those of newly issued bonds. A bond does not represent ownership. See Baby Bond, Callable, Junk Bond, Municipal Bond, US Gov't Issues, Zero Coupon Bond, Convertible Bond, Corporate Bond.

Bond Prices

View in the bond database that displays: Maturity, Outstanding Bond Amount, Latest Price, Current Year High and Low Prices. For latest price, see Price (Trade) Bonds.

Bond Type

The bond pays fixed interest amounts over its term. The bond price, however, can change as prevailing market interest rates change over time. Zero coupon bonds, or zeroes, do not pay interest. They are sold at deep discount to their par value, which is returned at maturity. Interest is internally compounded to produce the stated yield to maturity. With floating rate, the interest rate paid on the bond can change as prevailing market interest rates change.

Book/Share

The current fiscal year book value (or net equity for the corporation) per share of common stock.

Broker/Dealer

In the broadest sense, an agent who facilitates trades between a buyer and a seller and receives a commission for his services. Dealers buy and sell for their own account and keep their own inventory of securities on which they can profit or incur losses. Most stock brokerage firms really act as brokers and dealers. Brokers are also classed as Full Service or Discount, the former using a commission-based sales force and the latter using salaried brokers only.

Broker Call Rate

Interest rate at which brokerage firms borrow from banks to finance their clients' security positions.

Business

Describes the primary product or service offered by a given corporation.

Buy(s)

A transaction type for the purchase of a security. A buy creates an open lot which is part of a holding of a given security that you currently own. Buy(s) is also a filter for displaying only buy transactions.

Buy-to-Cover

A transaction type that is a closing transaction for a short sell and which creates a closed lot. Buys-to-Cover is also a filter for displaying only buy-to-cover transactions.

Buying Power

Value of margin eligible securities that may be purchased in a margin account. Determined by doubling the sum of the cash held in the brokerage account and the loan value of margined securities.

C

Call Option

A call option gives the owner the right, but not the obligation, to buy the underlying stock at a given price (the strike price) by a given time (the expiration date). The owner of the call is speculating that the underlying stock will go up in value, hence, increasing the value of the option. The purpose can be to speculate with the option (hope it goes up and sell for a profit), to invest in the underlying stock at a locked in price if the stock price goes high enough, or to generate income. Each option contract equals 100 shares of stock. For example, an AAA MAR 65 call, would give the owner the right to buy 100 shares of AAA at $65 (strike price) per share between now and the third Friday in March (expiration date).

Callable

A security redeemable by the issuer before the scheduled maturity. The issuer must pay the holder a premium price if the security is retired early. Most Corporate and Municipal Bonds are callable. US Government issues are generally not callable. They are called when interest rates fall so significantly that the bond issuer can save money by floating new bonds at the lower rate. The first call date is the date to or after which a specific call price will be offered by the issuer, usually a premium price to par, as an incentive to the bondholder to redeem the bond.

Canceled Order

A buy or sell order that is canceled before it has been executed. In most cases, a Limit Order can be can be canceled at any time as long as it has not been executed. A Market Order may only be canceled if the order is placed after market hours and is then canceled before the market opens the following day.

Capital Gains

The buying and selling of a security or other appreciating asset that has increased in value during the time you owned it. It is subject to capital gains tax, as listed on IRS Form 1040, Schedule D.

Capital Stock

Amount of money or property contributed by stockholders to be used as the financial foundation for the corporation. It includes all classes of common and preferred stock.

Cash Account

Orders placed in a cash account are settled on a cash basis, meaning that cleared funds must be in the account within three (3) business days to cover purchases.

Cash Available

The amount that may either be withdrawn in cash, or used to purchase additional securities without creating a debit balance. It is a combination of credit balances in all accounts and excess credit balances in margin accounts.

Cash Balance

Whenever a transaction occurs that affects cash, the cash balance is debited or credited. The cash balance is usually invested in a money market mutual fund that pays interest. Money market funds can be taxable or tax-exempt. In brokerage accounts, the balance in cash is swept into the money market daily.

Cash Flow

Net income plus depreciation and other non-cash charges. A strong cash flow is important for covering interest payments, particularly for highly leveraged companies.

Cash/Share

The amount of cash divided by total number of common stock shares outstanding for a given stock. A corporation with a high cash/share amount relative to the current price per share is said to be "cash rich" and may be considered low risk or undervalued.

Cash Market

A market in which security or commodity transactions occur within a few days of the trade date. Also called the spot market. The opposite is the futures market, where transactions are completed at a specified future date, price, and quantity, which is determined in the present. Stock, bond, and mutual funds trade in the cash market.

Cash Percent

The percentage of a given mutual fund's total assets invested in cash and equivalents. A high cash percent is usually good in a declining market but can result in under performance in a rising market.

CD Rate

The current interest rate for a given CD (certificate of deposit).

Certificate of Deposit

Investment created by banks, which pays stated interest at either fixed or variable rates. If sold directly by banks, principal is returned at maturity subject only to penalties for early cashing in. If sold through brokers (called Broker CDs), principal value can vary like with bonds, and early cashing in can fetch a principal lower than amount paid.

Change (in NAV)

The change in the net asset value since the close of the previous trading day. Negative values means the mutual fund has dropped in price; positive values means the mutual fund has appreciated in price.

Note: A way to calculate previous day's closing price, is to subtract the Change from the Current Price - add negative values.

Class A/Class B Shares

Shares of stock issued by the same company but having some difference, such as voting rights, or a dividend preference or participation.

Clearinghouse

A computerized facility that compares and reconciles both sides of a brokerage trade.

Closed to New Accounts

The mutual fund is currently closed to new investors. To be sure, call the mutual fund for the latest information.

Closing Commission

The commission deducted from the proceeds before calculating realized gain or loss. It is the fee charged by your broker to execute your trade. It may be a composite of several fees & charges.

Closing Price

The market price you receive when you sell or buy-to-cover your security.

Commercial Paper

Unsecured short-term debt, usually from 2 to 270 days, issued by banks and corporations, which is generally safe and flexible. It is usually a major component of money market fund investment portfolios.

Commission

Fee charged by broker to execute your trade. May be a composite of several fees & charges. Commission is taken into account when calculating realized gain or loss. The buy, or opening commission, is added to the cost basis and the sell, or closing commission, is deducted from the proceeds before calculating realized gain or loss, therefore commissions reduce taxable gains and increase losses. Total commission is the sum of both buy and sell commission. Commission rates take into account the quantity of the purchase, the unit price of the security (low priced stocks may have higher commission rates), and the type of investment (options have higher commissions).

Common Shares

Represents the total number of common shares outstanding, excluding treasury stock (stock issued but re-acquired by the company through buy-backs). This number is expressed in thousands, so add three zeros.

Common Stock

Security representing partial ownership interest in a corporation. Ownership may also be shares with Preferred Stock, which has prior claim on any dividends to be paid and, in the event of liquidation, to the distribution of the corporation's assets. Common stockholders assume the primary risk if business is poor, and realize greater gains in the event of success. They also elect the board of directors that controls the company.

Confirmation

A written notification from a broker to a client specifying the details of a securities' transaction

Conversion Price

The price at which convertible securities, such as bonds and preferred stock, can be converted into common stock at a set conversion ratio. For example, if the conversion ratio is 25 to 1, and you own a $1000 face value convertible bond, then the conversion price is $40 per share. The conversion value is the value of 25 shares at the current price per share. If you assume $32 per share, then the current value is 25 x $32 = $800. In this example, it is clearly better not to convert.

Convertible Bond

A debt security that is exchangeable for a set number of shares of another type of security, usually common stock, at a predetermined price. See Bond.

Corporate Bond

A debt security investment in obligations of U.S. corporations. Corporate bonds are taxable and have a specific maturity date. They are often traded on major exchanges. See Bond.

Covered Calls

A covered call seller or writer is an investor who owns a stock and sells a call option against it to generate additional income, which comes from the premium received for selling the option. If things work out right for the writer, the stock price will stay below the strike price and the writer will retain both the premium and the stock. However, if the stock price rises enough, the stock will be called away by the call buyer who has exercised the option and now gets the stock and pays the writer the strike price . Whether the writer makes a profit or loss on the stock that is called away depends on the purchase price (the cost basis). See Call Option.

Credit Balance

For cash accounts, it is the uninvested money in your account. In a margin account, it is the money on deposit against a short position.

Cumulative Return (12-Month, 10-Year)

Measures the price change over the period of time indicated, ending at the current date (or the date the price was last updated). This measure includes any dividends paid and reinvested during the period measured. Cumulative return can also be referred to as total return. It is the most useful measure of performance among different asset classes, such as stocks, bonds, cash, and so forth.

Current P/E Ratio

The ratio of current price divided by last two quarters earnings per share (EPS) plus next two estimated quarters EPS. See Price/Earnings Ratio.

Current Year High & Low Prices

The highest and lowest price for a given bond during the current calendar year.

Cumulative Return Through (Year)

Includes the price change over the period of years indicated, ending at the year shown, plus any dividend paid and reinvested over the period shown. The bar graph represents the total value of your portfolio.

Cumulative Return (1-Yr, 3-Yr, 5-Yr, 10-Yr)

The price change over the time period shown, plus any dividend, interest, or capital gains paid and reinvested over the period shown for any given security. Note that for stocks, the periods are complete calendar years, but for mutual funds, periods are rolling up to the current month.

CUSIP Number

An industry code which uniquely identifies nearly all traded stocks and bonds.

Current Ratio

A company's current assets divided by its current liabilities.

Current Yield

For stock, the annual dividend divided by the current price per share. For bond, the annual interest payment divided by [current price divided by 100 times quantity]. A measure in percentage terms of how much income you can derive from the security. Of great importance to fixed income investors and of minimal importance to growth investors. See Yield to Maturity.

D

Date

The date at which the offering price and NAV prices apply. Date is usually one day before the Last Update, more if Last Update falls after a weekend or holiday. However, if there have been no trades since the previous day, Date will display the Date of the last trade.

Note: Mutual fund net asset values are calculated at the end of each trading day. Usually the results are obtainable around one or two hours after the market closes, 4:00 PM ET, depending on the size of the mutual fund. If a fund's total assets and holdings are large, it might take longer for the fund to calculate it's net asset value. This is why current mutual fund quotes are only available for previous trading day's close.

Date of Record

Date on which a shareholder must own shares to be entitled to a dividend payment. From the following day, until the day the dividend is actually paid, the stock trades ex-dividend.

Debenture

A bond issued by a corporation which is secured by the general credit or promise to pay of the issuer. It is not backed by collateral such as tangible assets.

Debit Balance

Money owed by the client to the broker.

Debt/Equity Ratio

Long-term debt plus current liabilities divided by the last fiscal year net equity per share of common stock for a given corporation. A ratio above 2:1 or 200% may be excessive and a sign of strained corporate finances.

Debt Securities

Securities representing money borrowed by an issuer that must be paid back at a specific date. The security pays interest or is purchased at a discount to face value.

Debt Service

Cash required by a corporation or municipality to cover all interest and principal payments due in a given year, including sinking fund payments.

Discount Rate

The lending rate that the Federal Reserve Bank charges on loans made to other banks and financial institutions. Changes in this rate tend to have large ripple effects on the rates banks in turn charge their customers. The bond market and sometimes the stock market react sharply to changes in this rate. You can create market timing alerts with it.

Distributions

Capital gains (long or short term), interest, or dividends paid to bond holders and shareholders. These can be received as cash or stock and they are treated as closed lots for tax purposes. Return of capital is also a type of distribution, but it is usually tax exempt. Distributions from mutual fund shares are easily reinvested into more shares and the compounding of reinvested shares can add substantially to the cumulative return of a fund.

Dividend

The periodic, usually quarterly, payment made by a corporation to its shareholders, generally expressed as dividend per share. Dividends represent earnings that are not reinvested by the corporation. Some stocks pay no dividends and others, such as utility companies pay substantial ones that represent a large portion of the total return a shareholder will get from his investment. Dividends are a type of distribution and are usually taxable in year received.

Dividend Frequency

Shows how often a given mutual fund pays a dividend distribution.

Dividend Growth Rate (3 Yr and Current Year)

The unweighted average annual growth rate of annual fiscal year dividends for the last three fiscal years for a given security.

Dividend/Share

Indicates the annual dividend payment for the next 12 months for a given security. Most companies pay dividends quarterly.

Dividend Year Started

The year in which a given corporation started paying dividends to stockholders.

Dow Jones Indices

Indices tracked by the Dow Jones company, a highly reputable information services company; publisher of The Wall Street Journal, Barron's National Business and Financial Weekly, and other influential publications.

Dow Jones Industrial Average (DJIA)

The most commonly followed index of the U.S. stock market. It is comprised of 30 corporations spanning many different industries. It is price weighted, meaning that a $2 change in a $100 per share stock will have a greater affect than a $2 change in a $20 per share stock.

The Dow Jones Industrial Average measures (also defined in the glossary) can be used to gauge the health and direction of the stock market; see DJIA 200-Day Moving Average, DJIA Price/Earnings, DJIA Yield, DJIA Price/Book.

DJIA 200-Day Moving Average

This value is calculated by averaging all the closing values of the DJIA for the last 200 days. You can use this and the following measures to create market timing alerts.

DJIA P/E (Price/Earnings)

The latest DJIA value divided by the estimated current year earnings per share (EPS), with the index multiplier taken into account. Readings above 24 and below 8 are considered sell and buy signals respectively by many analysts.

DJIA Yield

The sum of all dividends of all stocks in the DJIA divided by the latest value of the DJIA, adjusted by the multiplier. Readings below 3 and above 6 are considered sell and buy signals respectively.

DJIA Price/Book

The latest value of the DJIA divided by the book value for all DJIA stocks, adjusted by the multiplier. Readings above 2.5 may be a sell signal.

Dow Jones Transportation Average (DJTA)

A index of 20 corporations in the transportation sector, including air, rail, and truck.

Dow Jones Utilities Average (DJUA)

An index of 15 major utility corporations.

Duration of an order

In brokerage, when trading stocks or options, it designates whether a limit trade is valid for Good Until Canceled or Day Only. Market orders all have a duration of Day Only by definition, since they are executed as soon as possible at the market price. It is possible that a market order could arrive after the market close, in which case, it may remain valid at the next market opening.

DVP/RVP Account

If you have not taken special steps to establish a DVP/RVP account with us, you must not select this account type. DVP/RVP accounts relate mainly to institutional trading accounts.

E

Earnings Per Share

The fiscal year earnings divided by common shares outstanding for any given year for a given corporation. The estimated current fiscal year earnings per share includes the actual EPS for quarters that have already been reported plus estimates calculated by the S&P Corporation for any quarters remaining in the fiscal year. Earnings are the principal force behind stock price appreciation. This view displays: Earnings Per Share, Mean Estimate, and Projected 5-Year Growth Rate.

Effective Tax Rate

The flat percentage rate equivalent of a given tax payer's progressive rate. For example, if your taxable income is $55,000 in 1993, the first $22,100 would be taxed at 15%. the next $31,400 at 28%, and the last $1,500 at 31%. The effective rate is approximately 24% applied to the entire $55,000.

Equity

The generic term for ownership interest in an asset. In real estate, it is often used to describe the net of the current value and the mortgage balance. It is also used to describe stock and mutual funds, that is, investments that issue ownership shares.

Equity Security

Instrument representing fractional ownership in a corporation. Stocks are equity securities.

Exchange

The principal exchange in which the stock is traded: NYSE = New York Stock Exchange; AMEX = American Stock Exchange; and OTC = Over the Counter. The OTC, unlike the other two, does not have a physical location. It is a network of security dealers, most of whom are connected by a computer link called NASDAQ (National Association of Securities Dealers Automated Quotation System). OTC stocks are found under the NASDAQ listings of your newspaper.

Exchange Call

NYSE requires a margin account to maintain 25% equity. Equity consists of funds and margin eligible securities in a margin account. When the market value of margined securities is less than the minimum equity, a margin call goes out to the client requesting additional equity, i.e. securities or cash. Exchange calls are due immediately.

Ex-Dividend

When a stock trades ex-dividend (without dividend), it means that a new buyer of the security will pay the price with the dividend deducted. Also, the new buyer will not have a tax liability for that dividend as does the buyer who bought on or before the record date (the official date declared by the board of directors to determine who is eligible for the dividend). The actual payment date of the dividend may be a couple of weeks after the record date. If a stock pays a large dividend, you should try to make a purchase after the record date, so to avoid the tax liability on the dividend.

Executed Order

Completed buy or sell transactions.

Exit Fee

A service charge that equals a percent of a share's NAV, which you pay when you sell your mutual fund shares. Sometimes the exit fee is a flat dollar charge.

Extended Hours Trading

An extended trading session (on a matched order basis) for NYSE and AMEX. Lasting from 4:15 p.m. to 5:00 p.m. EST, it uses the closing price of a security at the conclusion of the regular trading day to determine the transaction price of the matched orders. Only securities listed on NYSE and AMEX are eligible for the extended session.

F

Face Value

The stated value of a bond certificate when issued and when they are redeemed at maturity. Same as par value or principal. The face value never changes but the current value does. Current value for a bond is (face value x price) divided by 100. Bonds are purchased as units of face value. For example, you buy a $10,000 bond where the current value can be more or less than $10,000, depending on market conditions.

Federal Call

When a client makes certain types of transactions in their margin account, the brokerage firm will issue a call notifying the client if additional equity is required by the settlement date in order to satisfy Federal Regulation T.

Fees & Charges

These items relate to the costs of owning mutual fund shares. This view displays: if it is a Closed fund, Sales Charges, Exit Fee, Expense Ratio, 5-Year Fee, Phone Switch options.

First Call Provisions

Some bonds can be called prior to the maturity date at the issuer's discretion. These bonds are callable. The first call provision describes the time period and the price offered for the first call by the issuer.

Fiscal Policy

A method where governments use taxes and budgeting to raise revenue for public purposes. Another method is monetary policy, which seeks to influence the money supply by raising or lowering interest rates and thereby changing credit demand.

Fiscal Year

Any continuous 12 months which is used by a business or government as its annual accounting period. The U.S. government fiscal year ends on September 30. A fiscal year is designated by the year it ends. For example, an April - March fiscal year 1993 ended on March 31, 1993 and began on April 1, 1992.

Fiscal Year End

Shows the last month of a corporation's fiscal year.

Five-Year Fee

The total cost you might have to pay over 5 years for every $1,000 investment in a given mutual fund. Five-year fee is the best over-all measure for comparing fund costs if you intend to hold onto the fund for at least 5 years.

Flexible Equities

A mutual fund whose holdings can vary between a preponderance of stocks or bonds, depending on market conditions. Flexible funds seek to take advantage of changing market conditions.

Floating Rate

Rather than a fixed interest or coupon rate, some bonds and CDs have a floating interest rate which is adjusted periodically to market conditions. It is also called Variable Rate.

Front-end Load

The percentage of the purchase price that is charged and deducted from the investment. Same as Sales Charge. For example, if you invest $1000 in a 4% front-end load mutual fund, you only purchase $960 worth of shares.

Futures

Investment contracts which specify the quantity and price of a commodity to be purchased or sold at a later date. On contract date, the buyer must take physical possession or make delivery of the commodity, which can only be avoided by closing out the contract(s) before that date. Futures can be used for speculation or hedging.

G

General Obligation Bond

A municipal bond which is backed by the full faith and credit of a municipality. It includes the authority to raise taxes and/or borrow to pay back interest and principal. See Bond.

Ginnie Mae

Nickname for Government National Mortgage Association (GNMA), a wholly-owned corporation of the U.S. Government that functions as part of the Department of Housing and Urban Development (HUD). Also means a security that represents a pool of mortgages exceeding $1 million that is packaged from individual home mortgages and resold to investors who receive both principal and interest, just like a bank that holds a home mortgage. These securities are liquid and U.S. Government insured.

Glamour Stock

A stock with a wide public and institutional following. You may want to avoid investing in these stocks because they are over-hyped and extremely vulnerable to a downward slide.

Global Bonds

Mutual fund investing primarily in debt obligations (i.e. bonds) of foreign governments and/or corporations. Global bond funds can also be subject to foreign currency exchange risks.

Global Equities

Stocks purchased from companies all over the world, including the Unites States. Global equities can also expose you to foreign currency risk.

Gold

A precious metal usually sought after during times of rapidly rising inflation. For mutual fund investors, gold can also refer to the stock of gold mining companies, as well as bullion.

Government Bonds

Mutual fund investing primarily in debt obligations (i.e. bonds) of the U.S. government. Government bond funds can be short-term, intermediate-term or long-term, reflecting the average maturity of the bonds held in the portfolio.

Gross Domestic Product (GDP)

A measure of the economy which includes the value of all products and services produced by a nation in a given year. The growth rate of GDP is used to compare the economic progress of various nations.

Growth & Income

A security purchased for long-term price appreciation (similar to long-term growth) and also for potential dividend (or interest) income.

Growth Rate

The percentage rate of change in some financial characteristic of a company. See Historical 5-year Growth Rate, Projected 5-year Growth Rate, Dividend Growth Rate, Sales 3-year Growth Rate, and Net Income 3-year Growth Rate.

H

Hedging

An investment strategy of lowering risk by buying securities that have offsetting risk characteristics. A perfect hedge eliminates risk entirely. Hedging strategies lower return since there is a cost involved in hedging. For example, a portfolio manager could short a futures contract which will perfectly offset any decrease in the value of the portfolio. Options and short selling stock can also be used for hedging. Hedge funds are investment pools that are free to use any hedging techniques they desire and they often make large bets in a relatively small number of different holdings.

Hidden Asset

An asset that is omitted or understated in the balance sheet of a company. Discovering hidden assets before the market does can lead to appreciable price gains for savvy investors.

A highly speculative stock with a rising price and high volatility which makes it vulnerable to dramatic downswings.

High Flyer

A highly speculative stock with a rising price and high volatility which makes it vulnerable to dramatic crashes.

Holding

All the shares (mutual funds & stocks), contracts (options), or face amount (bonds) you own of an investment.

House Call

A brokerage firm's notice to the client that the equity in a margin account is below the firm's maintenance level and needs additional funds immediately.

Hybrid Investment

An investment which has the major characteristics of two or more other investments. For example, a convertible preferred stock generally pays a steady dividend and has steady principal like a high quality corporate bond, but it can be converted into common stock. Hybrids can be complicated to understand and are best left to sophisticated investors.

I

Imputed Interest

Interest which is not actually paid to bond holders but which the IRS may tax anyway. Common with zero coupon bond interest. See Interest and Bond.

Income

Dividends or interest received by owners of equity or bonds respectively. Dividends represent a portion of earnings paid to shareholders while interest is compensation to bondholders in the form of cash or more bonds for the lending of capital. Reinvested income can significantly add to returns. See Projected Income.

Income Account

An account that receives interest from bonds and credit balances, or dividends from stock positions.

Indexing

Constructing a portfolio to match the performance of a specific index, such as the S&P 500. Individuals can do this by purchasing shares in an index mutual fund.

Indices

Click Dow Jones Indices and S&P Indices in the Glossary list for these definitions.

Information

See Stock Information for these definitions.

Institution

The name of the institution issuing a CD or money market.

Institutions Holding

The percentage of outstanding shares held by institutions for investment purposes. Includes charitable trusts, pension funds, mutual funds, brokerage firms, and banks.

Interest

Compensation to bondholders in the form of cash or more bonds for the lending of capital. Accumulated or accrued interest is the interest due to the seller of a bond from the day after the last interest payment to the day before the settlement date. It is paid by the buyer of the bond. Imputed interest is not paid to the bondholder but it is calculated as if it was so that taxes can be paid on it anyway. Reinvested interest can significantly add to returns.

Interest Dates

Displays the frequency and dates that interest on a given bond is paid. By carefully selecting interest dates, you can receive income monthly from a group of bonds, with staggered interest dates.

Investment

An appreciating or income producing asset. An open investment is one you currently own. A closed investment is one you once owned. A long investment is an open investment that you bought. A short investment is an open investment that you sold short - i.e., you borrowed the investment from someone else, sold it, pocketed the proceeds, you hope it decreases in value, and you are obliged to buy it back in the future and return it to the original owner. An investment can be short and long at the same time if it contains both long and short lots. All investments are classified by type as a way of organizing your investments. See Holding.

Individual Retirement Account (IRA)

An Individual Retirement Account is a personal, tax-deferred, retirement account in which an employed person can contribute a maximum amount per year. There are specific rules concerning level of participation and eligibility for an a IRA and whether an employee's contributions are tax-deductible. Consult a financial consultant or tax advisor.

Inflation - CPI

The rise in price of goods and services, or Consumer Price Index (CPI), when too much money chases too few goods on the market. Moderate inflation is a result of economic growth. Hyperinflation (CPI rising at rates of 100% or more annually) causes people to lose confidence in their economy and put their money in hard assets such as gold and real estate.

Inflation Rate

The annual percentage change in the price of goods and services. At the consumer level, it is the Consumer Price Index (CPI) and at the wholesale level it is the Producer Price Index (PPI).

Intermediate Government Bonds

A U.S. government debt instrument having a maturity of between 3 to 10 years.

International Equities

Stocks purchased from companies based in countries other than the Unites States. International equities can also expose you to foreign currency risk.

Issuer

The official name of the company issuing a given bond.

J

Joint Account

A bank or brokerage account that two or more people own jointly. Some joint accounts are set up so that all owners of the account must sign checks and approve all withdrawals or brokerage transactions. In others, any one party can take these actions on his or her own. Joint accounts usually include rights of survivorship (upon the death of one party , the other gets complete ownership) or with tenants in common (the ownership of the deceased party's half goes to his estate, not the other party).

Joint and Survivor Annuity

An annuity that pays two or more beneficiaries. When one of them dies, the payments continue to the survivors but the deceased's share is no longer paid.

Jumbo CD

A certificate of deposit with a high minimum deposit required, often $90,000 or more. They carry a slightly higher interest rate; however, if the value of the CD plus interest held in the account exceeds $100,000, this excess is not insured by the FDIC. To be safe, you can hold several jumbo CDs at different banks.

Junior Security

A security with a lower claim on assets in the event of a company's liquidation. Normally, common stock is most junior to all other corporate issues. Then, from junior to senior, the order is preferred stock, debentures, and mortgage bonds. This last item is a direct claim on real property and is the most senior.

Junk Bond

A junk bond (or high-yield bond) is one with a S&P credit rating of BB or lower and that carries higher risk of interest or principal default than better rated investment grade bonds. Junk bonds are issued in leveraged buyouts and other takeovers by companies without long track records of sales and earnings, or by those with questionable credit strength.

K

Keogh Plan

Tax-deferred pension account designated for employees of unincorporated businesses or for persons who are self-employed, either full -time or part-time.

Kicker

A provision for equity participation which is often added to a new debt issue to make it more attractive in the market. Rights, warrants, and convertibility are common examples. Also called sweeteners.

L

Leverage

A company is leveraged when it has a high ratio of debt to equity. If the company can use the extra debt to expand and generate more than enough additional revenue to cover the higher interest costs, then the leverage is beneficial to the current shareholders, that is, each share has been leveraged.

Liabilities

Total liabilities is the sum of your Short Market Value plus your Debit Balances from the prior trading day. Short Market Value is the market value of short positions held in your short account as of the prior day's market close. Increases in this figure mean that positions you have sold short are moving against you, or up. Each Monday, your short account will be marked to the market. The Short Market Value of the account is used to recalculate the proper level of collateralization to secure the short positions in the account. The Debit Balance reflects the closing debit balance as of the close on the prior trading day.

Limit Order

Order that sets a specific price (Limit Price) that is the highest a buyer will pay or the lowest a seller wants to receive. Buyer will accept price lower than limit and seller higher than limit. It may be a Day or GTC (Good Until Canceled) order. If no price is indicated, the order is a market order by default.

Limited Partnership

A business or investment where limited partners provide capital, share in profits, have limited legal liability, and leave the management of the business to general partners. Can be tradable and listed on an exchange, packaged and sold by brokers and not exchange tradable, or tradable to other partners only. REITS (real estate investment trusts) are popular LPs. Most LPs provide both income and appreciation. Some are highly liquid and others not.

Liquidity

The ability to turn an asset into cash. A highly liquid asset is easy to sell because an active market exists that sets prices which are continuously adjusted for supply and demand. An example is a listed stock or mutual fund. A less liquid asset is real estate or a collectible.

Loan Value

Maximum percentage of current market value of margin eligible securities that a brokerage firm can lend a margin account client.

Long Investments

Includes: Cash Balance, Current Value, Total Cost, and Unrealized Gain/Loss. Long investments are investments that you have bought with the goal of price appreciation and/or income generation. Short investments, on the other hand, are first sold and then bought back.

Long Position

Securities owned by the client and held in the client's account at the brokerage firm.

Long-Term Growth

Securities whose price appreciation is anticipated over the long term; i.e., a year or more. Long-term growth securities tend to be more stable and appreciate at a slower, albeit steadier rate than do maximum capital gains securities.

Lot

A group of identical UNITS (for securities) or nearly identical units (for collectibles) of an investment that are traded at the same time and price. Open lots are the contents of open investments and can be long (buys) or short (short sell). Closed lots are the contents of closed investments and can be long (sell) or short (buy to cover).

M

Maintenance Requirement

The level of equity that must be maintained in a client's margin account. When the market value of a margined security is less than maintenance levels, a margin call is issued for the investor to increase equity.

Margin Account

An investment account which allows you to purchase securities with funds borrowed from the broker at a specified interest rate.

Margin Balance

A debit in your account secured with stocks and/or bonds which regulators have authorized for use as collateral.

Margin Call

A firm's demand of a client for additional equity in order to meet maintenance requirements. If a client fails to deliver more equity in the account, positions in the account may be liquidated. There are three types of margin calls: House, Exchange, and Federal. See House Call, Exchange Call, Federal Call.

Margin Debt

A debit in your account that is owed to the broker. The debit is secured with stocks and bonds which regulators have authorized for use as collateral. It excludes funds due which are debits resulting from purchases in a cash account.

Margin Loan Availability

The amount of money you may withdraw from your account using margin eligible securities in your margin account as collateral.

Marginal Tax Rate

The combined federal, state, and local tax rate applied to the next additional dollar of income. For example, if your federal tax bracket is 28%, and your state tax rate is 5%, when you earn another dollar of income, it would be taxed at a 33% tax rate.

Mark to Market

Determination of securities' value within a margin account to ensure that the account is in compliance with maintenance requirements.

Market Order

An order to buy or sell a security at the next available price.

Market Timing

Attempting to buy and sell securities to ride up trends and avoid down trends in the stock, bond, currency, or commodity markets. In theory, this can dramatically increase your rate of return, but practically, it is extremely difficult or impossible to consistently make the right decisions at the right time over the long term.

Market Value

The number of outstanding common shares of a given corporation times latest price per share. It is also referred to as market capitalization.

Note: ADRs and ADSs do not display Market Value.

Maturity

The date a given bond will mature and pay off its principal in full. A bond issued for $1,000 will pay off the $1,000 at maturity. A single company can issue more than one series of bonds. These bond series can be differentiated by their maturities.

Maximum Capital Gains

The attempt to maximize the positive difference between the buying and selling price of a security. Maximum capital gains securities are typically more risky, or volatile, than the average (S&P 500) security. They rise more during bull markets but also fall more during bear markets and are typically stocks of fast-growing small companies.

Mean Estimate

The average of analysts' earnings per share estimates for the current fiscal year for a given corporation.

Minimum Deposit

The minimum deposit accepted by the Institution for the particular CD. Jumbo and MiniJumbo CDs indicate minimum deposits of $100,000 for Jumbos and $25,000 and $50,000 for MiniJumbos.

Minimum Investment

Minimum Initial indicates the minimum deposit required to open a regular or IRA/SEP/Keogh tax-deferred account with the mutual fund. Minimum subsequent indicates the minimum required to make deposits in an already opened regular or tax-deferred account with the mutual fund.

Mixed Lot

The combination of round lot (100 shares) or multiple round lots and an odd lot (99 shares or less), e.g. 163 shares.

Money Market Fund

A mutual fund that invests in cash and equivalents. Generally, has a stable $1 per share net asset value (NAV) and a variable rate of return. Not federally insured but short term nature of investments plus private insurance make them quite safe. Dividends are paid periodically and are automatically reinvested in more shares. Available from banks, mutual fund companies, and brokerage firms, these funds are used as a convenient place to park cash and earn "interest" (really dividends, as mentioned above). Most brokerage and mutual accounts have an associated money market fund account. Money market funds can be taxable or tax-exempt. Each day, the balance in the cash / margin account, which comes from the proceeds of trades and distributions, is swept into the money market fund. See Account.

Municipal Bond

A bond issued by state or local government. Interest from these bonds is generally tax-free to residents but in some cases, interest is federally taxable if subject to Alternative Minimum Tax. Note that any capital gain realized by trading a municipal bond is subject to capital gains tax. Because of this hybrid tax situation, municipal bonds are normally put in taxable brokerage accounts since there is no special account for them. See Bonds.

Mutual Fund

A company that pools money of individual investors and purchases securities which become jointly owned by its shareholders. The shareholders receive interest, dividends, and capital gains (but not losses) from the ownership and sale of the fund's securities. The fund's portfolio is managed by a professional money manager. Open-end funds offer shares to the public continuously (except when temporarily closed) while closed-end funds offer a limited number of shares which then trade on an organized exchange. A no-load fund charges no up front or back end sales fee while a load fund may charge one or both. Virtually all mutual funds charge annual expense fees that reduce the investment return. Mutual funds can invest in equity, debt, cash, real estate, options, and futures. There are over 4,000 mutual funds. Closed end funds are purchased just like stocks. Full service brokers usually sell their own funds while discount brokers sell mostly funds of other companies.

Mutual Fund Cash Level

Measures the average percentage of cash held by managers of mutual funds in their funds. When levels are over 11%, managers are holding onto a lot of cash because they are bearish on the market. Levels below 6% means they are bullish as they have spent all their cash; fund managers usually need to keep about 5% cash just to meet daily redemption requirements. This indicator is usually considered a contrary indicator, as fund managers tend to be wrong at market extremes.

N

NASDAQ Composite Index

A market value weighted index comprised of about 3,500 stocks traded on the NASDAQ exchange. Large technology stocks have a major effect on this index value. NASDAQ represents the top tier of the over-the-counter (OTC) market.

Net Amount

Quantity times price, plus or minus commission.

Net Asset Value (NAV)

The per share price of a mutual fund. For a no-load fund, NAV is the price received by both buyers and sellers. For front loaded mutual funds, NAV is equivalent of the bid price (what shareholders can get for selling a share), while the offering price is the price buyers must pay per share (and includes front load). The NAV is usually calculated at the end of each trading day by taking the closing prices of all securities owned plus cash and equivalents and subtracting all liabilities then dividing by the number of shares outstanding, which for open-end funds, fluctuates depending on daily number of redemptions and purchases. Many new funds are issued at a NAV of $10. After a distribution, the NAV falls by the amount equal to the distribution.

Net Income

The net income after taxes but before payout of common and preferred dividends for the indicated fiscal year for a given corporation.

Net Income 3-Yr Growth Rate

The unweighted average of the growth rate for net income over the last three fiscal years for a given corporation.

No-load funds

Mutual funds that have no initial sales charge. Beware that some no-loads have other charges and expenses. The best measure of all fees and charges is the five year fee. See Mutual Fund.

Non-callable Bonds

Bonds which cannot be taken back by the issuer before maturity. Most U.S. Treasury issues are non-callable. This is an advantage to the lender since there is no interest rate risk. With callable bonds, there is the risk of having to reinvest before maturity at a potentially lower interest rate.

Non-marginable Securities

Securities that may not be purchased or sold in a margin account. All transactions involving them must be done on a full cash basis.

O

Odd Lot

Purchase or sale of less than the round lot unit of 100 shares.

Offering Price

The net asset value plus the sales charge. Offering price is what a buyer (you) would have to pay to buy one share of a given mutual fund. See Mutual Fund.

Out-of-State Deposit

Indicates whether an institution will accept out of state deposits from customers.

Open Lot

Open lots are the components that make up open investments and can be long (buy) or short (short sell). A lot in general is a group of identical units (for securities) or nearly identical units (for collectibles) of an investment that are traded at the same time and price. See lot.

Open Order

Orders that have been placed with the broker but have yet been executed or canceled.

Open Price

The price at which a given stock opened for the current trading day. For weekend days or holidays, this would be the opening price for the previous trading day.

Opening Commission

The commission added to the proceeds before calculating realized gain or loss. It is the fee charged by broker to execute your trade. May be a composite of several fees & charges.

Opportunity Cost

The rate of return you likely would have achieved for capital in an alternative investment from the one you chose. If the current investment under performs the foregone investment, then you have paid an opportunity cost greater than the current rate of return and you made a bad choice.

Option

A contract that gives the owner the right, if exercised, to buy or sell a security or basket of securities (index) at a specific price within a specific time limit. Usually, they are traded as securities themselves, with buyers and sellers trying to profit from price changes. They are generally available for 1 to 9 months, with some longer term options (called LEAPS) also available for selected securities. Stock option contracts are generally for the right to buy or sell 100 shares of the underlying stock (100 is the multiplier). Trading in options should only be undertaken by sophisticated investors.

Options

An item in the stock database that indicates whether a given stock also has options that can be traded. See Option.

Option Schedule

In brokerage, a list of the options available for the underlying stock symbol you enter.

OTC Stock

A security not listed on a major exchange.

Outstanding Bond Amount

The dollar amount of a bond outstanding as of the latest available balance sheet of a given corporation.

P

Par

The nominal or face value of a security. A bond selling at par is worth the same dollar amount as it was issued for, or at which it will be redeemed at maturity, usually $1000. For common stock, par value is set by the company issuing the stock. Par value is an assigned amount (usually $1) that is used in computing the dollar value of the company's shares for accounting and reporting purposes. See Bond.

Pay-Out Ratio

Pay Out Ratio = Average of the past 3 years' dividends / Earnings Per Share

Phone Switch

Some mutual funds allow the client to sell his or her shares and place proceeds in either a Money Market Fund or another Fund in its family, simply by telephoning a number.

Pink Sheets

The daily listing of stocks, prices, and market makers for over-the-counter (OTC) stocks too small in capitalization to be listed in the NASDAQ system.

Portfolio

All taxable and tax-deferred investment accounts and their contents (appreciating & income producing assets). More broadly, your portfolio holds all your investments.

Portfolio %

Indicates what portion of an account is invested in a given security.

Precious Metals Equities

Mutual fund investing primarily in stocks of companies who mine precious metals, such as gold, silver, platinum, etc. The stock prices of these companies can also reflect the rising or falling values of the precious metals that the company mines.

Preferred Stock

Stock that pays dividends at a stated rate and has priority over common stock in dividend payments and asset liquidation. Preferred stock does not ordinarily carry voting rights.

Price (52-Week High and 52-Week Low)

The highest and lowest trade prices achieved during the past 52 weeks.

Note: Compare current price to the 52-week high or 52-week low to get an estimate of where the stock is trading in its year range.

Price (Trade)

Bonds. The actual trading prices for listed bonds. For over-the-counter bonds, the bid price is shown. Bonds are generally listed in lots of 1,000. Therefore, if Price = 99.5 (=99.5% of $1,000) = $995, at maturity, the price = 100% of the face value, or $1,000. Latest Price is from last trading day of the indicated month. This view displays: Maturity; Outstanding (millions); Latest, High, and Low Prices.

Stocks and Options. The last trade price. Stocks that do not trade frequently display the bid price in the Price column. Bid price is what the buyer is willing to pay for the stock or options. Stocks also show daily highs and lows.

Indices. The last value of a given index.

Price/Book Ratio

The latest price per share divided by the last fiscal year book value per share, for a given corporation.

Price (Date)

The market price of an investment, at any given time. Current price is the market price as of the latest price update. Average price is the arithmetic average of the price of all lots of an investment. See Cost.

Price/Earnings (P/E) Ratio

The most commonly used measure of value for both markets and individual stocks. It indicates how many times earnings an investor is willing to pay to own a stock or market index, therefore it is sometimes called the multiple. Current P/E is the current price divided by the current fiscal year's estimated earnings per share. Past P/E is the current price divided by the actual earnings per share for the past 12 months. 12-month High P/E is the 52-week high price divided by the EPS for the past 12 months. 12-month Low P/E is the 52-week low price divided by the EPS for the past 12 months. Note: The past 12 months is not necessarily past year.

Prime Rate

The base rate on corporate loans posted by at least 75% of the nation's 30 largest banks. This is a useful measure for current lending rates, as most banks charge a few points above prime on mortgages and other personal loans.

Principal

The original amount or face value of a investment, typically bonds and CDs, on which interest is owned or earned. Interest is paid based on a percent of the principal (a stated interest or coupon rate). At maturity, the entire principal is returned to investor; however its purchasing value may be diminished by inflation.

Principal Transaction

A transaction in which the brokerage firm buys or sells a security into or from its own account. Commission is not charged for principal transactions. Instead the transaction is marked up or down before it is entered to the customer's account.

Proceeds

The sum of net amounts of all short open lots. Total proceeds is the sum of net proceeds of all short open investments in a given account. Average proceeds is for short investments what average cost is for long investments. See Average Cost.

Profit Margin %

The last fiscal year net income divided by the last fiscal year's sales or revenues for a given corporation.

Projected 5-Year EPS Growth Rate

The estimated average annual growth rate of fiscal year earnings per share for the next five years for a given corporation.

Projected Yield

Projected income divided by current value of a given account.

Prospectus

A formal written offer to sell securities to prospective shareholders. It is very useful to read the prospectus for a mutual fund before buying shares because it describes the philosophy, past performance, and fees.

Purchase Price

The market price you receive when you buy or sell short a security. Same as opening price.

Put Option

A put option gives the owner the right, but not the obligation, to sell the underlying stock at a given price (the strike price ) by a given time (the expiration date). The owner is speculating that the option will go up in value and the underlying stock will go down in value. The purpose can be to either speculate with the option (hope it goes up and sell for a profit) or trade the underlying stock at a locked in price if the stock price goes down enough. For example, an AAA MAR 65 put would give the owner the right to sell 100 shares of AAA at $65 (strike price) per share between now and the third Friday in March (expiration date).

Q

Quantity

The number of shares (stocks, mutual funds), contracts (options, futures), or the face value of bonds.

Quick Ratio

Cash and equivalents plus receivables divided by current liabilities (i.e., debt) for a given corporation.

R

Regular Initial Minimum

The minimum dollar amount required to open a regular account with a given mutual fund.

Regular Subsequent Minimum

The minimum dollar deposit accepted for an existing regular account with a given mutual fund.

Reinvest Distributions

In brokerage, feature where user requests that mutual fund distributions be reinvested in more shares, or instead paid in cash.

Rejected Order

Order which is invalid or unacceptable.

Reporting Date

The estimated date for the next report of quarterly financial data for a given corporation.

Regulation T

A regulation established by the Federal Reserve Board which covers the extension of credit to clients by securities brokers, dealers, and members of the national exchanges. It sets the initial margin requirement and defines eligible, ineligible, and exempt securities.

Regulation U

A U.S. government regulation that covers the lending of money by banks to their customers including brokerage firms.

Return of Capital

For a long investment, when a portion of the quantity (for a bond) or net amount (for a stock) of an investment is returned to the buyer. Returns of capital are tax-exempt distributions and reduce cost basis of an investment to a maximum of zero. Below zero, any additional returns of capital are treated as capital gains distributions and are taxable.

Return on Investment

Return on investment gives you a return value for the life of the investment, not just a gain or loss, or the year-to-date return.

Right

A security granted to shareholders of a corporation to subscribe to new shares of common stock before it is publicly offered. It is usually transferable and may be traded in the open market.

Return on Equity %

The current fiscal years estimated earnings per share (EPS) divided by the book value per share.

Round Lot

100 shares of stock.

S

Sales

The total sales or revenues for the indicated year for a given security.

Sales Charge

The percent of your investment capital that is subtracted immediately to cover sales and promotion costs when purchasing mutual funds. For example, if you invest $10,000 in a fund with an 8% sales charge, a sales fee of $800 is subtracted and your initial investment principal is $9,200. Also called Front Load and Initial Load.

Sales/Price Ratio

The last fiscal year's sales or revenues per share divided by the latest price per share for a given corporation.

Sales 3-Year Growth Rate

The unweighted average of the growth rate for sales or revenues over the last 3 years for a given corporation.

Sector Equities

Equities purchased from companies belonging to a specific sector within an industry, such as airline or electronic stocks.

Security

An investment that is represented by a negotiable document issued by a corporation or governmental entity for the purpose of raising capital. A listed security is one that is approved for trading on an exchange. A delisted security is one that is removed because of financial insufficiency or breaking of exchange rule. Two main categories: equity (claims against the earnings of a company by shareholders - includes stocks and mutual funds) and debt (claims against the assets of a company or government - includes bonds, notes, bills, and commercial paper). Some securities have hybrid characteristics such as preferred and convertible bonds. Securities are also classified by whether they are taxable, or tax-exempt. Most securities can be identified by unique ID numbers called CUSIP numbers or by symbols. Note: The term investment is more generic than security.

Sell(s)

A Transaction Type for the selling of a security. A sell creates a closed lot since it is the closing transaction for an open lot.

Send Trade

This will direct your order to us for review. If approved, it will be immediately directed to the appropriate exchange for execution.

Series E Bond

U.S. Government savings bond issued from 1941 to 1979.

Series EE Bond

U.S. Government savings bond with a 10-year maturity and face value of $50 to $10,000. It has properties of a zero coupon bond since it is purchased at a discount to face value.

Series HH Bond

U.S. Government savings bond available in denominations of $500 to $10,000 in exchange for Series E or EE bonds.

Settlement Date

Date by which an executed order must be settled. Buyers pay for securities with cash, and sellers deliver certificates of sold securities.

Short Account

A margin account through which a client can sell stock which he does not own. Sale proceeds are kept in the short account and marked to the market at the close of each business day to determine the account's credit balance.

Short Sells

A trade where the investor borrows a security from the broker, sells it at market price, and receives the proceeds of the sale less commission. The short seller then hopes that the security will go down in price so he or she can buy-to-cover the security back and return it to the broker. However, if the price goes up, the seller will eventually receive a margin call and be expected to either buy at current price and take the loss or add more cash or marginal securities to his account, and be vulnerable to a further short squeeze. When you are long in a security, the worst you can do is lose an amount equal to the cost of the security. When you are short, theoretically, your risk is unlimited as a security's price can keep rising forever.

Short Balance

Total proceeds from all short open lots minus all net amounts paid for covered trades in a given account.

Short Value

The latest value of all short investments (or short open lots) in a given account. See Short Sells.

Simplified Employee Pension Plan (SEP)

Type of pension plan into which both employer and employee contribute. It is easier to set up than a 401(k) or KEOGH and allows greater annual contributions than an IRA.

Small Stock Index

An index measuring a basket of small-capitalization stocks (companies whose revenues are typically under $500 million) which are thought to be representative of changes in the stock prices of small companies as a whole.

S&P Indices

Standard & Poor's Indices are broad-based measures of changes in stock market conditions based on the performance of widely held common stocks. Standard & Poor's, a division of The McGraw-Hill Companies, Inc., provides a broad range of investment services, including stock and bond ratings, composite indices, a wide variety of investment advisory reports, and so forth.

S&P 500

The basket of 500 widely held stocks which are thought to measure changes in stock-market conditions. The S&P 500 index is a service of Standard & Poor's corporation, a financial advisory, securities rating, and publishing firm. The index tracks industrial, transportation, financial and utility stocks.

S&P 500 Index

The S&P 500 index comprises 500 companies that account for 85% of the dollar value of all NYSE stocks. It is a broader and more representative average than the DOW but both move in tandem most of the time. The S&P 500 index does not include dividends. It is capitalization weighted, meaning that stocks with the highest value (number of shares outstanding multiplied by the price per share) have the greatest affect on the index. The S&P 500 index measures (also defined in the glossary) can be used to gauge the health or direction of the stock market. See S&P 500 200-Day Moving Average, S&P 500 P/E Ratio, S&P 500 Yield.

S&P 500 200-Day Moving Average

This value is calculated by averaging all the closing values of the S&P 500 for the last 200 days. You can use this and the following measures to create market timing alerts.

S&P 500 Price/Earnings (P/E) Ratio

The latest S&P 500 value divided by the last 4 quarters earnings per share. Reading above 24 and below 8 are considered sell and buy signals respectively by many analysts.

S&P 500 Yield

The sum of dividends of all stocks in the S&P 500, divided by the latest value of the S&P 500. Reading below 3 and above 6 are considered sell and buy signals respectively.

S&P 100 Index

A subset of the 500 index. Options based on this index (OEX) are very popular.

S&P Mid Cap 400

An index comprised of 400 mid-sized corporations.

S&P Rank

The computerized ranking system for stocks based on the last 10 years of dividend and earnings data of each company listed: A+ = Highest; C = Lowest; D = Company undergoing reorganization; LIQ = Company in liquidation, NR = No ranking due to insufficient data.

Special Subscription

A form of margin transaction in which a client can obtain advantageous credit to acquire a margin security through the exercise of a right or warrant.

Start Year

The year a given mutual fund began operation.

Stock

Ownership claims on a corporation's earnings and assets. See Common Stock, Preferred Stock.

Stock Power

Power of attorney form by which ownership of a security can be transferred from the registered owner to another party.

Stock Split

A change in the number of shares outstanding (in circulation). The number of shares are adjusted by the split ratio, e.g. 2 to 1. In this case, 1000 shares splits to 2000 but the opening price and current price are cut in half. The overall effect is to maintain the same cost and current value of an investment while increasing the number of shares and lowering the per share price. Reverse splits reduce the number of shares. Splits are done to reduce the cost per share to make it easier for small investors to own the stock in round lots.

Stop Order

An order to sell if and when the market price falls to a specified price. A stop order becomes a market order when the stop price is hit and the order will be executed at any market price at, above or below stop price. A variation of this, the stop-limit order, will only be executed at the limit price. If the market falls quickly: a stop order might be executed at a price much lower than the stop price and a stop-limit order might not get executed at all. Some investors prefer to set Mental Stops. When a stop order is executed an investor is said to be Stopped Out.

Strike Price

See Call Option.

Symbol

The official trading symbol used in actual transactions for stocks, options, mutual funds, or indices. A symbol uses letters, numbers, or a combination of the two. If the symbol contains any numbers, it means that it is a mutual fund that has not been assigned an actual trading symbol by NASDAQ and there is no quote service on that fund.

For any stock traded on the NYSE, AMEX, or OTC, the symbol is the official trading symbol used in actual transactions. Preferred stock has a dash followed by the preferred stock class. For example, Company B Class A is displayed as BBB-A.

Indices have their own symbols, which are shown in the Add Index screen.

T

T-Bills

T-Bills, the common name for a U.S. Treasury bill, are short-term (with a maturity of up to a year) discounted government securities sold through competitive bidding at weekly and monthly auctions in denominations from $10,000 to $1 million. They can also be purchased by individuals directly from a Federal Reserve Bank in denominations of under $500,000.

Tax-Deferred

Applies to an investment whose accumulated earnings are free from taxation until the investor takes possession of them. Usually, you cannot take possession of these investments without penalty until you are 59-1/2 years old. Tax-deferred investments are allowed by the IRS to save for retirement. See Real Tax-Deferred Accounts.

Tax-Exempt Security

An investment (generally a debt instrument, i.e., bond) whose interest is exempt from taxation by federal, state, and/or local authorities. Freequently called municipal bonds or munis, whether they were issued by a state government or agency, or by any local political district or subdivision. Tax-exempt securities are best applied to Taxable Accounts as the yield is not competitive enough to be used in tax-deferred accounts. Tax-exempt can be taxable under certain circumstances. See Real Taxable Accounts and Municipal Bonds.

Tax Method

IRS defined system for determining which Open Lots to sell or buy-to-cover when all lots of an investment are not sold or covered at one time. FIFO means selling or covering the lots in the same order by date as they were bought or shorted. Specific Lot means selling or covering specific lots that have been pre-selected before the trade is actually executed. Average Cost means using the average cost of all shares as the cost basis without the need to specify which lot is actually being traded.

Technical Short Value

The market value of a security which the client has sold but has not yet delivered to the broker.

10 Year Cum. Return

See Cumulative Return (1-Yr, 3-Yr, 5-Yr, 10-Yr).

To/From Date

Date to which the call may occur at the stated price for a given callable bond or the data from which the call will be in effect at the stated price. See Bond.

Total Assets

Total assets owned by a given mutual fund including cash and equivalents. As funds get very large, their performance may suffer.

Total Cost

The sum of cost of all long open investments in a given account.

Total Liabilities

The sum of your Short Market Value plus your Debit Balances from the prior trading day.

Total Return

Price appreciation plus interest, dividends, and capital gain distributions for a given investment or account during a given period. Year-to-date return is for a partial year. Also useful is last quarter, last four quarters, and one month total return, which cover the indicated time periods. Total return is the best way to measure the performance of similar or different investments.

Trade

Transaction that adds (buy or short sell) or removes a lot (sell or buy-to-cover) to or from open investments. Trade date is the date on which the trade occurs. Settlement date is the date by which the account must be debit or credited for results of the trade and it is normally three business days after trade date.

Treasuries

Debt securities of the U.S. government, issued at various schedules and maturities, and secured by its full faith and credit.

Turnover

The percentage of all securities owned by a given mutual fund which were sold in the last year. For example, a turnover of 200% means that the entire portfolio of the fund turned over twice completely in the last year.

12b-1 Fee

An annual fee, expressed as a percentage of NAV, specifically designated for marketing expenses for a given mutual fund. This fee is included in the expense ratio.

12 Mth Cum. Return

See Cumulative Return (1-Yr, 3-Yr, 5-Yr, 10-Yr).

U

Uncovered Options

Selling a call option to open in which the seller does not own the underlying security position. Also called naked options.

Underlying Security

The security that must be delivered when another security is exercised. For example, if a call option is exercised, then the underlying stock is delivered to the call owner. Warrants, rights, options, and convertible securities all have underlying securities. For futures options, futures are the underlying security.

Undervalued Security

When a security's price is below what a market analyst calculates based on fundamentals such as earnings potential, cash flow, and hidden assets. These securities are prized by value investors. These companies may become takeover targets.

Undistributed Earnings

The same as retained earnings. It is earnings that are not paid as dividends, but reinvested in the company.

Unissued Stock

Stock authorized in a company's charter but for some reason, not issued and not outstanding. Contrast with treasury stock, which has been issued and then repurchased and is therefore not outstanding.

Unit

Smallest tradable component of an asset: share for stocks and mutual funds, $1000 quantity for most bonds, and contract for options and futures.

Unit Investment Trust

A package of investments, usually bonds, sold to investors as a unit which is a fractional ownership of the total package. Unlike a mutual fund, the investments in a unit do not change and are not replaced if they mature or are called. Usually sold by brokers.

Unlisted Security

A stock or bond not listed on an exchange (usually New York or American) which trade in the over-the-counter market.

Unpaid Dividend

A dividend that has been declared by a corporation but not yet paid. It is carried as a liability until the payment date.

Unsecured Debt

A bond issued by a corporation which is not backed by specific collateral. Same as debenture. It is backed instead by the general credit or promise to pay by the issuer.

U.S. Gov't Issues

Debt issued by the U.S. Treasury or other government agencies (Ginnie Mae, Fannie Mae, Freddie Mac, etc.). U.S. Treasury issues include T-Bills (1 yr and less), T-Notes ( 1-10 yrs), and T-Bonds (10 -30 yrs). They are generally not callable and not subject to state and local taxes, and are considered the safest bonds available as they are backed by the full faith and credit of the U.S. government. The other agencies issue mostly pass- through mortgage bonds that pay interest and return of principal and are indirectly backed by the Treasury.

U.S. Savings Bond

These bonds (series EE) are zero coupon-like bonds sold by the U.S. government at 50% of face value that can be redeemed for face value after 5 years.

V

Valueline Composite Index

An equally weighted index of 1700 stocks on NYSE, AMEX, and OTC exchanges. A broad-based index that is less volatile than the more popular DJIA.

Variable Annuity

A life insurance product whose value fluctuates and is tied to the performance of a market index or a portfolio of securities. Often has a tax-deferred feature and works like a mutual fund in most cases. Your premium payments buy more shares.

Variable Interest Rate

Interest rate that is adjusted as market rates change. Can be found in adjustable rate mortgages, bonds, and certificates of deposit.

Veribanc Rating

See Rating for CDs and Money Markets.

Vesting

The entitlement to full pension plan benefits. Normally expressed as the number of months and years of employment required to be vested.

Volatility

The measure of the tendency of prices to fluctuate widely. Prices of small companies tend to be more volatile than those of large corporations. Beta is a measure of volatility. See beta.

Volume

The number of shares of stock or options that have traded as of the opening of a given trading day. Volume is the consolidated volume, that is to say, it includes shares traded on all exchanges.

For example, Apple Computer stock trades on both the over-the-counter (OTC) NASDAQ Exchange and the Pacific Exchange. For an Apple quote, volume would include shares as of the opening of both these exchanges.

Voting Right

Most common stock entitles a shareholder to the right to vote in person, or by proxy, on corporate elections and other related matters. Some companies issue both voting and non-voting shares, for example, Class A and Class B.

W

Warrants

Similar to long term options, they give the holder the right to convert the warrant at a set price, into a set number of shares of the associated stock. They are often issued as bonuses along with newly issued common stock or bonds, and in combination these are called units. When sold ex-warrant, it is too late to get the warrant that was attached to the stock.

Wash Sale

When an investor buys substantially identical securities as those he sold within the last or next 30 days, the sale of these securities can not be used as a realized loss for income tax purposes. For example, you sell your 100 AAA shares on October 1 for a loss of $1000. Then you buy 100 new shares of AAA on October 10. You sell these new shares on December 12 for a $2000 realized gain. On your tax return, you must show a net realized gain of $2000. The wash sale ($1000 loss) is disallowed as an offset against the gain for income tax purposes.

When Issued

A symbol next to the price in a newspaper stock or bond listing which indicates that the price shown is for a security that has been authorized but is not yet trading. Freequently used to show after split price before a split has occurred.

Whipsaw

A volatile market that can punish a trader who buys just before prices fall and then sells first before prices recover.

Writer

An investor who sells short put or call options, hoping to retain the income derived from the short sale. A covered writer owns the underlying stock and is hedged. See call and put option.

X

X or XD

Symbol used in newspapers to indicate that a stock is trading without a dividend. The symbol X also signifies without interest in bond tables. In most cases, it is wise to find out when a dividend paying stock will trade ex-dividend. By buying when the stock is ex-dividend, you avoid the tax liability on the just distributed dividend. Note that after a dividend is paid, the stock's price falls by the amount of the dividend paid, plus or minus any market adjustment. The same principle holds for mutual funds paying distributions. Buy shares after distributions are made. Stock mutual funds usually make distributions in December or January.

Y

Year-End Values

The market value of an account at any given year end. Used to quickly gauge year-to-year changes.

Year to Date (YTD)

Total return for a partial year. See Total Return.

Year Issued

The year a particular bond series was issued.

Yellow Sheets

A daily listing of bonds, prices, and market makers for corporate bonds not listed on major exchanges.

Yield

For a stock, the current yield is the annual dividend divided by the current price per share. For a mutual fund, the 4 qtr yield is the total dividends paid during the last four quarters divided by the NAV at the end of the last quarter. For a bond, the annual interest payment divided by [quantity x current price divided by 100]. For a CD, the annual interest payment divided by the face amount of the CD is the yield. It is a measure in percentage terms of how much income you can derive from the security. Of great importance to fixed income investors and of minimal importance to growth investors. See Yield to Maturity.

Yield Curve

Graph that shows a series of current interest rates, most often of U.S. Treasury issues from 3 months to 30 years maturity. A snap shot of the interest rate structure of the economy and sometimes a predictor of economic trends. Normally, the yield curve is moderately positive meaning that investors want higher rates the longer the maturity to offset the risk of holding the bond to maturity while rates go up for newly issued bonds. A negative curve occurs when investors fear that in the short term, rates will be high and money will remain "tight" near-term. When a negative curve starts to flatten, a powerful stock and bond rally usually ensues. A steep curve occurs when investors don't fear inflation in the near-term but are concerned about the long term. A sudden flattening of a steep curve in which the short end rises can be a harmful sign for the stock and bond markets.

Yield Spread

Difference in yield between various bonds of equivalent time to maturity. Since time to maturity is the same, the major distinguishing variable is quality. For example, a 5-year U.S. Treasury note will have a lower current yield than a comparable 5-year corporate bond. Also called quality spread.

Yield to Call

Yield on a bond which will be called by the issuer at the first call date. Important for corporate bonds.

Yield to Maturity

Takes into account the annual dividend, current price, redemption price, and time remaining to maturity. In effect, it is the annual total return for a bond. See Yield.

Z

Zero Coupon Bonds

Bonds that do not pay interest but which are instead sold at a substantial discount to par so at maturity they return the face amount. These bonds tend to be more volatile than regular bonds so they are best held to maturity by most investors. They are also called CATS or strips. The longer to maturity, the lower the purchase price and the greater the leverage and sensitivity to interest rates. U.S. Savings Bonds (series EE) are zero bonds sold at 50% of face value that are redeemed for face value at maturity.

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