| Accrued Interest |
The interest due on a bond or other fixed-income security since
the last interest payment was made. |
| Acquisition |
One company taking control of another by purchasing a majority or
all of the target company's outstanding shares. |
| All or None |
In brokerage, order instruction, particularly for large orders,
to execute the total quantity or none. |
| American Depository Receipt (ADR) |
A receipt that is issued by a U.S. depository bank which represents
shares of a foreign corporation held by the bank. |
| American Stock Exchange (AMEX) |
An open auction market similar to the NYSE where buyers and sellers
compete in a centralized marketplace. The Amex typically lists small
to medium cap stocks of younger or smaller companies. |
| American-Style Option |
An option that may be exercised at any time between its purchase
and its expiration date. |
| Annual Report |
A publication that is issued yearly by all publicly held corporations
and freely available to all shareholders. It reveals the company's
assets, liabilities, revenues, expenses, and earnings for the past
year, along with other financial data. This is often accompanied by
a glossy presentation of the company's achievements and philosophy. |
| Assets |
Property and items of value owned by a person or business. The primary
classifications of assets are: |
| current assets - cash and other liquid instruments,
including accounts receivable, that can be converted to cash within
one year at maximum |
| long term assets - plants, equipment, real estate,
and other capital assets, net of depreciation |
| prepaid and deferred assets - expenditures for
future costs or expenses, such as insurance, interest, or rent, that
are set up as assets to be amortized over an applicable period |
| intangible assets - assets with a determined value,
but which may not be scalable, such as goodwill, patents, copyrights,
and brand name recognition |
| Assignment |
The receipt of an exercise notice by an option writer (seller) that
obligating him to sell (in the case of a call) or purchase (in the
case of a put) the underlying security at the specified strike price. |
| At-the-Money |
An option is at-the-money if the strike price of the option is equal
to the market price of the underlying security. |
| Auction Market |
A form of trading that takes place by verbal outcry of bids and
offers by Exchange members acting as agents for institutions or individual
investors. |
| Averages |
Various statistical tools for measuring the performance of securities
markets. The most common is the Dow Jones Industrial Average. |
| Average Daily Volume |
The consolidated trading volume for all exchanges averaged for the
last 20 trading days. |
| 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. |
| Basis Point |
One one-hundredth of one percent. This small measurement is especially
helpful in expressing the often small but significant variations in
bond yields. |
| Bear Market |
A term to describe a market of declining prices. |
| Bear (Bull) |
For generations, bulls and bears on Wall Street have referred to
two decidedly different types of investors -- the bulls being those
who expect stock prices to rise, the bears being those who believe
prices are about to decline. |
| 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 and Ask |
Collectively called the "quote," the bid refers to the highest price
a buyer is willing to pay for a stock, while the asked is the lowest
price a seller will accept. |
| Block |
A large holding or transaction of stock. Generally 10,000 or more
shares or any quantity worth over $200,000 is considered a block. |
| Blue Chip |
A company known nationally for the quality of its products or services,
its reliability, and its ability to operate profitably in good and
bad economic times. |
| Bond |
Bonds are promissory notes or IOUs issued by a corporation or government
to its lenders. They are usually issued in multiples of $1,000 or
$5,000. A bond is evidence of a debt on which the issuing company
usually promises to pay the bondholder a specified amount of interest
at intervals over a specified length of time, and to repay the original
loan on the expiration date. A bond represents debt, therefore its
holder is a creditor of the corporation and not a part owner, as the
stock holder is. |
| Book Value |
The book value of a stock is determined by adding up all of a company's
assets and then deducting all of its debt and liabilities, including
preferred issues. This sum is then divided by the number of common
shares outstanding and the result is book value per common share.
Book value of a company's assets or of a security has little relationship
to the market value. |
| Broker |
An agent who acts as an intermediary between buyer and seller in
trading securities, commodities, or other property. He charges a commission
for this service. |
| Bull Market |
A term to describe a market of rising prices. |
| 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. |
| Buying Power |
Value of margin eligible securities that may be purchased in a margin
account. Determined by doubling the sum of the cash held in the brokerage
account and the loan value of margined securities. |
| Call Option |
A contract that gives the holder the right to buy the underlying
stock at a specified price (the strike price) within a fixed period
of time. |
| Callable |
Term to describe a bond issue all or part of which may be redeemed
by the issuing corporation under specified conditions before maturity.
The term also applies to preferred shares that may be redeemed by
the issuing corporation. |
| 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 Gain |
Profit earned on the sale of securities by selling the securities
at a higher price than they originally cost. |
| Capital Stock |
All shares representing ownership of a business, including common
and preferred. |
| 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 Sale |
A transaction on the floor of the Stock Exchange that calls for
delivery of the securities the same day. In regular stock trades,
the seller is to deliver on the third business day. Bonds must be
delivered on the next day after a trade. |
| 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. |
| Certificate of Deposit (CD) |
A money market instrument issued by commercial banks. It promises
to pay principal and a fixed rate of interest at maturity, normally
of one year or less. |
| 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. |
| Closing Purchase |
A transaction in which the purchaser's intention is to reduce or
eliminate a short position in a given series of options. |
| Closing Sale |
A transaction in which the seller's intention is to reduce or eliminate
a long position in a given series of options. |
| Commission |
The broker's basic fee for purchasing or selling securities as an
agent. |
| Commodities |
Articles of commerce or products that can be used for commerce.
In a narrow sense, products traded on an authorized commodity
exchange. Types of commodities include agricultural products,
metals, petroleum, foreign currencies, financial instruments,
and indexes to name a few. |
| Common Stock |
Securities that represent an ownership interest in a corporation.
Common stockholders assume the greater risk, but generally exercise
the greater control and may gain the greater award in the form of
dividends and capital appreciation. "Common Stock" and "Capital Stock"
are often used interchangeably when the company has no preferred stock. |
| Competitive Trader |
A member of the Exchange who trades in stocks on the Floor for an
account in which there is an interest. Also known as a Registered
Trader. |
| Confirmation |
A written notification from a broker to a client specifying the
details of a securities' transaction |
| Consolidated Tape |
A high-speed system that continuously provides the last sale price
and volume of any securities transaction in listed stocks to the public. |
| 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 |
A bond, debenture or preferred share that may be exchanged by the
owner for a fixed number of common shares of other securities usually
of the same company. |
| 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. |
| Coupon Bond |
A bond with interest coupons attached. Also known as a registered
bond. |
| Covered Option |
An option whose writer (seller) maintains the appropriate opposing
position in the underlying security. |
| Current Ratio |
A company's current assets divided by its current liabilities. |
| CUSIP Number |
A CUSIP number uniquely identifies a security. The first nine digits
or characters are assigned by the Committee on Uniform Security Identification
Procedures (CUSIP). Characters 1-6 identify the issuer, and 7-9 identify
the issue. |
| Day Order |
An order to buy or sell that, if not executed, expires at the end
of the trading day on which it was entered. |
| 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. |
| Dealer |
An individual or firm in the securities industry who buys and sells
stocks and bonds as a principal rather than as an agent. |
| Debit Balance |
Money owed by the client to the broker. |
| Delayed Opening |
The postponement of the trading of an issue on a stock exchange
because of unusual market conditions. |
| 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. |
| Depository Bank |
A bank organized in the U.S. which provides all the stock transfer
and agency services in connection with a depository receipt program. |
| Depository Trust Company (DTC) |
The Depository Trust Company (DTC) is the world's largest securities
depository with more than $10 trillion worth of securities in custody.
DTC is a national clearing house for the settlement of trade in corporate
and municipal securities, and performs securities custody-related
services for its participating banks and broker-dealers. DTC is owned
by members of the financial industry and by their representatives
who are its users. |
| Derivative Security |
A financial security whose value is determined in part from the
value and characteristics of another security, known as the underlying
security. |
| Display Book (Electronic Book) |
The Display Book is an electronic workstation that keeps track of
all limit orders and incoming market orders. |
| 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 portion of a company's earnings distributed to its shareholders.
The board of directors determines whether the company will pay a dividend,
and if so, how much. |
| Dividend Frequency |
Shows how often a given mutual fund pays a dividend distribution. |
| Direct Public Offering |
A company stock offering in which the company sells shares
to the public without using an investment banker. The offering
is usually less than $5,000,000 and uses Regulation A or Rule
504 exemptions. |
| Dollar Cost Averaging |
A system of buying securities at regular intervals with a fixed
dollar amount. Under this system investors buy by the dollars worth
rather than by the number of shares. |
| 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 Dow Jones Industrial Average (DJIA) is an index of 20 industrial
stocks used to measure the performance of the U.S. financial markets. |
| 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. |
| 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. |
| Earnings Report |
A statement issued by a company showing its revenues and expenses
over a given period. The health of a company's earnings is what most
investors consider when buying stock. |
| Equity |
Ownership in a company. |
| European-Style Option |
An option that may be exercised only during a brief period of time
just prior to its expiration date. |
| Exchange |
The principal market 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 FINRAaq (National Association of Securities
Dealers Automated Quotation System). OTC stocks are found under the
FINRAaq listings of your newspaper. |
| Ex-Dividend |
A synonym for "without dividend." The buyer of an ex-dividend stock
is not entitled to the next dividend payment. Dividends are paid on
a set date to all those shareholders recorded on the books of the
company as of a previous date of record. |
| Ex-Rights |
The buyer of a stock selling ex-rights is not entitled to rights. |
| Exercise Settlement Amount |
The difference between the exercise price of the option and the
exercise settlement value of the index on the day an exercise notice
is tendered. |
| Expiration Date |
The date after which an option can no longer be exercised. If an
option has not been exercised by its expiration date, it becomes worthless
and ceases to exist. The expiration date for most options is the Saturday
following the third Friday of the expiration month. |
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. |
| Face Value |
Sometimes referred to as par value, it is the value of a bond stated
on the bond certificate. |
| Financial Futures |
Futures contracts based on financial instruments such as U.S. Treasury
bonds, CDs and other interest-sensitive issues, currencies and stock
market indicators. |
| Fiscal Year |
Any consecutive 12-month period of financial accountability for
a corporation or government. |
| Floor Broker |
A member of the Stock Exchange who represents and executes customer
orders on the floor. |
| Floor Official |
A member or employee of the Exchange responsible for supervising
and regulating trading floor activities. |
| 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 |
Contracts specifying a certain amount of a specific tangible or
intangible product to be delivered on a specific date. Futures are
widely used by business as a hedge against unfavorable price changes
in the underlying commodity, and by speculators who hope to profit
from such changes. |
| 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. |
| General Mortgage Bond |
A bond that is secured by a blanket mortgage on the issuing company's
property, though it may be outranked by one or more other mortgages. |
| Gilt-Edged Bond |
A high-grade bond issued by a blue-chip company. |
| Good 'til Canceled (GTC) Order |
An order to buy or sell that remains in effect until it is either
executed or canceled. Also called an Open Order. |
| Good 'til Executed (GTX) Order |
An order to buy or sell that remains in effect until it is executed. |
| Good Delivery |
Certain basic qualifications must be met before a security sold
on the Exchange may be delivered. |
| Government Bonds |
Obligations of the U.S. Government, regarded as the least risky,
highest grade securities issues. The major types of debt instruments
issued by the U.S. government are Treasury bills, Saving bonds, Treasury
notes, and Treasury bonds. |
| Growth Stock |
Shares of a company known for a history of rapid earnings growth.
Most growth stocks do not pay dividends because management reinvests
earnings to feed the growth. |
| Hedge |
The purchase or sale of some derivative security such as options
or futures in order to reduce the risk involved in holding another
position in the underlying security or commodity. |
| Holding Company |
A corporation that owns a large number of shares in other companies.
Holding companies use the voting rights that come with their shares
to exert influence over the companies under them. |
| 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. |
| In-the-Money |
A call option is in-the-money if the strike price is below the current
market price of the underlying security. A put option is in-the-money
if the strike price is above the current market price of the underlying
security. |
| Income Bond |
Bonds that promise to repay principal but to pay interest only when
earned. |
| Independent Broker |
Member on the floor of the NYSE who executes orders for other brokers
who are too busy to handle all of their orders, or for firms who do
not have their Exchange member on the floor. |
| Index |
Any comprehensive measure of market trends, intended for investors
who are concerned with general stock market price movements. |
| Initial Public Offering |
An issue of new stock by a once private company to transform itself
into a publicly held one. IPOs are usually done to raise cash for
growing young companies that need larger sources of capital than the
private sector can provide. |
| Institutional Investors |
Organizations whose primary purpose is to invest their own assets
or those entrusted to them by others. The most common are employee
pension funds, insurance companies, mutual funds, university endowments,
and banks. |
| Interest |
The cost of borrowing money. |
| Investment Bank |
Middlemen between corporations issuing new securities and the buying
public. |
| Investment Company |
A company or trust that uses its capital or new investors' capital
to invest in other companies. Often referred to as mutual fund companies. |
| IRA (Individual Retirement Account) |
An individual pension fund that anyone may open with a bank. An
IRA permits investment of contributed funds through intermediaries
like mutual funds, insurance companies, and banks or directly in stocks
and bonds through stockbrokers. Because it is intended for retirement,
money in an IRA enjoys many tax advantages over traditional investments,
but may not be withdrawn early without heavy penalty fees. |
| 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). |
| 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. |
| Keogh Plan |
Tax advantaged personal retirement program that can be established
by a self-employed individual. |
| LEAPS |
Long-term Equity AnticiPation Securities are long-term stock or
index options. LEAPS, like all options, are available in two types,
calls and puts, with expiration dates up to three years in the future. |
| 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. |
| Limit Order |
An order to buy or sell a stated amount of a security at a specified
price or a better one if it is obtainable in the trading crowd. If
no other trader is willing to accept the specified price or better,
then the trade is not executed. |
| Limit Order Processing |
The limit order system electronically files orders which are to
be executed when and if the specific limit price is reached. The system
accepts limit orders up to 99,999 shares and electronically updates
the Specialist's Electronic Book. Good-'til-canceled orders not executed
on the day of submission are automatically stored until executed or
canceled. |
| Liquidity |
The ease with which securities can be bought and sold without wide
price fluctuations. In the past several years, 92 percent of all trades
in the NYSE market occurred with no price change or the minimum variation
of an eighth point from the preceding trade, characterizing an extremely
liquid market. |
| Listed Stock |
The stock of a company that is traded on a securities exchange.
The various stock exchanges have different standards for listing. |
| Locked In |
Investors are said to be "locked in" when a security they own is
trading at a higher price than they paid for, but they choose not
to sell in order to avoid having their profit become subject to the
capital gains tax. |
| Long Option Position |
A position wherein an investor's interest in a particular series
of options is as a net holder (i.e., the number of contracts bought
exceeds the number of contracts sold). |
| 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 |
The amount of funds put up by the customer when also borrowing on
credit from the broker to buy or sell a security. Under Federal Reserve
regulations, the initial margin required since 1945 has ranged from
the current rate of 50 percent of the purchase price up to 100 percent. |
| Margin Call |
A notice to a customer that he must provide additional capital to
satisfy a minimum margin requirement set by the Exchange or by the
firm. |
| Market-On-Close (MOC) Order |
A market order to be executed at the close that requests an execution
price as close as possible to the closing market price. |
| Market Maker |
A broker/dealer who is registered to trade in a given security on
the FINRAAQ. |
| Market Order |
An order to buy or sell a stated amount of a security at the most
advantageous price obtainable in the trading crowd. |
| Market Order Processing |
SuperDot's market order system is designed to process member firms'
market orders of up to 30,099 shares. The system provides for rapid
execution and reporting of market orders. In 1994, market orders were
executed and reported back to the originating member firm on average
within 24 seconds. |
| Market Value |
The current resale value of a security. The market value of an issue
is easily computed as the closing price multiplied by the shares outstanding. |
| Maturity |
The date on which a loan or bond comes due and is to be paid off. |
| Member |
An individual that has trading privileges on the New York Stock
Exchange. |
| Member Firm/Member Organization |
A broker/dealer organization that becomes a member because one of
its executives or principles owns or leases a membership (seat) on
the New York Stock Exchange. If the firm pays for the seat in the
name of the individual, then there is an agreement between the individual
and the firm called an ABC Agreement. |
| Merger |
The combination of two or more corporations into a single company.
Shareholders of the individual merging companies usually trade in
their shares and receive replacement stock in the newly formed company. |
| Money Market Fund |
A mutual fund which specializes in investing in high-yield money
instruments, such as federal securities, CDs and commercial paper.
The object is to make such instruments, normally available only in
large denominations to institutional investors, available indirectly
to individuals. |
| Municipal Bond |
A bond issued by a government on the state or local level. The term
also designates bonds issued by state agencies and authorities. The
proceeds from municipal issues are often directed towards financing
specific public projects, such as highways, environmental clean-up
efforts, housing projects, or even sports stadiums. Generally, interest
received from municipal bonds is exempt from federal income taxes
and state and local income taxes within the state of issue. |
| Mutual Fund |
A portfolio of stocks, bonds, or other securities administered by
a team of one or more managers from an investment company who make
buy and sell decisions on component securities. Capital is contributed
by smaller investors who buy shares in the mutual fund rather than
the individual stocks and bonds in its portfolio. The return on the
fund's holdings is distributed back to its contributors, or shareholders,
minus various fees and commissions. This system allows small investors
to participate in the reduced risk of a large and diverse portfolio
that they could not otherwise build themselves. |
| Naked Option |
Sometimes called an uncovered option, a naked option is one whose
seller does not maintain an equivalent position in the underlying
security. For example, the owner of a call has the option to buy the
underlying stock from the writer of the call. However, if the writer
does not own that stock, the option is naked. When the holder decides
to exercise his option, the writer will be forced to buy the stock
on the open market, then resell it at the lower strike price. This
will result in a loss for the writer. For obvious reasons, writing
naked options is risky and must be done in a margin account. |
| FINRA |
The National Association of Securities Dealers is an industry association
of broker/dealers in the over-the-counter securities business. The
FINRA is a self-regulatory body and administers the FINRAAQ stock market. |
| FINRAaq |
The National Association of Securities Dealers Automated Quotation
is a global intranet providing brokers and dealers with price quotations
on securities traded over-the-counter. Unlike the NYSE auction market
where orders meet on a trading floor, FINRAaq orders are paired and
executed on a computer network. |
| FINRAaq Composite Index |
A market value weighted index comprised of about 3,500 stocks traded
on the FINRAaq system. Large technology stocks have a major effect
on this index value. FINRAaq represents the top tier of the over-the-counter
(OTC) market. |
| National Market System |
A national market system was mandated by the Securities Act Amendments
of 1975, the most important federal securities legislation since the
1930s. At the heart of the national market is the Intermarket Trading
System (ITS), which began operation in 1978. Nine markets -- the American,
Boston, Cincinnati, Chicago, New York, Pacific, and Philadelphia,
and FINRA over-the-counter market -- are linked electronically by ITS
computers. This allows traders at any exchange to seek the best available
price on all other exchanges that a particular security is eligible
to trade on. The national market system also includes a consolidated
electronic tape, which combines last-sale prices from all markets
into a single stream of information. |
| 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. |
| New York Stock Exchange (NYSE) |
The NYSE marketplace blends public pricing with assigned dealer
responsibilities. Aided by advanced technology, public orders meet
and interact on the trading floor with a minimum of dealer interference.
The result is competitive price discovery at the point of sale. Liquidity
in the NYSE auction market system is provided by individual and institutional
investors, member firms trading for their own accounts, and assigned
specialists. The NYSE is linked with other markets trading listed
securities through the Intermarket Trading System (ITS). |
| 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-Regular Way |
The generally accepted regular way settlement is the third business
day after the trade occurs. A trade made with stated conditions, such
as a cash sale, calls for delivery, and settlement different from
the standard procedures. |
| NSCC |
National Securities Clearing Corporation. Facilitates trade processing,
clearance, delivery and settlement of equities, and corporate and
municipal bonds. NSCC is owned equally by the New York and American
Stock Exchanges and the National Association of Securities Dealers. |
| NYSE-Listed |
Companies that have applied and been approved to have their shares
traded on the New York Stock Exchange. |
| NYSE Composite Index |
Comprehensive measure of the market trend for the benefit of many
investors who are concerned with general stock market price movements.
The indexes consist of a Composite Index of all common stocks listed
on the NYSE and four subgroup indexes -- Industrial, Transportation,
Utility, and Finance. The indexes are basically a measure of the changes
in aggregate market value of NYSE common stocks, adjusted to eliminate
the effects of capitalization changes, new listings and delistings. |
| Odd Lot |
A unit of 1 to 99 shares of stock. Most stocks are traded in units
of 100 shares known as "round lots," but some smaller investors still
deal in "odd lots." |
| Off-Board |
Transactions that take place over-the-counter in unlisted securities
or transactions of listed shares that are not executed on a national
securities exchange. |
| Off-Hours Trading |
Trading that takes place after the close of the regular session.
On June 13, 1991, the NYSE introduced off-hours trading in the form
of two post-4:00 p.m. crosses. Crossing Session I introduced a 5:00
p.m. cross in individual stocks at the NYSE regular day closing price;
Crossing Session II facilitates the crossing of portfolios until 5:15
p.m. |
| Offer |
The price at which a person is willing to sell a security. |
| Open Order |
Orders that have been placed with the broker but have yet been executed
or canceled. |
| Open Interest |
In options and futures trading, the number of outstanding option
contracts at any given time that have not been exercised and have
not yet reached expiration. |
| Opening Automated Reporting System (OARS) |
OARS, a feature of the SuperDot system, is designed to accept member
firms' pre-opening market orders for all stocks up to 30,099 shares
for rapid, systematic execution and immediate reporting. OARS automatically
and continuously pairs buy and sell orders and presents the imbalance
to each specialist up to the opening of a stock, thus assisting the
specialist as he or she determines the opening price. |
| Opening Purchase |
A transaction in which the purchaser's intention is to create or
increase a long position in a series of options. |
| Opening Sale |
A transaction in which the seller's intention is to create or increase
a short position in a given series of options. |
| Option |
Options are derivative securities that give the holder the right
to buy (call) or sell (put) a specified amount of the underlying security
at a specific "strike price" and within a specified time frame. The
purchaser hopes that the stock price will go up (if he buys a call)
or down (if he buys a put) by an amount sufficiently above or below
the strike price to provide a profit when the option is exercised.
If the stock price holds steady or moves in the opposite direction,
the price paid for the option is lost entirely. There are several
other types of options available to the public but these are basically
combinations of puts and calls. Individuals may write (sell) as well
as purchase options. Options on stock indexes, futures, and debt instruments
also exist.
The NYSE withdrew from the options trading business in 1997. |
| Options Clearing Corporation (OCC) |
An agency, partly owned by the New York Stock Exchange, that clears
options transactions. |
| Order |
An order is an intent to buy or sell a security. |
| Out-of-the-Money |
A call option is out-of-the-money when the strike price is above
the price of the underlying security. Likewise, a put option is out-of-the-money
when the exercise price is below the price of the underlying security.
An out-of-the-money option is one that has no intrinsic value. |
| Over-the-Counter (OTC) |
A market for securities made up of securities dealers who may or
may not be members of a securities exchange. The over-the-counter
market is conducted over the telephone and computer, and deals mainly
with stocks of companies without sufficient shares, stockholders,
or earnings to warrant listing on an exchange. |
| Overbought |
Refers to a stock that has risen sharply in price or to the market
as a whole after a period of vigorous buying, which it is sometimes
said, has left prices "too high." |
| Oversold |
Refers to a stock that has fallen sharply in price or to the market
as a whole when it appears to have declined to an unreasonable level
from vigorous selling. |
| Par |
Equal to the nominal or face value of security. |
| Passed Dividend |
The omission by a company's board of a regular or scheduled dividend
payment. |
| Pay-Out Ratio |
Pay Out Ratio = Average of the past 3 years' dividends / Earnings
Per Share |
| Penny Stocks |
Low-priced issues, often highly speculative, selling at less than
$1 a share. Frequently used as a term of disparagement, although some
penny stocks have developed into investment-caliber issues. |
| Point |
In the case of shares of stock, a point equals $1. If ABC shares
rise 3 points, each share has risen $3 in price. In the case of bonds,
a point equals $10 because bonds are quoted as a percentage of $1,000.
An advance from 87 to 90 would mean a rise in value of $30 from $870
to $900. |
| Portfolio |
The collection of different investment instruments owned by one
individual or institution. A portfolio can consist of any combination
of stocks, bonds, derivatives and such. |
| Post Trade Processing |
After a trade is executed, SuperDot automatically submits it to
a comparison cycle to check for any errors and ensure that every sale
has a matching purchase and vice versa. Additionally, a complete audit
trail is created prior to settlement and delivery of the stock in
case the need should arise for an investigation. |
| Preferred Stock |
A type of stock that pays a fixed dividend regardless of corporate
earnings, and that has priority over common stock in the payment of
dividends. However, it carries no voting rights, and should earnings
rise significantly the preferred holder is stuck with the same fixed
dividend while common holders collect more. The fixed income stream
of preferred stock makes it similar in many ways to bonds. |
| Premium |
For bonds and preferred stock, the premium is the amount by which
the price exceeds the face, or par, value. For options markets, the
premium is synonymous with the option's price. |
| Price-Earnings Ratio |
A popular measure for comparing stocks selling at different prices
in order to single out over or undervalued issues. The P/E ratio is
simply the price per share divided by the company's earnings per share.
However, P/E, is not always an accurate guide to a stock's quality.
Some people tend to think that a stock is inflated and drastically
overvalued if its price is many many times its earnings. Yet that
same stock may be quite accurately valued to reflect the company's
rapid growth and potential for high future earnings. When comparing
P/Es it is therefore important to choose stocks in the same industry
that are likely to face the same earnings prospects. |
| Primary Distribution |
The sale of a new issue of securities by a company. Initial public
offerings (IPOs) are primary distributions by companies that were
not publicly traded prior to the offering. |
| Prime Rate |
The interest rate extended by commercial banks to their most credit-worthy
and reliable corporate customers. Other interest rates such as personal,
automobile, commercial and financing loans are often pegged to the
prime. |
| Principal |
Any person who buys or sells a security for his or her own account.
Also refers to an executive of a firm that actively engages in that
firm's trading business. |
| Private Placement |
Capital acquired through a small (usually $1-5 million) private
offering to 35 or less qualified investors. These investments are
registered under Section 144 and are classified as restricted stock. |
| Prospectus |
The official document that, according to SEC regulations, must be
provided by the issuer to potential purchasers of a new securities
issue. It highlights the much longer Registration Statement filed
with the Commission that gives information on the financial well-being
of the issuer and the specifics of the issue itself. Potential investors
can consult this information before buying. |
| Proxy |
A ballot by which stockholders can transmit their votes on corporate
matters without needing to attend the actual shareholders meeting.
A proxy could also state the stockholder's intention to transfer voting
rights to someone else. A company's shareholders' are commonly asked
to vote on such matters as electing a board of directors, approving
mergers and acquisitions, and sometimes on proposals that other stockholders
have submitted to management. One share generally equals one vote. |
| Purchase Price |
The market price you receive when you buy or sell short a security.
Same as opening price. |
| Put Option |
A contract that gives the holder the right to sell the underlying
stock, to the writer of the put, at a specified price (the strike
price) within a fixed period of time. |
| Quote |
The price range in which a stock is currently trading. Composed
of the bid and asked prices, as well as a minimum number of shares
that can be bought or sold at these prices. |
| Rally |
A sharp, sudden rise in the price of a company's stock following
a decline. |
| Record Date |
The date on which you must be registered as a shareholder of a company
in order to receive a declared dividend or, among other things, to
vote on company affairs. |
| Red Herring |
Final version of an offering prospectus that fully discloses material
facts about the issuer. The Red Herring gets its name from the red
print on the first page of the document. |
| Redemption Price |
The price at which a bond may be bought back before its maturity
by the issuing company. The term also applies to the price a company
must pay to call in certain types of preferred stock. |
| Registered Bond |
A bond that is registered on the books of the issuing company in
the name of the owner. It can be transferred only when endorsed by
the registered owner. |
| Registered Competitive Market Maker (RCMM) |
Members of the New York Stock Exchange with a specific Exchange-imposed
obligation to enhance the quality of NYSE markets by injecting their
own or their firms' capital into difficult market-making situations.
At the request of an Exchange official, an RCMM must make a bid or
offer that narrows an existing quote spread or improves its depth.
An RCMM may also be asked to assist a commission broker or floor broker
in executing a customer's otherwise unexecutable order. |
| Registered Representative |
A man or woman who is licensed to solicit business from public customers.
In a New York Stock Exchange member organization, a registered representative
must be Series 7 certified. Also known as an account executive or
simply stockbroker. |
| Regular Way Delivery |
Unless otherwise specified, securities sold on the NYSE are to be
delivered and paid for by the third business day after the transaction. |
| Regulation T |
The federal regulation governing the amount of credit that may be
advanced by brokers and dealers to customers for the purchase of securities. |
| Regulation U |
The federal regulation governing the amount of credit that may be
advanced by a bank to its customers for the purchase of securities. |
| REIT |
Real Estate Investment Trust. An organization similar to an investment
company in some respects, but concentrating its holdings in real estate
investments. A REIT may own several office buildings in a major city
for example, deriving income from the rent and appreciation of the
property. |
| Rejected Order |
Order which is invalid or unacceptable. |
| Rights |
When a company wants to raise capital by issuing additional securities,
it may give current stockholders the opportunity, ahead of the general
public, to buy the new issue in proportion to the number of shares
already owned. The piece of paper evidencing this privilege is called
a right. Because the additional stock is usually offered to stockholders
below the current market price, rights ordinarily have a market value
of their own and are actively traded. In most cases, rights must be
exercised within a relatively short period. Failure to exercise or
sell rights may result in monetary loss to the holder. |
| Rolling |
A follow-up action in which one option position is closed and a
new option position is opened with different terms but on the same
underlying security. An option can be rolled up or down to a new strike
price or rolled out to another expiration date to compensate for a
change in price in the underlying security. |
| Round Lot |
A unit of 100 shares of stock. In some less active stocks, a round
lot may consist of 10 share units. |
| 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. |
| Seat |
A membership on an exchange is called a "seat". |
| SEC |
The Securities and Exchange Commission. A federal agency established
by the Securities Exchange Act of 1934, the SEC is responsible for
monitoring the securities industry and enforcing U.S. securities laws. |
| Secondary Distribution |
Also known as a secondary offering. The redistribution of a block
of stock some time after it has been sold by the issuing company.
The sale is handled off of the exchange by one or more securities
firms at a fixed price related to the market price. The block of stock
is usually large, such as might be involved in the settlement of an
estate. |
| Secondary Market |
When stocks or bonds are traded or resold, they are said to be sold
on a secondary market. The majority of all securities transactions
take place on a secondary market. |
| Securities Industry Association (SIA) |
Represents the collective business interests of more than 500 brokerages
and investment banking firms. Membership includes most NYSE member
organizations, major firms of all U.S. and Canadian exchanges, and
the OTC market. |
| 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. |
| Seller's Option |
A special transaction that gives the seller the right to deliver
the stock or bond at any time within a specified period, ranging from
not less than 2 business days to not more than 60 business days. |
| Serial Bond |
An issue that matures in parts at stated intervals. |
| Series |
All option contracts of the same class that also have the same unit
of trade, expiration date, and strike price. |
| Settlement |
The conclusion of a transaction in which parties pay for securities
purchased and take delivery of securities sold. |
| Settlement Date |
Date by which an executed order must be settled. Buyers pay for
securities with cash, and sellers deliver certificates of sold securities. |
| Shares Outstanding |
The number of authorized shares in a company that are held by investors,
including employees and executives of that company. Unissued shares
or treasury shares are not included in this figure. |
| Short Option Position |
A position where a person's interest in a particular series of options
is as a net writer (i.e., the number of contracts sold exceeds the
number of contracts bought). |
| Short Sale |
The borrowing of stock one does not own in order to sell it, with
the expectation that its price will fall and it can be repurchased
cheaper. For example, suppose a broker expects the price of XYZ to
drop. Therefore, the broker borrows shares in XYZ and sells them at
the present price of 50. After a week, the price of XYZ has dropped
to 45. The broker closes his short position by buying back the shares
at 45 and returning them to their lender. The $50 he made on the sale
minus the $45 he paid to get back the borrowed shares is his profit
of $5 per share. |
| SIAC |
Securities Industry Automation Corporation. SIAC operates the New
York and American Stock Exchanges automation and communications systems
to support trading, market data reporting, and surveillance activities.
SIAC also supports the NSCC's nationwide clearance and settlement
systems and it is the systems processor for industry-wide National
Market System components, such as CTS, CQS, and ITS. SIAC is jointly
owned by the NYSE and AMEX. |
| SIPC |
Securities Industry Protection Corporation. A non-profit membership
corporation established by Congress in 1970 to protect investors'
securities and cash held by broker-dealers in the event of liquidation.
SIPC derives its annual assessments from U.S. registered broker-dealers,
who are legally required to join. |
| Specialist |
A key feature of the NYSE auction market is the role of the Specialist.
Specialists, managers of the auction process, are required to perform
several functions:
Maintain current bid and asked prices for their assigned stocks. This
information is transmitted worldwide, keeping all market participants
informed of the supply and demand for any NYSE-listed stock.
Act as agents, executing orders entrusted to them by a trading floor
broker, such as a limit order.
Buy or sell for their own accounts, against the trend of the market,
when there is a temporary shortage of either buyers or sellers. This
promotes stability and liquidity in the market.
Act as catalysts, bringing buyers and sellers together, so that offers
to buy can be matched with offers to sell.
The absolute obligation of the specialists is to place and execute
public investor orders ahead of their own -- to yield at all times
to public orders. However, if public customers cannot get together,
the specialists have a second obligation -- to make the market as
continuous as possible by providing their own capital or inventory
to complete a transaction. |
| SRO |
Self-Regulatory Organization. Describes a national securities exchange,
registered securities association, or registered clearing agency authorized
by the Securities Exchange Act of 1934 to regulate the conduct and
activities of its members, subject to oversight by a specified government
regulatory agency. |
| Stock Exchange |
An association of stockbrokers who meet to buy and sell stocks and
bonds according to fixed regulations. |
| Stock Index Futures |
Futures contracts based on market indexes. e.g., NYSE Composite
Index Futures Contracts. |
| Stock Split |
When a company increases the number of shares outstanding by splitting
existing shares. A 2-for-1 split means every stockholder gets two
new shares for each one they own, and a 3-for-2 split means they get
three shares for every two they own. The price of an individual share
falls, but stockholders do not lose money because they are being given
the equivalent number of new shares. In a reverse stock split, a company
reduces the number of the shares outstanding by consolidating existing
shares. A 1-for-5 reverse split for example, means for each five shares
owned one receives a single new share instead. The price of the new
shares is five times higher, but only to reflect the shortened supply.
If a company's stock is trading at a very low price, this process
makes the company look more attractive to investors. |
| Stop Limit Order |
An order to buy or sell at a specified price or better (called a
stop-limit price), but only after a given stop price has been reached
or passed. It is a combination of a stop order and a limit order. |
| Stop Order |
An order to buy or sell at the market price once the security has
traded at a specified price called the stop price. A stop order may
be a day-limit order, a GTC order, or any other form of time-limit
order. A stop order becomes a market order when the stop price is
reached.
A stop order to buy must always be executed when the buy price is
at or above the stop price.
A stop order to sell must always be executed when the sell price is
at or below the stop price. |
| Strike Price |
The price at which the owner of an option may buy or sell the underlying
security. |
| Swapping |
Selling one security and buying a similar one at almost the same
time to take a loss, usually for tax purposes. |
| Syndicate |
A group of investment banks authorized to underwrite and distribute
a new security simultaneously. |
| S&P 500 |
A capitalization weighted index of 500 stocks. Standard and Poor's
500 index represents the price trend movements of the major common
stock of U.S. public companies. It is used to measure the performance
of the entire U.S. domestic stock market. |
| T-Bills |
T-Bills, the common name for a U.S. Treasury bill, are short-term
(with a maturity of up to a year) discounted government securities
sold through competitive bidding at weekly and monthly auctions in
denominations from $10,000 to $1 million. They can also be purchased
by individuals directly from a Federal Reserve Bank in denominations
of under $500,000. |
| Tax-Deferred |
Applies to an investment whose accumulated earnings are free from
taxation until the investor takes possession of them. Usually, you
cannot take possession of these investments without penalty until
you are 59-1/2 years old. Tax-deferred investments are allowed by
the IRS to save for retirement. See Real Tax-Deferred Accounts. |
| Tax-Exempt Security |
An investment (generally a debt instrument, i.e., bond) whose interest
is exempt from taxation by federal, state, and/or local authorities.
Frequently called municipal bonds or munis, whether they were issued
by a state government or agency, or by any local political district
or subdivision. Tax-exempt securities are best applied to Taxable
Accounts as the yield is not competitive enough to be used in tax-deferred
accounts. Tax-exempt can be taxable under certain circumstances. See
Real Taxable Accounts and Municipal Bonds. |
| Tender Offer |
A public offer to buy shares from existing stockholders of a company,
usually made by another company attempting a takeover. |
| Third Market |
Securities listed on a stock exchange that are also traded in the
over-the-counter market by broker/dealers. |
| Tick |
The tick is the direction in which the price of a stock moved on
its last sale. An up-tick means the last trade was at a higher price
than the one before it and a down-tick means the last sale price was
lower than the one before it. A zero-plus tick means the transaction
was at the same price as the one before, but still higher than the
nearest preceding different price. The tick becomes especially important
when large market movements trigger the implementation of certain
circuit breakers meant to stabilize the market. |
| Ticker Symbol |
A three or four letter abbreviation used to identify a security,
whether on the floor, a TV screen, or a newspaper page. Ticker symbols
are part of the lore of Wall Street. They were originally developed
in the 1800s by telegraph operators to save bandwidth. One-letter
symbols were therefore assigned to the most active stocks. Railroads
were the dominant issues at the time, so they retain a majority of
the one-letter designations. Ticker symbols today are assigned on
a first-come, first-served basis. Each marketplace -- the NYSE, the
American Stock Exchange, and others -- allocates symbols for companies
within its purview, working closely to avoid duplication. A symbol
used for one company cannot be used for any other, even in a different
marketplace. |
| Time Value |
The portion of an option's price or premium that is attributable
to the amount of time remaining until it expires. The longer an option
has until it expires, the more opportunities its price has to fall
in-the-money. Time value is in addition to intrinsic value, which
is the amount by which the option is in-the-money. |
| 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. |
| Trader |
An employee of a broker/dealer or other financial institution who
specializes in handling purchases and sales of securities for the
firm or its clients. |
| Trading Post and Panel |
Any stock that trades on the floor of the NYSE is assigned a centralized
trading location called its post and panel. The post is a physical
structure where specialists work and floor brokers congregate to form
the trading crowd. The panel is the location on the post where information
pertaining to a symbol, such as the bid and ask, is displayed. |
| Transfer |
The legal change in ownership after the sale of a security. This
task may involve the physical delivery of a stock certificate or the
change of ownership on the books of the corporation by the transfer
agent. |
| Transfer Agent |
A transfer agent keeps a record of the name of each registered shareowner,
his/her address, the number of shares owned, and sees that the certificates
presented for transfer are properly canceled and new certificates
issued in the name of the new owner. |
| Turnover Rate |
An annual measure of the proportion of the shares outstanding that
have actually traded. This number is significant when considered in
relation to share volume. For example, if an exchange has daily share
volume of 250 million with a turnover rate of only 12%, then most
issues on the exchange are not being traded. |
| 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. |
| 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 |
Any security on which a derivative product is based. The underlying
security of an option, for example, is the stock that will be bought
or sold if the option is exercised. |
| 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 Stock |
A stock that has not been admitted to trading privileges on an exchange.
Companies that have not yet met the criteria for trading on an exchange
are referred to as over-the-counter stocks. |
| 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. |
| Venture Capital |
Equity stake in a small business for expansion uses. The deal usually
involves $5 to 40 million, has broad take over rights and significant
operational involvement. |
| Volatility |
A measure of the fluctuation in market price of a security. A volatile
issue has frequent and large swings in price. Mathematically, volatility
is calculated as the annualized standard deviation of returns. |
| Volume |
The number of shares or contracts traded in a security or an entire
market during a given period. Volume is normally considered on a daily
basis, with a daily average being computed for longer periods. |
| 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. |
| Warrant |
A warrant gives the holder the right to purchase additional shares
of new stock within a specified time limit or perpetually. Warrants
are often bundled in with new issues of debt or equity by a company
as an added inducement to buy. If the company is successful and the
stock rises over time, warrant holders will convert their warrants
into more 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 |
Shortened form of "when, as, and if issued." Indicates a transaction
in a security that has been authorized for issuance, but has not actually
hit the market yet. No "when issued" transaction is final, and is
only settled if and when the actual security is issued. |
| Wilshire 5000 |
A capitalization weighted index of all U.S.-headquartered companies
(currently about 7500). The capitalization of the portfolio is the
sum of the market capitalizations of all the companies. |
| Writer |
The seller of an option contract. |
| Yield |
Also known as return. The dividends or interest paid on a security
expressed as a percentage of the current price. For example, a stock
with a current market price of $40 per share, paying dividends at
the rate of $3.20 is said to yield 8% ($3.20/$40). |
| Zero Coupon Bond |
A bond that makes no periodic interest payments, but is priced at
a discount from its face value. It is simply an IOU of an amount of
money to be paid at a certain date. |
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