Term
|
Definition
| An Investment Company Act of 1940 provision that allows a mutual fund to collect a fee for the promotion or sale of or another activity connected with the distribution of its shares. The fee cannot exceed .75% of average net assets. |
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Term
| 20-day cooling off period |
|
Definition
| A period of 20 calendar days following the filing of a registration statement with the SEC, during which the SEC examines the statement for deficiencies the issuing corporation negotiates with an underwriting syndicate for a final agreement, and the syndicate prepares for the successful distribution of the impending issue. The final day of the period is normally considered the effective date, unless otherwise stated by the SEC. |
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Term
|
Definition
| A tax-deferred defined contribution retirement plan offered by an employer. |
|
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Term
|
Definition
| A tax-deferred annuity retirement plan available to employees of public schools and certain nonprofit organizations. |
|
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Term
|
Definition
|
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Term
|
Definition
| The general guidelines for the percentage markups, markdowns, and commissions on OTC securities transactions. The policy is intended to ensure fair and reasonable treatment of the investing public. |
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Term
|
Definition
| The standard for judging whether an investment company qualifies as diversified under the Investment Company Act of 1940. Under this act, a diversified investment company must invest at least 75% of its total assets in cash, receivables, or invested securities. This 75% must be invested in such a way that no more than 5% of its total assets are invested in any one company's voting securities, and no single investment may represent ownership of more than 10% of any one company's outstanding voting securities. |
|
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Term
|
Definition
| See American depository receipt. |
|
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Term
|
Definition
| See American depositary receipt. |
|
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Term
|
Definition
| See adjusted gross income. |
|
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Term
|
Definition
| See assumed interest rate. |
|
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Term
|
Definition
| See American Stock Exchange. |
|
|
Term
|
Definition
| See Securities Act of 1933. |
|
|
Term
|
Definition
| See Securities Exchange Act of 1934. |
|
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Term
|
Definition
| (1) A person authorized by a court of law to liquidate an intestate decedent's estate. (2) An official or agency that administers a state's securities laws. |
|
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Term
| American Stock Exchange (AMEX) |
|
Definition
| A private, not-for-profit corporation in New York that handles about one-fifth of all securities trades within the US. |
|
|
Term
| American depository receipt (ADR) |
|
Definition
| A negotiable certificate representing a given number of shares of stock in a foreign corporation. It is bought and sold in the American securities markets, just as stock is traded. Syn. American depositary share. |
|
|
Term
|
Definition
| Total of Share Prices / Number of Investments |
|
|
Term
|
Definition
|
|
Term
|
Definition
| See negotiable certificate of deposit. |
|
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Term
|
Definition
| See current market value. |
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Term
|
Definition
| See Consumer Price Index. |
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Term
|
Definition
| See Committee on Uniform Securities Identification Procedures. |
|
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Term
|
Definition
| A class of mutual fund share issued with a front-end sales load. A mutual fund offers different classes of shares to allow investors to choose the type of sales charge they will pay. See also Class B share; Class C share; Class D share; front-end load. |
|
|
Term
|
Definition
| A class of mutual fund share issued with a back-end load. A mutual fund offers different classes of shares to allow investors to chose the type of sales charge they will pay. See also back-end load; Class A share; Class C share; Class D share. |
|
|
Term
|
Definition
| A class of mutual fund share issued with a level load. A mutual fund offers different classes of shares to allow investors to choose the type of sales charge they will pay. See also Class A share; Class B share; Class D share. |
|
|
Term
|
Definition
| A class of mutual fund share issued with both a level load and a back-end load. A mutual fund offers different classes of shares to allow investors to choose the type of sales charge they will pay. See also back-end load; Class A share; Class B share; Class C share. |
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|
Term
| Code of Arbitration Procedure |
|
Definition
| FINRA's formal method of handling securities-related disputes or clearing controversies between members, public customers, clearing corporations, or clearing banks. Such disputes involve violations of the Uniform Practice Code rather than the Conduct Rules. Any claim, dispute, or controversy between member firms or associated persons must be submitted to arbitration. |
|
|
Term
|
Definition
| FINRA's formal procedure for handling trade practice complaints involving violations of the Conduct Rules. The Department of Enforcement is the first body to hear and judge complaints. |
|
|
Term
| Committee on Uniform Securities Identification Procedures (CUSIP) |
|
Definition
| A committee that assigns identification numbers and codes to all securities, to be used when recording all buy and sell orders. |
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Term
|
Definition
| A New York Stock Exchange service that delivers real-time reports of securities transactions to subscribers as they occur in the various exchanges. The Tape distributes reports to subscribers over two different networks that the subscribers can tap into through either the high-speed electronic lines of the low-speed ticker lines. Network A reports transactions in the NYSE-listed securities. Network B reports AMEX-listed securities transactions, as well as reports of transactions in regional exchange issues that substantially meet AMEX listed requirements. Syn. Tape; Ticker Tape. |
|
|
Term
| Consumer Price Index (CPI) |
|
Definition
| Measure of price changes in consumer good and services used to identify periods of inflation or deflation. |
|
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Term
|
Definition
| Annual Interest / Current Market Price |
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|
Term
|
Definition
| Annual Dividend / Current Market Price |
|
|
Term
|
Definition
| Total Dollars Invested / Number of Shares Purchased |
|
|
Term
| Dow Jones Industrial Average (DJIA) |
|
Definition
| The most widely used market indicator, composed of 30 large, actively traded issues of industrial stocks. |
|
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Term
|
Definition
| The most widely quoted and oldest measure of change in stock prices. Each of the four averages is based on the prices of a limited number of stocks in a particular category. |
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Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
| See Employee Retirement Income Security Act of 1974. |
|
|
Term
|
Definition
| Education IRAs, which are also known as Coverdell Education Savings Accounts (ESAs), may be established for the purpose of paying qualified education expenses for the designated beneficiary of the account. Although contributions to Education IRAs are not tax deductible, the distributions are tax-free as long as the distributions are taken to pay for allowable educational expenses. The maximum annual contribution is $2,000 per beneficiary. |
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|
Term
| Employee Retirement Income Security Act of 1974 (ERISA) |
|
Definition
| The law that governs the operation of most corporate pension and benefit plans. The law eased pension eligibility rules, set up the Pension Benefit Guaranty Corporation, and established guidelines for the management of pension funds. Coporate retirement plans established under ERISA qualify for favorable tax treatment for employers and participants. Syn. Pension Reform Act. |
|
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Term
|
Definition
| See Securities Exchange Act of 1934. |
|
|
Term
|
Definition
| See the Federal Deposit Insurance Corporation. |
|
|
Term
|
Definition
| See Federal Home Loan Bank. |
|
|
Term
|
Definition
| See Federal Home Loan Mortgage Corporation. |
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Term
|
Definition
| See Federal National Mortgage Association. |
|
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Term
|
Definition
| See Federal Open Market Committee. |
|
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Term
|
Definition
| See Federal Reserve Board. |
|
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Term
|
Definition
| See Federal National Mortgage Association. |
|
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Term
|
Definition
| An organization of 37 privately owned banks that provide credit services to farmers and mortgages on farm property. Included in the system are the Federal Land Banks, Federal Intermediate Credit Banks, and the Banks for Cooperatives. |
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Term
|
Definition
| See Federal Reserve System. |
|
|
Term
| Federal Deposit Insurance Corporation (FDIC) |
|
Definition
| The government agency that provides deposit insurance for member banks and prevents bank and thrift failures. |
|
|
Term
| Federal Home Loan Bank (FHLB) |
|
Definition
| A government regulated organization that operates a credit reserve system for the nation's savings and loan institutions. |
|
|
Term
| Federal Home Loan Mortgage Corporation (FHLMC) |
|
Definition
| A publicly traded corporation that promotes the nationwide secondary market in mortgages by issuing mortgage-backed pass-through debt securities. Syn. Freddie Mac. |
|
|
Term
| Federal Intermediate Credit Bank (FICB) |
|
Definition
| One of 12 banks that provide short-term financing to farmers as part of the Farm Credit System. |
|
|
Term
| Federal National Mortgage Association (FNMA) |
|
Definition
| A publicly held corporation that buys conventional mortgages from government agencies, including the Federal Housing Administration, Department of Veterans Affairs, and Farmers Home Administration, Syn. Fannie Mae. |
|
|
Term
| Federal Open Market Committee (FOMC) |
|
Definition
| A committee that makes decisions concerning the Fed's operations to control the money supply. |
|
|
Term
| Federal Reserve Board (FRB) |
|
Definition
| A seven-member group that directs the operations of the Federal Reserve System. The President appoints board members, subject to Congressional approval. |
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Term
|
Definition
| The central bank system of the United States. it's primary responsibility is to regulate the flow of money and credit. The system includes 12 regional banks, and hundreds of national and state banks. Syn. Fed. |
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|
Term
| Financial Industry Regulatory Authority (FINRA) |
|
Definition
| Formed in July 2007 by merger of the National Association of Securities Dealers (NASD) and New York Stock Exchange Regulation, Inc. it is the self-regulatory organization for the over-the-counter securities market and for members of the New York Stock Exchange. |
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Term
|
Definition
| See Securities Act of 1933. |
|
|
Term
|
Definition
| See Government National Mortgage Association. |
|
|
Term
| General Securities Representative |
|
Definition
|
|
Term
| Government National Mortgage Association (GNMA) |
|
Definition
| A wholly government-owned corporation that issues pass-through mortgage debt certificates back by the full faith and credit of the US government. Syn. Ginnie Mae. |
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Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
| See initial public offering. |
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|
Term
|
Definition
| See individual retirement account. |
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|
Term
|
Definition
| The reinvestment of assets that an individual receives as a distribution form a qualified tax-deferred retirement plan into an individual retirement account within 60 days of receiving the distribution. The individual may reinvest the entire sum or a portion of the sum, but any portion not reinvested is taxed as ordinary income. |
|
|
Term
|
Definition
| The direct reinvestment of retirement assets from one qualified tax-deferred retirement plan to an individual retirement account. The account owner never takes possession of the assets, but directs that they be transferred directly from the existing plan custodian to the new plan custodian. |
|
|
Term
|
Definition
| Material information that has not been disseminated to or is not readily available to the general public. |
|
|
Term
|
Definition
| See Insider Trading and Securities Fraud Enforcement Act of 1988. |
|
|
Term
| Insider Trading and Securities Fraud Enforcement Act of 1988 |
|
Definition
| legislation that defines what constitutes the illicit use of nonpublic information in making securities trades and the liabilities and penalties that apply. Syn. Insider Trading Act. |
|
|
Term
| Internal Revenue Code (IRC) |
|
Definition
| Legislation that defines tax liabilities and deductions for US taxpayers. |
|
|
Term
| Investment Advisers Act of 1940 |
|
Definition
| Legislation governing who must register with the SEC as an investment adviser. |
|
|
Term
| Investment Company Act Amendments of 1970 |
|
Definition
| Amendments to the Investment Company Act of 1940 requiring a registered investment company that issues contractual plans to offer all purchases withdrawal rights and purchasers of front-end load plans surrender rights. |
|
|
Term
| Investment Company Act of 1940 |
|
Definition
| Congressional legislation regulating companies that invest and reinvest in securities. The act requires an investment company engaged in interstate commerce to register with the SEC. |
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|
Term
| Investment Company/Variable Contract Products Limited Principal |
|
Definition
|
|
Term
| Investment Company/Variable Contract Products Limited Representative |
|
Definition
|
|
Term
|
Definition
| A qualified tax-deferred retirement plan for persons who are self-employed and unincorporated or who earn extra income through personal services aside from their regular employment. Syn. HR-10 plan. |
|
|
Term
|
Definition
|
|
Term
|
Definition
| A category of the money supply that includes all coins, currency and demand deposits--that is, checking accounts and NOW accounts. |
|
|
Term
|
Definition
| A category of the money supply that includes M1 in addition to all time deposits, savings deposits, and non-institutional money market funds. |
|
|
Term
|
Definition
| A category of the money supply that includes M2 in addition to all large time deposits, institutional money market funds, short-term repurchase agreements, and certain other large liquid assets. |
|
|
Term
|
Definition
| See Municipal Securities Rulemaking Board. |
|
|
Term
|
Definition
| An amendment enacted in 1938 to broaden Section 15 of the Securities Exchange Act of 1934. Named for its sponsor, the late Sen. Francis Maloney of Connecticut, the amendment provided for the creation of a self-regulatory organization for the specific purpose of supervising the over-the-counter securities market. |
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|
Term
| Municipal Securities Rulemaking Board (MSRB) |
|
Definition
| A self-regulatory organization that regulates the issuance and trading of municipal securities. The board functions under the Securities and Exchange Commission's supervision; it has no enforcement powers. |
|
|
Term
|
Definition
| See National Association of Securities Dealers, Inc. |
|
|
Term
|
Definition
| The body of rules describing how NASD functioned and implemented authority over member firms in the over-the-counter market. The functions are now administered by FINRA. |
|
|
Term
|
Definition
| Regulations written by NASD designed to ensure fair and ethical trading practices among it's member firms. Now administered by FINRA. |
|
|
Term
| NASD Department of Enforcement |
|
Definition
| The body within NASD, consisting of members from each of the 13 districts, that had original jurisdictional for hearing and judging complaints. Its functions are now administered by FINRA. |
|
|
Term
|
Definition
| The publication that outlines policies for regulating the over-the-counter securities markets, originally written by NASD, now adopted by FINRA. It includes the Conduct Rules, the Uniform Practice Code, The Code of Procedures, and the Code of Arbitration Procedures. |
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|
Term
|
Definition
|
|
Term
|
Definition
| The net total of a mutual fund's assets and liabilities; used to calculate the price of a new fund shares. |
|
|
Term
|
Definition
| Value of a mutual fund share, calculated by dividing the fund's net assets by the number of shares outstanding. |
|
|
Term
| NAV per share of a Mutual Fund |
|
Definition
| Fund Net Assets / Number of Shares Outstanding |
|
|
Term
|
Definition
| See negotiable order of withdrawal account. |
|
|
Term
|
Definition
| See New York Stock Exchange. |
|
|
Term
|
Definition
| The nationwide electronic quotation system for up-to-the-minute bid and asked quotations on approximately 5,500 over-the-counter stocks. |
|
|
Term
| National Association of Securities Dealers, Inc. |
|
Definition
| Established under the Maloney Act of 1938 as the self-regulatory organization (SRO) for the over-the-counter securities markets. It merged with the NYSE Regulation, Inc., in July 2007 to become the Financial Industry Regulatory Authority (FINRA). |
|
|
Term
| New York Stock Exchange (NYSE) |
|
Definition
| The largest stock exchange in the United States. It is a corporation, operated by a board of directors who is responsible for setting policy, supervising Exchange and member activities, listing securities, overseeing the transfer of members' seats on the Exchange, and judging whether an applicant is qualified to be a specialist. |
|
|
Term
| Number of Outstanding Shares |
|
Definition
| Issued Shares - Treasury Shares |
|
|
Term
| Number of Shares for Conversion |
|
Definition
| Par Value / Conversion Price |
|
|
Term
|
Definition
|
|
Term
|
Definition
| The security exchange system in which broker/dealers negotiate directly with one another rather than through an auction on an exchange floor. The trading takes place over computer and telephone networks that link brokers and dealers around the world. Both listed and OTC securities, as well as municipal and US government securities, trade in the OTC market. |
|
|
Term
|
Definition
| See public offering price. |
|
|
Term
|
Definition
| Bond Market Value / Number of Shares on Conversion. |
|
|
Term
|
Definition
| See Employee Retirement Income Security Act of 1974. |
|
|
Term
| Public Offering Price (POP) |
|
Definition
| NAV per Share / (100% - Sales Charge Percentage) |
|
|
Term
|
Definition
| See real estate investment trust. |
|
|
Term
|
Definition
| The Federal Reserve Board regulation that governs customer cash accounts and the amount of credit that brokerage firms and dealers may extend to customers for the purchase of securities. Regulation T currently sets the loan value of marginal securities at 50 percent and the payment deadline at two days beyond regular way settlement. |
|
|
Term
|
Definition
| An IRA that allows tax-free distributions after the investor reaches 59 1/2 and the account is at least 5 years old. Contribution limits, catch-up contributions, and spousal account provisions are the same as for traditional IRAs. Contributions to a Roth are offset by any contributions to a traditional IRA. |
|
|
Term
|
Definition
| NYSE rule requiring that each member organization exercise due diligence to learn the essential facts about every customer. Syn. know your customer rule. |
|
|
Term
|
Definition
| See Securities and Exchange Commission. |
|
|
Term
|
Definition
| See simplified employee pension plan. |
|
|
Term
|
Definition
| See Securities Investor Protection Corporation. |
|
|
Term
|
Definition
| See self-regulatory organization. |
|
|
Term
|
Definition
|
|
Term
|
Definition
| Federal legislation requiring the full and fair disclosure of all material information about the issuance of new securities. Syn. Act of 1933; Full Disclosure Act; New Issues Act; Prospectus Act; Trust in Securities Act; Truth in Securities Act. |
|
|
Term
| Securities Acts Amendments of 1975 |
|
Definition
| Federal legislation that established the Municipal Securities Rule-making Board. |
|
|
Term
| Securities Exchange Act of 1934 |
|
Definition
| Federal legislation that established the Securities and Exchange Commission. The act aims to protect investors by regulating the exchanges, the over-the-counter market, the extension of credit by the Federal Reserve Board, broker/dealers, insider transactions, trading activities, client accounts, and net capital. Syn. act of 1934; Exchange Act. |
|
|
Term
| Securities Investor Protection Corporation (SIPC) |
|
Definition
| A nonprofit membership corporation created by an act of Congress to protect clients of brokerage firms forced into bankruptcy. Membership is composed of all brokers and dealers registered under the Securities Exchange Act of 1934, all members of the national securities exchanges, and most FINRA members. SIPC provides brokerage firm customers up to $500,000 coverage for cash and securities held by the firms (cash coverage is limited to $100,000). |
|
|
Term
| Securities and Exchange Commission (SEC) |
|
Definition
| Commission created by Congress to regulate the securities markets and protect investors. It is composed of five commissioners appointed by the President of the United States and approved by the Senate. The SEC enforces, among other acts, the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940, and the Investment Advisers Act of 1940. |
|
|
Term
| Separate Trading of Registered Interest and Principal of Securities (STRIPS) |
|
Definition
| A zero-coupon bond issued and backed by the Treasury Department. |
|
|
Term
|
Definition
| The investment company/variable contract products limited principal license, which entitles the holder to supervise the sale of investment company and variable annuity products. A Series 6 or a Series 7 qualification is a prerequisite for this license. |
|
|
Term
|
Definition
| The investment company/variable contract products limited representative license, which entitles the holder to sell mutual funds and variable annuities and is used by many firms that sell primarily insurance-related products. The Series 6 can serve as the prerequisite for the Series 26 license. |
|
|
Term
|
Definition
| The Uniform Securities Agent State Law Exam, which entitles the successful candidate to sell securities and give investment advice in those states that require Series 63 registration. |
|
|
Term
|
Definition
| The Uniform Investment Adviser Law Exam, which entitles the successful candidate to sell securities and give investment advice in those states that require Series 65 registration. |
|
|
Term
|
Definition
| General securities registered representative license; entitles the holder to sell all types of securities products, with the exception of commodities futures (requires Series 3). Series 7 is the most comprehensive of the FINRA representative licenses and a prerequisite for most FINRA principal examinations. |
|
|
Term
|
Definition
| A nonmarketable, interest-bearing US government savings bond issued at a discount from par. Interest in Series EE bonds is exempt from state and local taxes. |
|
|
Term
|
Definition
| A nonmarketable, interest-bearing US government savings bond issued at par and purchased only by trading in Series EE bonds at maturity. Interest on Series HH bonds is exempt from state and local taxes. |
|
|
Term
|
Definition
|
|
Term
|
Definition
| The section of the Internal Revenue Code that provides special tax treatment for regulated investment companies. |
|
|
Term
|
Definition
| See tax-sheltered annuity. |
|
|
Term
| Tax-Free or Municipal Equivalent Yield |
|
Definition
| Corporate Rate X (100% - Tax Bracket) |
|
|
Term
| Taxable or Corporate Equivalent Yield |
|
Definition
| Municipal Rate / (100% - Tax Bracket) |
|
|
Term
|
Definition
| A marketable US government debt security with a maturity of less than six months. T-bills are issued through a competitive bidding process at a discount from par; they have no fixed interest rate. |
|
|
Term
|
Definition
| A marketable, fixed-interest US government debt security with a maturity of more than 10 years. |
|
|
Term
|
Definition
| A marketable, fixed-interest US government debt security with a maturity of between 1 and 10 years. Syn. T-note. |
|
|
Term
|
Definition
| Generic term for a zero-coupon bond issued by a brokerage firm and collateralized by the Treasury securities a custodian holds in escrow for the investor. |
|
|
Term
|
Definition
| Equity securities that the issuing corporation has issued and repurchased from the public at the current market price. |
|
|
Term
|
Definition
| See Securities Act of 1933. |
|
|
Term
|
Definition
| See Uniform Gift to Minors Act. |
|
|
Term
|
Definition
| See unit investment trust. |
|
|
Term
| US government and agency bond fund |
|
Definition
| A mutual fund whose investment objective is to provide current income while preserving safety of capital through investing in securities backed by the US Treasury or issued by a government agency. |
|
|
Term
|
Definition
| See Uniform Securities Act. |
|
|
Term
| Uniform Gifts (Transfers) to Minors Act (UGMA or UTMA) |
|
Definition
| legislation that permits a gift of money or securities to be given to a minor and held in a custodial account that an adult manages for the minor's benefit. Income and capital gains transferred to a minor's name are taxed at a lower rate. |
|
|
Term
| Uniform Investment Adviser Law Exam |
|
Definition
|
|
Term
|
Definition
| Policies originally written by NASD establishing guidelines for member firms' business dealings in securities with other member firms and customers. The Code has been adopted and is now administered by FINRA. |
|
|
Term
| Uniform Securities Act (USA) |
|
Definition
| Model legislation for securities industry regulation at the state level. Each state may adopt the legislation in its entirety or it may adapt it (within limits) to suit its needs. |
|
|
Term
| Uniform Securities Agent State Law Exam |
|
Definition
|
|
Term
| Uniform Transfers to Minors Act (UTMA) |
|
Definition
| Legislation adopted in some states that permits a gift of money or securities to be given to a minor and held in a custodial account that an adult manages for the minor's benefit until the minor reaches a certain age (not necessarily the age of majority). |
|
|
Term
|
Definition
| See registered representative. |
|
|
Term
|
Definition
As defined in Rule 502 of Regulation D, any institution or individual meeting minimum net worth requirements for the purchase of securities qualifying under the Regulation D registration exemption. An accredited investor is generally accepted to be one who:
- has a net worth of $1 million or more; or
- has had an annual income of $200,000 or more in each of the two most recent years (or $300,000 jointly with a spouse), and who has a reasonable expectation of reaching the same income level in the current year. |
|
|
Term
|
Definition
| The interest that has accumulated since the last interest payment up to, but not including, the settlement date, and that is added to a bond transaction's contract price. There are two methods of calculating accrued interest: the 30-day-month (360-day-year) method for corporate and municipal bonds and the actual-calendar-days (365-day-year) method for government bonds. Income bonds, bonds in default, and zero-coupon bonds trade without accrued interest (flat). |
|
|
Term
|
Definition
| The period during which contributions are made to an annuity account. |
|
|
Term
|
Definition
| An accounting measure used to determine an annuitant's proportionate interest in the insurer's separate account during an annuity's accumulation (deposit) stage. |
|
|
Term
| adjusted gross income (AGI) |
|
Definition
| Earned income plus net passive income, portfolio income, and capital gains. |
|
|
Term
|
Definition
| Any promotional material designed for use by newspapers, magazines, billboards, radio, television, telephone recordings or other public media where the firm has little control over the type of individuals exposed to the material. See registered representative. |
|
|
Term
|
Definition
| Anyone in a position to influence decisions made in a corporation, including officers, directors, principal stockholders, and members of their immediate families. Their shares are often referred to as control stock. |
|
|
Term
|
Definition
|
|
Term
|
Definition
| A debt security issued by an authorized agency of the federal government. Such an issue is backed by the issuing agency itself, not by the full faith and credit of the US government (except GNMA) and Federal Import Export Bank issue). See also government security. |
|
|
Term
|
Definition
| A transaction in which a broker/dealer acts for the accounts of others by buying or selling securities on behalf of customers. Syn. agency basis. |
|
|
Term
|
Definition
| (1) An individual or a firm that effects securities transactions for the accounts of others. (2) A person licensed by a state as a life insurance agent. (3) A securities salesperson who represents a broker/dealer or an issuer when selling or trying to sell securities to the investing public; this individual is considered an agent whether he actually receives or simply solicits orders. |
|
|
Term
| aggressive investment strategy |
|
Definition
| A method of portfolio allocation and management aimed at achieving maximum return. Aggressive investors place a high percentage of their investable assets in equity securities and a far lower percentage in safer debt securities and cash equivalents, and they pursue aggressive policies including margin trading, arbitrage, and option trading. |
|
|
Term
|
Definition
| The annual meeting that all registered representatives and principals must attend, the purpose of which is to review compliance issues. |
|
|
Term
|
Definition
| A formal statement issued yearly by a corporation to its shareowners. It shows assets, liabilities, equity revenues, expenses, and so forth. It is a reflection of the corporation's condition at the close of the business year (balance sheet) and earnings performance (income statement). |
|
|
Term
|
Definition
| Person who receives an annuity contract's distribution. |
|
|
Term
|
Definition
| To change an annuity contract from the accumulation (pay-in) stage to the distribution (payout) stage. |
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Term
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Definition
| A contract between an insurance company and an individual, generally guaranteeing lifetime income to the individual on whose life the contract is based in return for either a lump-sum or a periodic payment to the insurance company. The contract holder's objective is usually retirement income. |
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Term
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Definition
| An accounting measure used to determine the amount of each payment during an annuity's distribution stage. The calculation takes into account the value of each accumulation unit and such other factors as assumed interest rate and mortality risk. |
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Term
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Definition
| The increase in an asset's value. |
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Term
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Definition
| See qualified retirement plan. |
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Term
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Definition
| A process that allows industry disputes between members, member organizations, their employees, and customers to be heard and settled by either FINRA or a designated arbitration panel. Once the process is agreed to by both parties, there is no appeal. |
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Term
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Definition
| An indication of willingness by a trader or dealer to sell a security or a commodity; the price at which an investor can buy from a broker/dealer. Syn. offer. |
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Term
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Definition
| (1) Anything that an individual or a corporation owns. (2) A balance sheet item expressing what a corporation owns. |
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Term
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Definition
| A mutual fund that splits its investment assets among stocks, bonds, and other vehicles in an attempt to provide a consistent return for the investor. |
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Term
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Definition
| (1) A document accompanying or part of a stock certificate that is signed by the person named on the certificate for the purpose of transferring the certificate's title to another person's name. (2) The act of identifying and notifying an account holder that the option owner has exercised an option held short in that account. |
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Term
| associated person of a member (AP) |
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Definition
| Any employee, manager, director, officer, or partner of a member broker/dealer or another entity (issuer, bank, etc.), or any person controlling, controlled by, or in common control with that member. |
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Term
| assumed interest rate (AIR) |
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Definition
| The net rate of investment return that must be credited to a variable life insurance policy to ensure that at all times the variable death benefit equals the amount of the death benefit. The AIR forms the basis for projecting payments, but it is not guaranteed. |
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Term
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Definition
| A market in which buyers enter competitive bids and sellers enter competitive offers simultaneously. The NYSE is an auction market. Syn. double auction market. |
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Term
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Definition
| The number of shares of stock that a corporation can issue. The number of shares is stipulated in the corporation's state-approved charter and may be changed by a vote of the corporation's stockholders. |
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Term
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Definition
| An option available to mutual fund shareholders whereby fund dividends and capital gains distributions are automatically reinvested back into the fund. |
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Term
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Definition
| a price at a midpoint among a number of prices. Technical analysts often use averages as market indicators. |
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Term
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Definition
| A step in determining a bond's yield to maturity. A bond's average price is calculated by adding its face value to the price paid for it and dividing the result by two. |
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Term
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Definition
| The failure of an OTC market maker to honor a firm bid and asked price. Violates the Conduct Rules. |
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Term
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Definition
| A commission or sales fee that is charged when mutual fund shares or variable annuity contracts are redeemed. It declines annually, decreasing to zero over an extended holding period--up to eight years--as described in the prospectus. Syn. contingent-deferred sales load. |
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Term
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Definition
| The predating of a letter of intent (by as much as 90 days) to allow an investor to incorporate recent deposits for the purpose of qualifying for a sales load discount (breakpoint) on a purchase of open-end investment company shares. |
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Term
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Definition
| A report of a corporation's financial condition at a specific time. |
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Term
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Definition
| Formula stating that a corporation's assets equal the sum of its liabilities plus shareholder's equity. |
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Term
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Definition
| A mutual fund whose stated investment policy is to have at all times some portion of its investment assets in bonds and preferred stock as well as in common stock in an attempt to provide both growth and income. |
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Term
| balanced investment strategy |
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Definition
| Method of portfolio allocation and management aimed at balancing risk and return. A balanced portfolio may combine stocks, bonds, packaged products, and cash equivalents. |
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Term
|
Definition
| A money market instrument used to finance international and domestic trade. A banker's acceptance is a check drawn on a bank by an importer or exporter of goods and represents the bank's conditional promise to pay the face amount of the note at maturity (normally less than three months). |
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Term
|
Definition
| A measure of a bond's yield, equal to 1/100 of 1% of yield. A bond whose yield increases from 5.0% to 5.5% is said to increase by 50 basis points. |
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Term
|
Definition
| An investor who acts on the belief that a security or market is falling or will fall. |
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Term
|
Definition
| A market in which prices of a certain group of securities are falling or are expected to fall. |
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Term
|
Definition
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Term
|
Definition
| An offering newly issued securities in which the investment banker acts as an agent of the corporation, promising only his best efforts in making the issue a success, but not guaranteeing the corporation that all shares will be sold or its money for an unsold shares. |
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Term
|
Definition
| A means of measuring the volatility of a security or a portfolio of securities in comparison with the market as a whole. A beta of 1 indicates that the security's price will move with the market. A beta greater than 1 indicates that the security's price will be more volatile than the market. A beta less than 1 means that it will be less volatile than the market. |
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Term
|
Definition
| An indication by an investor, a trader, or a dealer of a willingness to buy a security, the price at which an investor can sell to a broker/dealer. |
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Term
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Definition
| The equity issues of financial stable, well-established companies that have demonstrated their ability to pay dividends in both good and bad times. |
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Term
|
Definition
| To register a securities offering in a particular state. |
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Term
|
Definition
| Nickname for state regulations governing the securities industry. Coined in the early 1900s by a Kansas Supreme Court justice who wanted regulation to protect against "speculative schemes that have no more basis than so many feet of the blue sky." |
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Term
|
Definition
| (1) Individuals elected by stockholders to establish corporate management policies. A board of directors decides, among other issues, if and when dividends will be paid to stockholders. (2) The body that governs the NYSE. It is composed of 20 members elected for a term of two years by the NYSE general membership. |
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Term
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Definition
| Offer from a broker/dealer to buy or sell securities; indicates willingness to execute a trade under terms and conditions accompanying the quote. |
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Term
|
Definition
| An issuing company's or government's legal obligation to repay the principal of a loan to bond investors at a specified future date. Usually issued with par or face values of $1,000, representing the amount of money borrowed. The issuer promises to pay a percentage of the par value as interest on the borrowed funds. The interest payment is stated on the face of the bond at issue. |
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Term
|
Definition
| A mutual fund whose investment objective is to provide stable income with minimal capital risk. It invests in income-producing instruments, which may include corporate, government, or municipal bonds. |
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Term
|
Definition
| One of a number of quotations listed in the financial press and most daily newspapers that provide representative bid prices from the previous day's bond market. Quotes for corporate and government bonds are percentages of the bonds' face values (usually $1,000). Corporate bonds are quoted in increments of 1/8 where a quote of 99 1/8 represents 99.125% of par ($1,000), or $991.25. Government bonds are quoted in 32nds. Municipal bonds may be quoted on a dollar basis or on a yield-to-maturity basis. |
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Term
|
Definition
| An evaluation of the possibility of a bond issuer's default, based on an analysis of the issuer's financial condition and profit potential. Standard & Poor's, Moody's Investor Service, and Fitch Investors Service, among others, provide bond rating services. |
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Term
|
Definition
| The annual rate of return on a bond investment. Types of yield include nominal yield, current yield, yield to maturity, and yield to call. Their relationships vary according to whether the bond in question is at a discount, at a premium, or at par. |
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Term
|
Definition
| A measure of the net worth of each share of common stock. It is calculated by subtracting intangible assets and preferred stock from total net worth, then dividing the result by the number of shares of common outstanding. Syn. net tangible assets per share. |
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Term
|
Definition
| A security sold without delivery of a certificate. Evidence of ownership is maintained on records kept by a central agency; for example, the Treasury keeps records of T-bills purchasers. Transfer of ownership is recorded by entering the change on the books or electronic file. |
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Term
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Definition
| The point at which gains equal losses. |
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Term
|
Definition
| The schedule of sales charge discounts a mutual fund offers for lump-sum or cumulative investments. |
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Term
|
Definition
| The sale of mutual fund shares in an amount just below the level at which the purchaser would qualify for reduced sales charges. Violates the Conduct Rules. |
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Term
|
Definition
| An index designed to reflect the movement of the market as a whole. Examples include the S&P 100, the S&P 500, the AMEX Major Market Index, and the Value Line Composite Index. |
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Term
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Definition
| (1) An individual or firm that charges a fee or commission for executing buy and sell orders submitted by another individual or firm. (2) The role of a firm when it acts as an agent for a customer and charges the customer a commission for its service. |
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Term
|
Definition
| Person or firm in the business of buying and selling securities. A firm may act as broker (agent) and dealer (principal), but not in the same transaction. Broker/dealers normally must register with the SEC, appropriate SROs, and any state in which they do business. |
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Term
|
Definition
| An investor who acts on the belief that a security or the market is rising or will rise. |
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Term
|
Definition
| A market in which prices of a certain group of securities are rising or will rise. |
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Term
|
Definition
| A predictable long-term pattern of alternating periods of economic growth and decline. The cycle passes through four stages: expansion, peak, contraction, and trough. |
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Term
|
Definition
| A day on which financial markets are open for trading. Saturdays, Sundays, and legal holidays are not considered business days. |
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Term
| business or financial risk |
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Definition
| The risk that the business in which you have invested money will not do well. |
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Term
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Definition
| (1) Option contract giving the owner the right to buy a specified amount underlying security at a specified price within a specified time. (2) The act of exercising a call option. |
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Term
|
Definition
| Investor who pays a premium for an option contract and receives, for a specified time, the right to buy the underlying security at a specified price. |
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Term
|
Definition
| The date, specified in the prospectus of every callable security, after which the security's issuer has the option to redeem the issue at par or at par plus a premium. |
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Term
|
Definition
|
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Term
|
Definition
| Price, usually a premium over the issue's par value, at which preferred stock or bonds can be redeemed before an issue's maturity. |
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Term
|
Definition
| A provision in a bond indenture stating that the issue is noncallable for a certain period of time (5 years, 10 years, etc.) after the original issue date. |
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Term
|
Definition
| The written agreement between an issuing corporation and its bondholders or preferred stockholders giving the corporation the option to redeem its senior securities at a specified price before maturity and under certain conditions. Syn. call feature. |
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Term
|
Definition
| The potential for a bond to be called before maturity, leaving the investor without the bond's current income. As this is more likely during the times of falling interest rates, the investor may not be able to reinvest his principal at a comparable rate of return. |
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Term
|
Definition
| An investor who receives a premium and takes on, for a specified time, the obligation to sell the underlying security at a specified price at the call buyer's discretion. |
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Term
|
Definition
| A type of bond issued with a provision allowing the issuer to redeem the bond before maturity at a predetermined price. |
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Term
|
Definition
| A type of preferred stock issued with a provision allowing the corporation to call in the stock at a certain price and retire it. |
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Term
|
Definition
| Accumulated money or goods available for use in producing more money or goods. |
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Term
|
Definition
| A rise in an asset's market price. |
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Term
|
Definition
| All tangible property, including securities, real estate, and other property, held for the long term. |
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Term
|
Definition
| Profit realized when a capital asset is sold for a higher price than the purchase price. |
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Term
| capital gains distributions |
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Definition
| Payments made to mutual fund shareholders of gains realized on the sale of the fund's portfolio securities. These amounts, if any, are paid once a year. |
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Term
|
Definition
| The loss incurred when a capital asset is sold for a lower price than the purchase price. |
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Term
|
Definition
| The segment of the securities market that deals in instruments with more than one year to maturity--that is, long-term debt and equity securities. |
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Term
|
Definition
| Potential for an investor to lose all money invested due to circumstances unrelated to an issuer's financial strength (e.g., derivative instruments such as options carry risk independent of the underlying securities' changing value). |
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Term
|
Definition
| All of a corporation's outstanding preferred stock and common stock, listed at par value. |
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Term
|
Definition
| Composition of long-term funds (equity and debt) a corporation has as a source of financing. |
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Term
|
Definition
| The money a corporation receives in excess of the stated value of stock at the time of first sale. Syn. paid-in surplus. |
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Term
|
Definition
| The sum of a corporation's long-term debt, stock, and surpluses. Syn. invested capital. |
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Term
|
Definition
| An account in which the customer is required by the SEC's Regulation T to pay in full for securities purchased no later than two days after the standard payment period set by the Uniform Practice Code. Syn. special cash account. |
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Term
|
Definition
| Money paid to a corporation's stockholders out of the corporation's current earnings or accumulated profits. The board of directors must declare all dividends. |
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Term
|
Definition
| A security that can be readily converted into cash. Examples include Treasury bills, certificates of deposit, and money market instruments and funds. |
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Term
|
Definition
| A settlement contract that calls for delivery and payment on the same day the trade is executed. Payment is due by 2:30 pm ET or within 30 minutes of the trade if it occurs after 2:00 pm ET. Syn. cash trade. |
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Term
|
Definition
| The department within a brokerage firm that delivers securities and money to and receives securities and money from other firms and clients of the brokerage firm. Syn. security cage. |
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Term
|
Definition
| The redemption of a bond by an issuer owing to disaster(for example, a power plant that has been built with proceeds from an issue burns to the ground). |
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Term
|
Definition
| A paper document used to evidence ownership of or creditorship in a corporation. |
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|
Term
|
Definition
| (1) For an index or average, the difference between the current value and the previous day's market close. (2) for a stock or bond quote, the difference between the current price and the last trade of the previous day. |
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Term
|
Definition
| Excessive trading in a customer account by a registered representative who ignores customer interest and seeks only to increase commissions. Violates the Conduct Rules. Syn. overtrading. |
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Term
|
Definition
| The price of the last transaction for a particular security on a particular day. |
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Term
| closed-end management company |
|
Definition
| An investment company that issues a fixed number of shares in an actively managed portfolio of securities. The shares may be of several classes and are traded in the secondary marketplace, either on an exchange or over the counter. The shares' market price is determined by supply and demand, not by NAV. Syn. publicly traded fund. |
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Term
|
Definition
| A measurable economic factor that varies directly and simultaneously with the business cycle, thus indicating the current state of the economy. Examples include nonagricultural employment, personal income, and industrial production. |
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|
Term
| collateralized mortgage obligation (CMO) |
|
Definition
| A mortgage-backed corporate security. Unlike pass-through obligations issued by FNMA and GNMA, its yield is not guaranteed and it does not have the federal government's backing. These issues attempt to return interest and principal at the predetermined rate. |
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Term
|
Definition
| An equity mutual fund that attempts to combine the objectives of growth and current yield by dividing its portfolio between companies that show long-term growth potential and companies that pay high dividends. |
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Term
|
Definition
| A benefit offered by a mutual fund whereby the investor may qualify for a sales charge breakpoint by combining separate investments in two or more mutual funds under the same management. |
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Term
|
Definition
| An unsecured, short-term promisory note issued by a corporation for financing accounts receivable and inventories. It is usually issued at a discount reflecting prevailing market interest rates. Maturities range up to 270 days. |
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Term
|
Definition
| A service charge an agent assesses in return for arranging a security's purchase or sale. A commission must be fair and reasonable, considering all the relevant factors of the transaction. Syn. Sales charge. |
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Term
|
Definition
| The state official with jurisdiction over insurance transactions. |
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Term
|
Definition
| A security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy. |
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Term
|
Definition
| This is a mutual fund portfolio that consists primarily of common stocks. The emphasis of these portfolios is usually on growth. |
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|
Term
| completion of the transaction |
|
Definition
| As defined by FINRA, the point at which a customer pays any part of the purchase price to the broker/dealer for a security he has purchased or delivers a security he has sold. If the customer pays the broker/dealer before payment is due, the transaction's completion occurs when the broker/dealer delivers the security. |
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Term
|
Definition
| The department within a brokerage firm that oversees the firm's trading and market-making activities. It ensures that the firm's employees and officers abide by the rules and regulations of the SEC, exchanges, and SROs. |
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Term
|
Definition
| The profit per bond or share that an underwriter allows the seller of a new issue securities. The selling group broker/dealer purchase the securities from the syndicate member at the public offering price minus the concession. Syn. reallowance. |
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Term
|
Definition
| A set of rules established by NASD (now FINRA) regulating the ethics employed by members in the conduct of their business. |
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Term
|
Definition
| Means for an investment company to avoid taxation on net investment income distributed to shareholders. If a mutual fund acts as a conduit for the distribution of net investment income, it may qualify as a regulated investment company and be taxed only on the income it retains. Syn. pipeline theory. |
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Term
|
Definition
| Printed document that states the trade date, settlement date, and money due from or owed to a customer. It is sent or given to the customer on or before the settlement date. |
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Term
|
Definition
| A defensive investment strategy in which the total sum of money invested is kept constant, regardless of any price fluctuation in the portfolio. As a result, the investor sells when the market is high and buys when it is low. |
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Term
|
Definition
| An investment strategy in which the investor maintains an appropriate ratio of debt to equity securities by making purchases and sales to maintain the desired balance. |
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Term
|
Definition
| Date on which the Internal Revenue Service considers that a taxpayer receives dividends or other income. |
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|
Term
| contingent-deferred sales load |
|
Definition
|
|
Term
|
Definition
| A monetary policy that decreases the money supply, usually with the intention of raising interest rates and combating inflation. |
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|
Term
|
Definition
| A period of general economic decline; one of the business cycle's four stages. |
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Term
|
Definition
| A type of accumulation plan in which an individual agrees to invest a specific amount of money in the mutual fund during a specific time period. Syn. penalty plan; prepaid charge plan. |
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|
Term
| control (controlling, controlled by, under common control with) |
|
Definition
| The power to direct or affect the direction of a company's management and policies, whether through the ownership of voting securities, by contract, or otherwise. Control is presumed to exist if a person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing more than 10% of a company's voting securities. |
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|
Term
|
Definition
| (1) A director, officer, or another affiliate of an issuer. (2) A stockholder who owns at least 10% of any class of a corporation's outstanding securities. |
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Term
|
Definition
| Any security owned by a director, an officer, or another affiliate of the issuer or by a stockholder who owns at least 10% of any class of a corporation's outstanding securities. Who owns a security, not the security itself, determined whether it is a control security. |
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Term
|
Definition
| Two securities, one of which can be converted into the other, of equal dollar value. A convertible security holder can calculate parity to help decide whether converting would lead to gain or loss. |
|
|
Term
|
Definition
| The dollar amount of a convertible security's par value that is exchangeable for one share of common stock. |
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|
Term
|
Definition
| A feature the issuer adds to a security that allows the holder to change the security into shares of common stock. This makes the security attractive to investors and, therefore, more marketable. |
|
|
Term
|
Definition
|
|
Term
|
Definition
| The number of shares of common stock per par value amount that the holder would receive for converting a convertible bond or preferred share. Syn. conversion rate. |
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|
Term
|
Definition
| The total market value of common stock into which a senior security is convertible. |
|
|
Term
|
Definition
| A debt security, usually in the form of a debenture, that can be exchanged for equity securities of the issuing corporation at specified prices or rates. |
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|
Term
| convertible preferred stock |
|
Definition
| An equity security that can be exchanged for common stock at specified prices or rates. Dividends may be cumulative or noncumulative. |
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Term
|
Definition
| The period (a minimum of 20 days) between a registration statement's filing date and the registration's effective date. In practice, the period varies in length. |
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|
Term
|
Definition
| See registration by coordination. |
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|
Term
|
Definition
| An account held in a corporation's name. The corporate agreement, signed when the account is opened, specified which officer may trade in the account. In addition to standard margin account documents, a corporation must provide a copy of its charter and bylaws authorizing a margin account. |
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|
Term
|
Definition
| A debt security issued by a corporation. A corporate bond typically has a par value of $1,000, is taxable, has a term maturity, and is traded on a major exchange. |
|
|
Term
|
Definition
| The most common form of business organization, in which the organization's total worth is divided into shares of stock, each share representing a unit of ownership. A corporation is characterized by a continuous life span and its owners' limited liability. |
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Term
|
Definition
| The price paid for an asset, including any commissions or fees, used to calculate capital gains or losses when the asset is sold. |
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Term
|
Definition
| A debt obligation with attached coupons representing semiannual interest payments. The holder submits the coupons to the trustee to receive the interest payments. The issuer keeps no record of the purchaser, and the purchaser's name is not printed on the certificate. Syn. bearer bond. |
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Term
|
Definition
|
|
Term
|
Definition
| An investor who sells a call option while owning the underlying security or some other asset that guarantees the ability to deliver if the call is exercised. |
|
|
Term
|
Definition
| The degree of probability that a bond's issuer will default in the payment of either principal or interest. Syn. default risk; financial risk. |
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|
Term
|
Definition
| A risk that applies with debt securities (bonds). The investor has extended credit to the issuer when he buys their bonds. This is the risk that the issuer will be unable to pay the investor back. |
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|
Term
| cumulative preferred stock |
|
Definition
| An equity security that offers the holder any unpaid dividends in arrears. These dividends accumulate and must be paid to the cumulative preferred stockholder before any dividend can be paid to the common stockholders. |
|
|
Term
|
Definition
| A voting procedure that permits stockholders either to cast all of their votes for any one candidate or to cast their total number of votes in any proportion they choose. This results in greater representation for minority stockholders. |
|
|
Term
|
Definition
| Cash and other assets that are expected to be converted into cash within the next 12 months. Examples include such liquid items as cash and equivalent, accounts receivable, inventory, and prepaid expenses. |
|
|
Term
| current market value (CMV) |
|
Definition
| The worth of the securities in an account. The market value of listed securities is based on the closing prices on the previous business day. Syn. long market value. |
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Term
|
Definition
| See public offering price. |
|
|
Term
|
Definition
| A corporation's debt obligations due for payment within the next 12 months. Examples include accounts payable, accrued wages payable, and current long-term debt. |
|
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Term
|
Definition
| Account in which a custodian enters trades on behalf of the beneficial owner, often a minor. |
|
|
Term
|
Definition
| An institution or a person responsible for making all investment, management, and distribution decisions in an account maintained in the best interest of another. Mutual funds have custodians responsible for safeguarding certificates and performing clerical duties. |
|
|
Term
|
Definition
| Any person who opens a trading account with a broker/dealer. A customer may be classified in terms of account ownership, trading authorization, payment methods, or types of securities traded. |
|
|
Term
|
Definition
| A document showing a customer's trading activity, positions, and account balance. The SEC requires that customer statements be sent quarterly, but customers generally receive them monthly. |
|
|
Term
|
Definition
| Fundamental analysis term for an industry that is sensitive to the business cycle and price changes. Most cyclical industries produce durable good such as raw materials and heavy equipment. |
|
|
Term
|
Definition
| (1) An individual or a firm engaged in the business of buying and selling securities for its own account, either directly or through a broker. (2) The role of a firm when it acts as principal and charges the customer a markup or markdown. Syn. principal. |
|
|
Term
|
Definition
| This provision of an annuity allows for the payment to a beneficiary the greater of the value of the contributions or the value of the separate account at date of death. The provision is only effective during the accumulation period of the annuity, meaning if the annuitant dies before reaching the annuity (payout) phase. |
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|
Term
|
Definition
| A debt obligation backed by the issuing corporation's general credit. Syn. unsecured bond. |
|
|
Term
|
Definition
| Raising money for working capital or for capital expenditures by selling bonds, bills, or notes to individual or institutional investors. In return for the money lent, the investors become creditors and receive the issuer's promise to repay principal and interest on the debt. |
|
|
Term
|
Definition
| A security representing an investor's loan to an issuer such a corporation, a municipality, the federal government, or a federal agency. In return for the loan, the issuer promises to repay the debt on a specified date and to pay interest. |
|
|
Term
|
Definition
| The date on which a corporation announces an upcoming dividend's amount, payment date, and record date. |
|
|
Term
|
Definition
| An item of expenditure subtracted from adjusted gross income to reduce the amount of income subject to tax. |
|
|
Term
|
Definition
| Failure to pay interest or principal promptly when due. |
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Term
|
Definition
|
|
Term
|
Definition
| A fundamental analysis term of an industry that is relatively unaffected by the business cycle. Most defensive industries produce nondurable goods for which demand remains steady throughout the business cycle; examples include the food industry and utilities. |
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Term
| defensive investment strategy |
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Definition
| A method of portfolio allocation and management aimed at minimizing the risk of losing principal. Defensive investors place a high percentage of their investable assets in bonds, cash equivalents and stock that are less volatile than average. |
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Term
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Definition
| An annuity contract that delays payment of income, installments, or a lump sum until the investor elects to receive it. |
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Term
| deferred compensation plan |
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Definition
| A nonqualified retirement plan whereby the employee defers receiving current compensation in favor of a larger payout at retirement (or in the case of a disability or death). |
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Term
|
Definition
| A qualified retirement plan that specifies the total amount of money that the employee will receive at retirement. |
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Term
| defined contribution plan |
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Definition
| A qualified retirement plan that specifies the amount of money that the employer will contribute annually to the plan. |
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Term
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Definition
| A persistent and measurable fall in the general level of prices. |
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Term
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Definition
| The change in ownership or in control of a security in exchange for cash. Delivery takes place on the settlement date. |
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Term
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Definition
| A sum of money left with a bank (or borrowed from a bank and left on deposit) that the investing customer has the right to withdraw immediately. |
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Term
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Definition
| A prolonged period of economic decline. |
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Term
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Definition
| An investment vehicle, the value of which is based on another security's value. futures contracts, forward contracts, and options are among the most common types of derivatives. Institutional investors generally use derivatives to increase overall portfolio return or to hedge portfolio risk. |
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Term
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Definition
| a substantial fall in currency's value as compared to the value of gold or the value of another country's currency. |
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Term
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Definition
| A reduction in earnings per share of common stock. Dilution occurs through the issuance of additional shares of common stock and the conversion of the convertible securities. |
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Term
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Definition
| The difference between the lower price paid for a security and the security's face amount at issue. |
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Term
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Definition
| A bond that sells at a lower price than its face value. |
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Term
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Definition
| The interest rate charged by the 12 Federal Reserve Banks for short-term loans made to member banks. |
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Term
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Definition
| The authority given to someone other than an account's beneficial owner to make investment decisions for the account concerning the security, the number of shares or units, and whether to buy or sell. The authority to decide only timing or price does not constitute discretion. |
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Term
|
Definition
| An account in which the customer has given the registered representative authority to enter transactions at the representative's discretion. |
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Term
|
Definition
| An order entered by a registered representative for a discretionary account allowing him to use his own judgment on the customer's behalf with respect to choice of security, quantity of security, and whether the transaction should be a purchase or sale. |
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Term
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Definition
| The flow of money from low-yielding accounts in traditional savings institutions to higher yielding investments. Typically, this occurs when the Fed tightens the money supply and interest rates rise. |
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Term
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Definition
| The sum that people divide between spending and personal savings. |
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Term
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Definition
| Any cash or other property distributed to shareholders or general partners that arises from their interest in the business, investment company, or partnership. |
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Term
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Definition
| The period during which an individual receives distributions from an annuity account. Syn. payout stage. |
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Term
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Definition
| A risk management technique that mixes a variety of investments within a portfolio, thus minimizing the impact of any one security on overall portfolio performance. |
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Term
| diversified common stock fund |
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Definition
| A mutual fund that invests its assets in a wide range of common stocks. The fund's objectives may be growth, income, or a combination of both. |
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Term
| diversified management company |
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Definition
| As defined by the Investment Company Act of 1940, a management company that meets certain standards for the percentage of assets invested. These companies use diversification to manage risk. |
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Term
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Definition
| A distribution of a corporation's earnings. Dividends may be in the form of cash, stock, or property. The board of directors must declare all dividends. Syn. stock dividend. |
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Term
|
Definition
| A measure of a corporation's policy of paying cash dividends, calculated by dividing the dividend's paid on common stock by the net income available for common stockholders. The ratio is the complement of the retained earnings ratio. |
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Term
|
Definition
| Annual rate of return on a common or preferred stock investment. Yield is calculated by dividing the annual dividend by the stock's purchase price. |
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Term
|
Definition
| The dollar amount of cash dividends paid on each common share during one year. |
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Term
| doctrine of mutual reciprocity |
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Definition
| The agreement that established the federal tax exemption for municipal bond interest. States and municipalities do not tax federal securities or properties, and the federal government reciprocates by exempting local government securities and properties from federal taxation. Syn. mutual exclusion doctrine; reciprocal immunity. |
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Term
|
Definition
| A system of buying mutual fund shares in fixed dollar amounts at regular fixed intervals, regardless of the share's price. The investor purchases more shares when prices are low and fewer shares when prices are high, thus lowering the average cost per share over time. |
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Term
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Definition
| Person who makes a gift of money or securities to another. Once a gift is donated, the donor gives up all rights to it. Gifts of securities to minors under the Uniform Gifts to Minors Act provide tax advantages to the donor. |
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Term
|
Definition
| A closed-end investment company that offers two classes of stock: income shares and capital shares. Income shares entitle the holder to share in the net dividends and interest paid to the fund. Capital shares entitle the holder to profit from the capital appreciation of all securities the fund holds. |
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Term
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Definition
| A copy of a customer's confirmation that brokerage firm sends to an agent or a attorney if the customer requires it in writing. In addition, if the customer is an employee of another broker/dealer, SRO regulations may require a duplicate confirmation to be sent to the employing broker/dealer. |
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Term
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Definition
| Income derived from active participation in a trade or business, including wages, salary, tips, commissions, and bonuses. |
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Term
|
Definition
| A corporation's net income available for common stock dividend by its number of shares of common stock outstanding. Syn. primary earnings per share. |
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Term
|
Definition
| The potential for international developments and domestic events to trigger losses in securities investments. |
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Term
|
Definition
| The date the registration of an issue of securities becomes effective, allowing the underwriters to sell the newly issued securities to the public and confirm sales to investors who have given indications of interest. |
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Term
|
Definition
| The responsiveness of consumers and producers to a change in price. A large change in demand or production resulting from a small change in price for a good is considered an indication of elasticity. |
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Term
|
Definition
| The signature on the back of a stock or bond certificate by the person named on the certificate as the owner. An owner must endorse certificates when transferring them to another person. |
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Term
|
Definition
| Common and preferred stockholder's ownership interests in a corporation. |
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Term
|
Definition
| Raising money for working capital or for capital expenditures by selling common or preferred stock to individual or institutional investors. In return for the money paid, the investors receive ownership interests in the corporation. |
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Term
|
Definition
| Security representing the right to buy or sell common stock at a specified price within a specified time. |
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Term
|
Definition
| A security representing ownership in a corporation or another enterprise. Examples of equity securities include: common and preferred stock; interests in a limited partnership or joint venture; securities that carry the right to be traded for equity securities, such as convertible bonds, rights, and warrants; and put and call options on equity securities. |
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Term
|
Definition
| Tax imposed by a state or the federal government on the assets a person possesses at the time of death. |
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Term
|
Definition
| The first date on which a security is traded that the buyer is not entitled to receive distributions previously declared. Syn. ex-dividend date. |
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Term
|
Definition
|
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Term
|
Definition
| Any organization, association, or group of persons that maintains or provides a marketplace in which securities can be bought and sold. An exchange need not be a physical place, and several strictly electronic exchanges do business around the world. |
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Term
|
Definition
| All of the exchanges on which listed securities are traded. |
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Term
|
Definition
| A feature offered by a mutual fund allowing an individual to transfer an investment in one fund to another fund under the same sponsor without incurring an additional sales charge. |
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Term
|
Definition
| A security that has met certain requirements and has been admitted to full trading privileges on an exchange. The NYSE, the AMEX, and regional exchanges set listing requirements for volume of shares outstanding, corporate earnings, and other characteristics. Exchange-listed securities can also be traded in the third market, the market for institutional investors. |
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Term
|
Definition
| A person given fiduciary authorization to manage the affairs of a decedent's estate. An executor's authority is established by the decedent's last will. |
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Term
|
Definition
| A security exempt from the registration requirements (although not from the antifraud requirements) of the Securities Act of 1933. Examples include government securities and municipal securities. |
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Term
|
Definition
| To affect the transaction offer by an option, a right, or warrant. for example, an equity call holder exercises a call by selling 100 shares of the underlying stock at the agreed-upon price within the agreed-upon time period. |
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Term
|
Definition
| Cost per share at which an option or warrant holder may buy or sell the underlying security. Syn. strike price. |
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Term
|
Definition
| A period of increased business activity through-out an economy; one of the four stages of the business cycle. Syn. recovery. |
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Term
|
Definition
| A monetary policy that increases the money supply, usually with the intention of lowering interest rates and combatting deflation. |
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Term
|
Definition
| A ratio for comparing a mutual fund's efficiency by dividing the fund's expenses by its net assets. |
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Term
|
Definition
|
|
Term
| face-amount certificate company (FAC) |
|
Definition
| An investment company that issues certificates obligating it to pay an investor a stated amount of money (the face amount) on a specific future date. The investor pays into the certificate in periodic payments or in a lump sum. |
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Term
|
Definition
| These are immediately available funds representing noninterest-bearing deposits at Federal Reserve banks. Federal funds are the primary payment mode for government securities and are often used to pay for new issues of municipal securities and for secondary market transactions in certain types of securities. |
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Term
|
Definition
| A bid or an offer published before being identified by source and verified as legitimate. A fictitious quote may create the appearance of trading activity where none exists; violates the Conduct Rules. |
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Term
|
Definition
| A person legally appointed and authorized to hold assets in trust for another person and manage those assets for that person's benefit. |
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Term
|
Definition
| The day on which an issuer submits the SEC the registration statement for a new securities issue. |
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Term
|
Definition
| The legal document that states a new issue security's price, delivery date, and underwriting spread, as well as other material information. It must be given to every investor who purchases a new issue of registered securities. Syn. prospectus. |
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Term
| firm commitment underwriting |
|
Definition
| An underwriting where the underwriter buys the entire issue from the issuer at an agreed upon price and then proceeds to sell the issue. The issuer has a firm commitment that all shares are sold because the entire issue is bought by the underwriter. |
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Term
|
Definition
| The actual price at which a trading unit of a security (such as 100 shares of stock or five bonds) may be bought or sold. All quotes are firm quotes unless otherwise indicated. |
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Term
| first in, first out (FIFO) |
|
Definition
| An accounting method used to assess a company's inventory, in which it is assumed that the first goods acquired are the first to be sold. The same method is used by the IRS to determine cost basis for tax purposes. See also average basis; last in, first out; share identification. |
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Term
|
Definition
| The federal tax and spending policies set by Congress or the President. These policies affect tax rates, interest rates and government spending in an effort to control the economy. |
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Term
|
Definition
| An insurance contract in which the insurance company makes fixed dollar payments to the annuitant for the term of the contract, usually until the annuitant dies. the insurance company guarantees both earnings and principal. Syn. fixed dollar annuity; guaranteed dollar annuity. |
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Term
|
Definition
|
|
Term
| fixed unit investment trust |
|
Definition
| An investment company that invests in a portfolio or securities in which no changes are permissible. |
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|
Term
|
Definition
| A term used to describe bonds traded without accrued interest. They are traded at the agreed-upon market price only. |
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Term
|
Definition
| A variable or whole life insurance contract that permits the holder to adjust the premium payments and death benefit according to changing needs. |
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|
Term
|
Definition
|
|
Term
|
Definition
| The valuation process for mutual fund shares, whereby an order to purchase or redeem shares is executed at the price determined by the portfolio valuation calculated after the order is received. Portfolio valuations occur at least once per business day. |
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Term
|
Definition
| The exchange where securities are traded directly from an institutional investor to another without a brokerage firm's services, primarily through the use of an ECN such as INSTINET. |
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|
Term
|
Definition
| A portion of a whole share of stock. Mutual fund shares are frequently issued in fractional amounts. Fractional shares used to be generated when corporations declared stock dividends, merged, or voted to split stock, but now it is more common for corporations to issue the cash equivalent of fractional shares. |
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Term
|
Definition
| The deliberate concealment, misrepresentation, or omission of material information or the truth, so as to deceive or manipulate another party for unlawful or unfair gain. |
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Term
|
Definition
| The cash funds in customer accounts. Broker/dealers must notify customers of their free credit balances at least quarterly. |
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|
Term
|
Definition
| A letter to mutual fund investors explaining a contractual plan's sales charge and operation. The letter must be sent within 60 days of a sale. During the free-look period, the investor may terminate the plan without paying a sales charge. Syn. 45-day letter. |
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Term
|
Definition
| Buying and immediately selling securities without making payment. This practice violates the SEC's Regulation T. |
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|
Term
| freeriding and withholding |
|
Definition
| The failure of a member participating in the distribution of a hot issue to make a bona fide public offering at the public offering price. This practice violates the Conduct Rules. |
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Term
|
Definition
| (1) Mutual fund commission or sales fee charges at the time shares are purchased. The load is added to the share's net asset value when calculating the POP. (2) System of sales charge for contractual plans permitting up to 50% of the first year's payments to be deducted as a sales charge. Investors have a right to withdraw from such a plan, but restrictions apply if this occurs. |
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|
Term
|
Definition
| An account requiring cash in advance before a buy order is executed and securities in hand before a sell order is executed. An account holder under such restrictions has violated the SEC's Regulation T. |
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|
Term
|
Definition
| A written authorization for someone other than an account's beneficial owner to make deposits and withdrawals and to execute trades in the account. |
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|
Term
| full trading authorization |
|
Definition
| An authorization, usually provided by a full power of attorney, for someone other than the customer to have full trading privileges in an account. |
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Term
|
Definition
| Debt issue that prints the bond-holder's name on the certificate. The issuer's transfer agent maintains the records and sends principal and interest payments directly to the investor. |
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Term
|
Definition
|
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Term
|
Definition
| All long-term debt financing of a corporation or municipality (i.e., all outstanding bonds maturing in 5 years or more.) |
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|
Term
|
Definition
| An ERISA guideline stipulating that retirement plan assets must be segregated from other corporate assets. |
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Term
|
Definition
| Interchangeable, owing to identical characteristics or value. A securities is fungible if it can be substituted or exchanged for another security. |
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Term
|
Definition
| The account that holds all of an insurer's assets other than those in separate accounts. The general account holds the contributions paid for traditional life insurance contracts. |
|
|
Term
| general obligation bond (GO) |
|
Definition
| A municipal debt issue backed by the full faith, credit, and taxing power of the issuer for payment of interest and principal. Syn. full faith and credit bond. See also double-barreled bond; revenue bond. |
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Term
|
Definition
| Communications with the public that promote securities as investments, but that do not refer to particular securities. Syn. institutional advertising. |
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Term
|
Definition
| Proper delivery by a selling firm to the purchaser's office of certificates that are negotiable without additional documentation and that are in units acceptable under the Uniform Practice Code. |
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|
Term
|
Definition
| A debt obligation of the US government, backed by its full faith, credit, and taxing power, and regarding as having no risk of default. The government issues short-term Treasury bills, medium term Treasury notes, and long-term Treasury bonds. |
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|
Term
| gross domestic product (GDP) |
|
Definition
| Total value of goods and services produced in a country during one year; includes consumption, government purchase, investments, exports minus imports. |
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|
Term
|
Definition
| All income of a taxpayer, from whatever source derived. |
|
|
Term
|
Definition
| A mutual fund whose aim is to provide for a degree of both income and long-term growth. |
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|
Term
|
Definition
| A diversified common stock fund that has capital appreciation as its primary goal. It invests in companies that reinvest most of their earnings for expansion, research, or development. |
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|
Term
|
Definition
| An industry that is growing faster than the economy as a whole as a result of technological changes, new products, or changing consumer tastes. |
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Term
|
Definition
| A relatively speculative issue that is believed to offer significant potential for capital gains. It often pays low dividends and sells at a high price earnings ratio. |
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|
Term
| guaranteed dollar annuity |
|
Definition
|
|
Term
|
Definition
| An equity security, generally a preferred stock, issued with a promise from a corporation other than the issuing corporation to maintain dividend payments. The stock still represents ownership in the issuing corporation, but it is considered a dual security. |
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|
Term
|
Definition
| A fiduciary who manages the assets of a minor or an incompetent for that person's benefit. |
|
|
Term
|
Definition
| A mutual fund or investment company which, as a regular policy, hedges its market commitments. It does this by holding securities it believes are likely to increase in value and at the same time is short other securities it believes are likely to decrease in value. The sole objective is capital appreciation. This type of fund is highly aggressive, and is generally not available to ordinary investors. |
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|
Term
|
Definition
| The highest price a security or commodity reaches during a specified period of time. |
|
|
Term
|
Definition
| Securities transaction settlement and delivery procedure where customer securities are transferred into the broker/dealer's name and held by the broker/dealer. The broker/dealer is the nominal owner, but the customer is the beneficial owner. |
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|
Term
|
Definition
|
|
Term
|
Definition
| A company organized to invest in and manage other corporations. |
|
|
Term
|
Definition
| A time period signifying how long the owner possesses a security. It starts the day after a purchase and ends on the day of the sale. |
|
|
Term
|
Definition
| The particular security designated for sale by an investor holding identical securities with different acquisition dates and cost bases. Allows investors to control the amount of capital gain or loss incurred through the sale. |
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|
Term
|
Definition
| An insurance contract purchased for a single premium that starts to pay the annuitant immediately following its purchase. |
|
|
Term
|
Definition
| A parent, mother-in-law or father-in-law, husband or wife, child, or another relative supported financially by a person associated with the securities industry. |
|
|
Term
| incidental insurance benefit |
|
Definition
| A payment received from a variable life insurance policy, other than the variable death benefit and the minimum death benefit, and including but not limited to any accidental death and dismemberment benefit, disability income benefit, guaranteed insurability option, family income benefit, or fixed-benefit term rider. |
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|
Term
|
Definition
| A debt obligation used when a company is reorganizing and coming out of bankruptsy. This bond that promises to repay principal in full at maturity. Interest is paid only if the corporation's earnings are sufficient to meet the interest payment and if the board of directors declares the interest payment. Income bonds are usually traded flat. Syn. Adjustment bond. |
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|
Term
|
Definition
| Mutual fund that seeks to provide stable current income by investing in securities that pay interest or dividends. |
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|
Term
|
Definition
| The summary of a corporation's revenues and expenses for a specific fiscal period. |
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|
Term
|
Definition
| Ownership that cannot be declared null or void. |
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|
Term
|
Definition
| A comparison of current prices to some baseline, such as prices on a particular date. Indexes are frequently used in technical analysis. |
|
|
Term
| indication of interest (IOI) |
|
Definition
| An investor's expression of conditional interest in buying an upcoming securities issue after the investor has reviewed a preliminary prospectus. An indication of interest is not a commitment to buy. |
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|
Term
| individual retirement account (IRA) |
|
Definition
| Retirement investing tool for employed individuals that allows an annual contribution of 100% of earned income up to a maximum of $5,000. Some or all of the contribution may be deductible from current taxes, depending on the individual's adjusted gross income and coverage by employer-sponsored qualified retirement plans. Persons age 50 and over make an additional, or catch-up, contribution of $1,000. |
|
|
Term
| industrial development (revenue) bond (IDB) |
|
Definition
| in general, securities issued by a state, local government, or development agency to finance the construction or purchase of industrial, commercial or manufacturing facilities to be purchased by or leased to a private user. IDBs are backed by the credit of the private user and generally are not considered liabilities of the governmental issuer (although in some jurisdictions they may also be backed by an issuer with taxing power). |
|
|
Term
|
Definition
|
|
Term
|
Definition
| A persistent and measurable rise in the general level of prices. |
|
|
Term
| initial public offering (IPO) |
|
Definition
| A corporation's first sale of common stock to the public. |
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|
Term
|
Definition
| Any person who possesses or has access to material, nonpublic information about a corporation. Insiders include directors, officers, and stockholders who own more than 10% of any class of equity security of a corporation. |
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|
Term
|
Definition
| Account held for the benefit of others. Examples of institutional accounts include banks, trust, pension and profit sharing plans, mutual funds, and insurance companies. |
|
|
Term
|
Definition
| A person or an organization that trades securities in large enough share quantities or dollar amounts that it qualifies for preferential treatment and lower commissions. An institutional order can be of any size. Institutional investors are covered by fewer protective regulations since it is assumed they are more knowledgeable and more able to protect themselves. |
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|
Term
|
Definition
| The charge for the privilege of borrowing money, usually expressed as an annual percentage rate. |
|
|
Term
|
Definition
| The risk associated with investments relating to the sensitivity of price or value to fluctuation in the current level of interest rates; also, the risk that involves the competitive cost of money. This term is generally associated with bond prices, but it applies to all investments. In bonds, prices carry interest risk because if bond prices rise, outstanding bonds will not remain competitive unless their yields and prices adjust to reflect the current market. |
|
|
Term
|
Definition
| (1) Person who makes investment recommendations in return for a flat fee or a percentage of assets managed. (2) For an investment company, the person who bears the day-to-day responsibility of investing the cash and securities held in the fund's portfolio in accordance with objectives stated in the fund's prospectus. |
|
|
Term
|
Definition
| An institution in the business of raising capital for corporations and municipalities. An investment banker may not accept deposits or make commercial loans. Syn. investment bank. |
|
|
Term
| investment banking business |
|
Definition
| A broker, dealer, or municipal or government securities dealer that underwrites or distributes new issues of securities as a dealer or that buys and sells securities for the accounts of others as a broker. Syn. investment securities business. |
|
|
Term
|
Definition
| A company engaged in the business of pooling investors' money and trading in securities for them. Examples include face amount certificate companies, unit investment trusts, and management companies. |
|
|
Term
|
Definition
| The broad credit designation given to bonds which have a high probability of being paid and minor, if any, speculative features. Bonds rated BBB or higher by Standard and Poor's Corporation or Baa or higher by Moody's Investor Service, Inc., are deemed by those agencies to be investment grade. |
|
|
Term
| investment grade security |
|
Definition
| A security to which the rating services (Standard & Poor's, Moody's, etc.) have assigned a rating of BBB/Baa or above. |
|
|
Term
|
Definition
| Any goal a client hopes to achieve through investing. Examples include current income, capital growth, and preservation of capital. |
|
|
Term
|
Definition
| A portfolio strategy that allocates investable assets according to an investment's relative safety. The pyramid base is composed of low-risk investments, the mid portion is composed of growth investments, and the pyramid top is composed of speculative investments. |
|
|
Term
|
Definition
| An individual who purchases an asset or a security with the intent of profiting from the transaction. |
|
|
Term
|
Definition
|
|
Term
|
Definition
| Can be any of a company's class of securities or the act of distributing them. |
|
|
Term
|
Definition
| Equity securities authorized by the issuer registration statement and distributed to the public. |
|
|
Term
|
Definition
| The entity, such as a corporation or municipality, that offers or proposes to offer its securities for sale. |
|
|
Term
|
Definition
| An account in which two or more individuals possess some form of control over the account and may transact business in the account. The account must be designed as either tenants in common or joint tenants with right of survivorship. |
|
|
Term
|
Definition
| This annuity pays until the last two parties dies. It's most commonly used for husband and wife and generally the annuitants receive the smallest payments when this option is selected. |
|
|
Term
| joint life with last survivor |
|
Definition
| An annuity payout option that covers two or more people, with the annuity payments continuing as long as one of the annuitants remains alive. |
|
|
Term
| joint tenants with right of survivorship (JTWROS) |
|
Definition
| A form of joint ownership of an account whereby a deceased tenants fractional interest in the account passes to the surviving tenant(s). It is used almost exclusively by husbands and wives. |
|
|
Term
|
Definition
|
|
Term
|
Definition
| Measurable economic factor that changes after the economy has started to follow a particular pattern or trend. Lagging indicators are believed to confirm long-term trends (e.g., average duration of unemployment, corporate profits, labor cost per unit of output). |
|
|
Term
| last in, first out (LIFO) |
|
Definition
| An accounting method used to assess a corporation's inventory in which it is assumed that the last goods acquired are the first to be sold. The method is used to determine cost basis for tax purposes; the IRS designates last in, first out as the order in which sales or withdrawals from an investment are made. See also first in, first out; share indicators. |
|
|
Term
|
Definition
| A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators are believed to predict changes in the economy. Examples include new orders for durable goods, slowdowns in deliveries by vendors, and numbers of building permits issued. |
|
|
Term
|
Definition
| The selection of securities a state agency (usually a state banking or insurance commission) determines to be appropriate investments for fiduciary accounts such as mutual savings banks, pension funds, and insurance companies. |
|
|
Term
|
Definition
| A signed agreement allowing an investor to buy mutual fund shares at a lower over-all sales charge, based on the total dollar amount of the intended investment. An LOI is valid only if the investor completes the terms of the agreement within 13 months of signing the agreement. A letter of intent may be backdated 90 days. Syn. statement of intention. |
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Term
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Definition
| Using borrowed capital to increase investment return. Syn. trading on the equity. |
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Term
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Definition
| A legal obligation to pay a debt owed. Current liabilities are debts payable within 12 months. Long-term liabilities are debts payable over a period of more than 12 months. |
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Term
| life annuity with period certain |
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Definition
| An annuity payout option that guarantees the annuitant a monthly check for a certain time period and thereafter until the annuitant's death. If the annuitant dies before the time period expires, the payments go to the annuitant's named beneficiary. |
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Term
| life annuity/straight life |
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Definition
| An annuity payout option that pays a monthly check over the annuitant's lifetime. |
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Term
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Definition
| An annuity payout option that provides a death benefit during the accumulation stage. If the annuitant dies during this period, a full contribution is made to the account, which is paid to the annuitant's named beneficiary. |
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Term
| life only (straight life) |
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Definition
| This option provides that the annuitant will be paid as long as he lives. As the annuitant is assuming greater risk that he may die sooner than expected, his payout is greater with this option. |
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Term
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Definition
| An investor's right to limit potential losses to no more than the amount invested. Equity shareholders, such as corporate stockholders and limited partners, have limited liability. |
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Term
| limited power of attorney |
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Definition
| A written authorization for someone other than an account's beneficial owner to make certain investment decisions regarding transactions in the account. |
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Term
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Definition
| A person who has passed an examination attesting to the knowledge and qualifications necessary to supervise and broker/dealer's business in a limited area of expertise. A limited principal is not qualified in the general fields of expertise reserved for a general securities principal; these include supervision of underwriting and market making and approval of advertising. |
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Term
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Definition
| A person who has passed an examination attesting to the knowledge and qualifications necessary to sell certain specified investment products. |
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Term
| limited trading authority |
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Definition
| An authorization, usually provided by a limited power of attorney, for someone other than the customer to have trading privileges in an account. These privileges are limited to purchases and sales; withdrawal of assets is not authorized. |
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Term
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Definition
| The ease with which an asset can be converted to cash in the marketplace. A large number of buyers and sellers and a high volume of trading activity provide high liquidity. |
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Term
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Definition
| The risk that an investment cannot be easily liquidated or sold. |
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Term
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Definition
| A stock, bond, or security that satisfies certain minimum requirements and is traded on a regional or national securities exchange such as the NYSE. |
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Term
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Definition
| Term used to describe the owning of a security, contract, (e.g., a common stock owner has a long position in the stock). |
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Term
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Definition
| Profit earned on the sale of a capital asset that has been owned for more than 12 months. |
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Term
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Definition
| Loss realized on the sale of a capital asset that has been owned for more than 12 months. |
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Term
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Definition
| A capital loss incurred in one tax year that is carried over to the next year or later years for use as a capital loss deduction. |
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Term
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Definition
| The lowest price a security or commodity reaches during a specified time period. |
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Term
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Definition
| An investment company that trades various types of securities in a portfolio in accordance with specific objectives stated in the prospectus. |
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Term
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Definition
| Amount paid to the investment manager for its services in the supervision of the investment company's affairs. This fee is set as a percentage of the company's net assets. |
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Term
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Definition
| The amount of equity contributed by a customer as a percentage of the current market value of the securities held in the margin account. See also equity; initial margin requirement; Regulation T. |
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Term
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Definition
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Term
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Definition
| A publication that comments on securities, investing, the economy, or other related topics and is distributed to an organization's clients or to the public. |
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Term
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Definition
| A dealer willing to accept the risk of holding a particular security in its own account to facilitate trading in that security. See also make a market. |
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Term
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Definition
| An order to be executed immediately at the best available price. A market order is the only order that guarantees execution. Syn. unrestricted order. |
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Term
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Definition
| The potential for an investor to experience losses owing to day-to-day fluctuations in the prices at which securities can be bought or sold. |
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Term
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Definition
| The uncertainty that a particular security may fluctuate in price solely due to investor sentiment in the market. Sometimes called systemic risk. |
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Term
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Definition
| Price at which investors buy or sell a share of common stock or a bond at a given time. Market value is determined by buyer and seller interaction. |
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Term
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Definition
| The ease with which a security can be bought or sold; having a readily available market for trading. |
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Term
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Definition
| Difference between the lowest current offering price among dealers and the higher price a dealer charges a customer. |
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Term
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Definition
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Term
|
Definition
| Any fact that could affect an investor's decision to trade a security. |
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Term
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Definition
| Date on which a bond's principal is repaid to the investor and interest payments cease. |
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Term
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Definition
| (1) Of the New York Stock Exchange: one of the individuals owning a seat on the Exchange. (2) Of the Financial Industry Regulatory Authority: any broker or dealer admitted to membership in the authority. |
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Term
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Definition
| A broker/dealer in which at least one of the principal officers is a member of the New York Stock Exchange, another exchange, a self-regulatory organization, or a clearing corporation. |
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Term
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Definition
| Members of the FINRA, one of the exchanges, another SRO, or a clearing corporation. |
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Term
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Definition
| The amount payable under a variable life insurance policy upon the policyowner's death, regardless of the separate account's investment performance. The insurance company guarantees the minimum amount. |
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Term
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Definition
| The Federal Reserve Board's actions that determine the size and rate of the money supply's growth, which in turn affect interest rates. |
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Term
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Definition
| The securities market that deals in short-term debt. Money market instruments are very liquid forms of debt that mature in less than one year. Treasury bills make up the bulk of money market instruments. |
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Term
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Definition
| A mutual fund that invests in short-term debt instruments. The fund's objective is to earn interest while maintaining a stable net asset value of $1 per share. Generally sold with no load, the fund may also offer draft-writing privileges and low opening investments. |
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Term
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Definition
These are obligations that are commonly traded in the money market. These instruments are generally short-term and highly liquid. In addition to certain US government securities, such as T-bills, the following are commonly traded in the money market:
- bankers acceptance or BA
- certificate of deposit CD
- commercial paper
- eurodollar deposits
- repurchase agreement or repo |
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Term
| money rate or interest rate risk |
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Definition
| Interest rates and price have an inverse relationship for securities sold primarily for their fixed income like bonds and preferred stock. This is the risk that as interest rates rise, prices of these securities will fall. |
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Term
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Definition
| The total stock of bills, coins, loans, credit, and other liquid instruments in the economy. It is divided into four categories--L, M1, M2, and M3--according to the type of account in which the instrument is kept. |
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Term
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Definition
| All annuity contracts, fixed and variable, contain a mortality guarantee. This is the insurance company guarantee that the annuitant will receive payments as long as he lives. There is a charge made against the account as an operating expense to cover the cost of this guarantee. Mutual funds do NOT have a mortality guarantee. |
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Term
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Definition
| The expansion of the money supply that results from a Federal Reserve System member bank's being able to lend more money than it takes in. A small increase in bank deposits generates a far larger increase in available credit. |
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Term
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Definition
| A debt security issued by a state, a municipality, or another subdivision (such as a school, park, sanitation or another local taxing district) to finance its capital expenditures. Such expenditures might include the construction of highways, public works or school buildings. Syn. municipal security. |
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Term
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Definition
| Mutual fund that invests in municipal bonds and operates either as a unit investment trust or an open-end fund. The fund's objective is to maximize federally tax-exempt income. |
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Term
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Definition
| An investment company that continuously offers new equity shares in an actively managed portfolio of securities. All shareholders participate in the funds gains or losses. The shares are redeemable on any business day at the net asset value. Each mutual fund's portfolio is invested to match the objective stated in the prospectus. Syn. open-end investment company; open-end management company. |
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Term
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Definition
| A national bank, stock exchange member firm, trust company, or another qualified institution that physically safeguards the securities a mutual fund holds. It does not manage the fund's investments; its function is solely clerical. |
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Term
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Definition
| A characteristic of a security that permits the owner to assign, give, transfer, or sell it to another person without a third party's permission. |
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Term
| negotiable certificate of deposit (CD) |
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Definition
| An unsecured promissory note issued with a minimum face value of $100,000. It evidences a time deposit of funds with the issuing bank and is guaranteed by the bank. |
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Term
| negotiable order of withdrawal (NOW) account |
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Definition
| Bank account through which a customer can write drafts against money held on deposit; an interest-bearing checking account. |
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Term
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Definition
| A mutual fund share's value, calculated once a day, based on the closing market price for each security in the fund's portfolio. It is computed by deducting the fund's liabilities from the portfolio's total assets and dividing this amount by the number of shares outstanding. |
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Term
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Definition
| The difference between a security's closing price on the trading day reported and the previous day's closing price. In over-the-counter transactions, the term refers to the difference between the closing bids. |
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Term
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Definition
| The source of an investment company's dividend payments. It is calculated by subtracting the company's operating expenses from the total dividends and interest the company receives from the securities in its portfolio. |
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Term
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Definition
| The rate of return from a variable life insurance separate account. The cumulative return for all years is applied to the benefit base when calculating the death benefit. |
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Term
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Definition
| Amount by which assets exceed liabilities. Syn. owners' equity; shareholders' equity; stockholders' equity. |
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Term
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Definition
| The form that must be filled out for each new account opened with a brokerage firm. The form specifies, at a minimum, the account owner, trading authorization, payment method, and types of securities appropriate for the customer. |
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Term
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Definition
| The securities market for shares in privately owned businesses that are raising capital by selling common stock to the public for the first time. Syn. primary market. |
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Term
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Definition
| A mutual fund whose shares are sold without a commission or sales charge. The investment company distributes the shares directly. |
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Term
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Definition
| The person in whose name securities are registered if that person is other than the beneficial owner. This is a brokerage firm's role when customer securities are registered in street name. |
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Term
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Definition
| A quotation on an inactively traded security that does not represent an actual offer to buy or sell, but is given for informational purposes only. |
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Term
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Definition
| The interest rate stated on the face of a bond that represents the percentage of interest the issuer pays on the bond's face value. Syn. coupon rate; stated yield. |
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Term
| noncumulative preferred stock |
|
Definition
| Equity security that does not have to pay any dividends in arrears to the holder. |
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Term
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Definition
| In a qualified retirement plan, a formula for calculating contributions and benefits that must be applied uniformly so as to ensure that all employees receive fair and equitable treatment. |
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Term
| nondiversified management company |
|
Definition
| A management company that does not meet the diversification requirements of the Investment Company Act of 1940. Such a company is not restricted in the choice of securities or by the concentration of interest it has in those securities. |
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Term
| nonfixed unit investment trust |
|
Definition
| An investment company that invests in a portfolio of securities and permits changes in the portfolio's makeup. |
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Term
| nonqualified retirement plan |
|
Definition
| A corporate retirement plan that does not meet the standards set by the Employee Retirement Income Security Act of 1974. |
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Term
|
Definition
| An annuity that does not qualify for tax deductibility of contributions under IRS codes. It is funded with after-tax dollars, but the earnings in the account will accrue tax deferred. It is important to note that at payout of the annuity, all distributions in excess of the cost basis will be taxed as ordinary income. |
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Term
|
Definition
| A short-term debt security, usually maturing in five years or less. |
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Term
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Definition
| See registration by filing. |
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Term
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Definition
| Account titled with something other than a customer name. The title might be a number symbol, or a special title. The customer must sign a form designating account ownership. |
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Term
|
Definition
| An amount of a security that is less than the normal unit of trading for that security. Generally, an odd lot is fewer than 100 shares of stock or five bonds. |
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Term
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Definition
| (1) See ask. (2) Under the Uniform Securities Act, any attempt to solicit a purchase or sale in a security for value. |
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Term
| open-end investment company |
|
Definition
|
|
Term
|
Definition
| A security that represents the right to buy or sell a specified amount of an underlying security--a stock, bond, futures contract, etc.--at a specified price within a specified time. The purchaser acquires a right, and the seller assumes an obligation. |
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Term
|
Definition
| Form completed by a registered representative that contains customer instructions regarding an order's placement. It contains such information as the customer's name and account number, a description of the security, the type of transaction (buy, sell, sell short, etc.) and any special instructions (such as time or price limits). Syn. order ticket. |
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Term
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Definition
| Earnings other than capital gain. |
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Term
|
Definition
| Equity securities issued by a corporation and in the hands of the public; issued stock that the issuer has not reacquired. |
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Term
|
Definition
| Term used to describe a security traded through the phone-linked and computer-connected OTC market rather than through an exchange. |
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Term
|
Definition
| The dollar amount the issuer assigns to a security. For an equity security, par is usually a small dollar amount that bears no relationship to the security's market price. For a debt security, par is the amount repaid to the investor when the bond matures, usually $1,000. Syn. face value; principal; stated value. |
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Term
|
Definition
| The state of a convertible bond (or preferred stock) when its price is equal to the market price of the underlying stock. It means that two securities are of equal dollar value. |
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Term
| participating preferred stock |
|
Definition
| Preferred stock that is entitled to its stated dividend and also to additional dividends as a specified percentage of dividends on a common stock, if declared. |
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Term
|
Definition
| Provision of the Employee Retirement Income Security Act of 1974 requiring that all employees in a qualified retirement plan be covered within a reasonable time of their hire. |
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Term
|
Definition
| A form of business ownership in which two or more individuals manage the business and are equally and personally liable for its debts. |
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Term
|
Definition
| Security representing an interest in a pool of conventional, VA, Farmers Home Administration, or other agency mortgages. The pool receives the principal and interest payments, which it passes through to each certificate holder. Payment may or may not be guaranteed. |
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Term
|
Definition
| The day on which a declared dividend is paid to all stockholders owning shares on the record date. |
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Term
|
Definition
| As defined by the Federal Reserve Board's Regulation T, the period of time corresponding to the regular way settlement period administered by FINRA. |
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Term
|
Definition
|
|
Term
|
Definition
| Retirement plan where an employee authorizes a deduction from his check on a regular basis. The plan may be qualified, such as a 401(k) plan, or nonqualified. |
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Term
|
Definition
| Contract between an individual and an employer, labor union, government entity, or another institution that provides for the distribution of pension benefits at retirement. |
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Term
|
Definition
| Settlement option that allows the annuitant to receive payments for as long as he lives, but also designates a minimum guaranteed period (i.e., 10 or 15 years) for which he will receive payments. If death occurs during this guaranteed period, then payments will continue for the remaining years of the period certain to a stated beneficiary. |
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Term
|
Definition
| A mutual fund sales contract in which the customer commits to buying shares in the fund on a periodic basis over a long time period in exchange for a lower minimum investment. |
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|
Term
|
Definition
| As defined in securities law, an individual, corporation, partnership, association, fund, stock joint stock company, unincorporated organization, trust government, or political subdivision of a government. |
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Term
|
Definition
| An individual's total earnings derived from wages, passive business enterprises, and investments. |
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Term
|
Definition
|
|
Term
|
Definition
| A measure of a bond's price; $10 or 1% of the par value of $1,000. |
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Term
|
Definition
| Earnings from interest, dividends, and all nonbusiness investments. |
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|
Term
|
Definition
| The entity responsible for investing a mutual fund's assets, implementing its investment strategy, and managing day-to-day portfolio trading. Syn. fund manager. |
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Term
|
Definition
| The amount of a security either owned (a long position) or owed (a short position) by an individual or a dealer. Dealers take long positions in specific securities to maintain inventories and thereby facilitate trading. |
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Term
|
Definition
|
|
Term
|
Definition
|
|
Term
|
Definition
| A stockholder's legal right to maintain proportionate ownership by purchasing newly issued shares before the new stock is offered to the public. |
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Term
|
Definition
| An equity security that represents ownership in a corporation. It is issued with a stated dividend, which must be paid before dividends are paid to common stock holders. It generally carries no voting rights. |
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Term
|
Definition
| Mutual fund with investment objective of stable income and minimal capital risk; invests in income-producing instruments like preferred stock. |
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Term
|
Definition
| An abbreviated prospectus that is distributed while the SEC is reviewing an issuer's registration statement. It contains all of the essential facts about the forthcoming offering except the underwriting spread, final public offering price, and date on which the shares will be delivered. Syn. red herring. |
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Term
|
Definition
| The price of an option agreed upon by the buyer and seller through their representatives on the floor of an exchange. The premium is paid by a buyer to a seller. |
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Term
|
Definition
| The original sale of a security; all further trades in the secondary market. |
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Term
|
Definition
| Interest rate commercial banks charge their prime or most creditworthy customers, generally large corporations. |
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Term
|
Definition
| (1) A person who trades for his own account in the primary or secondary market (2) See dealer. (3) See par. |
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Term
|
Definition
| A transaction in which a broker/dealer either buys securities from customers and takes them into its own inventory or sells securities to customers from its inventory. |
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Term
|
Definition
| An offering of new issue securities that complies with Regulation D of the Securities Act of 1933. According to the Regulation D, a security generally is not required to be registered with the SEC if it is offered to no more than 35 nonaccredited investors or to an unlimited number of accredited investors. See also Regulation D. |
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Term
|
Definition
| An employee benefit plan established by an employer whereby the employees receive a share of the business profits. The money may be paid directly to the employees or deferred until retirement. A combination of both approaches is also possible. |
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Term
|
Definition
| A tax that takes a larger percentage of the income of high-income earners than that of low income earners (e.g., graduated income tax). |
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Term
|
Definition
| A distribution made by a corporation to its stockholders of securities it owns in other corporations or of its products. |
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|
Term
|
Definition
|
|
Term
|
Definition
| A limited power of attorney from a stockholder authorizing another person to vote on stockholder issues according o the first stockholder's instructions. To vote on corporate matters, a stockholder must attend the annual meeting or vote by proxy. |
|
|
Term
|
Definition
| A legal maxim that restricts discretion in a fiduciary account to only those investments that a reasonable and prudent person might make. |
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|
Term
|
Definition
| The sale of an issue of common stock, either by a corporation going public or by an offering of additional shares. |
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|
Term
| public offering price (POP) |
|
Definition
| (1) The price of new shares that is established in the issuing corporation's prospectus. (2) The price to investors for mutual fund shares, equal to the net asset value plus the sales charge. |
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|
Term
| purchasing power or inflation risk |
|
Definition
| The uncertainty that a dollar will not purchase as much in the future as it does now. This risk is found in all fixed dollar securities such as bonds and fixed annuities. |
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|
Term
|
Definition
| (1) Option contract giving the owner the right to sell a certain amount of an underlying security at a specified price within a specified time. (2) The act of exercising a put option. |
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|
Term
|
Definition
| Investor who pays a premium for an option contract and receives, for a specified time, the right to sell the underlying security at a specified price. |
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|
Term
|
Definition
| Investor who receives a premium and takes on, for a specified time, the obligation to buy the underlying security at a specified price at the put buyer's discretion. |
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|
Term
|
Definition
| See registration by qualification. |
|
|
Term
| qualified retirement plan |
|
Definition
| A corporate retirement plan that meets the standards set the by the Employee Retirement Income Security Act of 1974. Contributions to a qualified plan are tax deductible. Syn. approved plan. |
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Term
|
Definition
| The price of a bid a market maker or a broker/dealer offers for a particular security. Syn. quote. |
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Term
|
Definition
| A computer that provides representatives and market makers with the information that appears on the Consolidated Tape. The information on the screen is condensed into symbols and numbers. |
|
|
Term
|
Definition
| An evaluation of a corporate or municipal bond's relative safety, according to the issuer's ability to repay principal and make interest payments. Bonds are rated by various organizations, such as Standard & Poor's and Moody's. Ratings range from AAA or Aaa (the highest) to C or D (represents a company in default). |
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|
Term
|
Definition
| A company, such as Moody's or Standard & Poor's, that rates various debt and preferred stock issues for safety of payment of principal, interest, or dividends. The issuing company or municipality pays a fee for the rating. |
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|
Term
| real estate investment trust (REIT) |
|
Definition
| A corporation or trust that uses the pooled capital of many investors to invest in direct ownership of either income property or mortgage loans. These investments offer tax benefits in addition to interest and capital gains distributions. |
|
|
Term
|
Definition
| Amount a taxpayer earns when he sells an asset. |
|
|
Term
|
Definition
| General economic decline lasting from 6-18 months. |
|
|
Term
|
Definition
| The date a corporation's board of directors establishes that determines which of its stockholders are entitled to receive dividends or rights distributions. |
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|
Term
|
Definition
|
|
Term
|
Definition
| See preliminary prospectus. |
|
|
Term
|
Definition
| A security that the issuer redeems upon the holder's request. Examples include shares in an open-end investment company and Treasury notes. |
|
|
Term
|
Definition
| The return of an investor's principal in a security, such a bond, preferred stock, or mutual fund shares. By law, redemption of mutual fund shares must occur within seven days of receiving the investor's request for redemption. |
|
|
Term
|
Definition
| Retiring an outstanding bond issue at maturity using money from the sale of a new offering. See also advance refunding. |
|
|
Term
|
Definition
| A stock exchange that serves the financial community in a particular region of the country. These exchanges tend to focus on securities issued within their regions, but also offer trading in NYSE-and AMEX-listed securities. |
|
|
Term
|
Definition
| Term describing a security that prints the owner's name on the certificate. The owner's name is stored in records kept by the issuer or a transfer agent. |
|
|
Term
| registered as to principal only |
|
Definition
| The term describing a bond that prints the owner's name on the certificate, but that has unregistered coupons payable to the bearer. Syn. partially registered. |
|
|
Term
|
Definition
| An associated person of a member firm who manages or supervises the firm's investment banking or securities business. This includes any individual who trains associated persons and who solicits business. Unless the member firm is a sole proprietorship, it must employ at least two registered principals, one of whom must be registered as a general securities principal and one of whom must be registered as a financial and operations principal. If the firm does options business with the public, it must employ at least one registered options principal. |
|
|
Term
| registered representative (RR) |
|
Definition
| Associated person engaged in the investment banking or securities business. According to the FINRA, this includes any individual who supervises, solicits, or conducts business in securities or who trains people to supervise, solicit, or conduct business in securities. Anyone employed by a brokerage firm who is not a principal and who is not engaged in clerical or brokerage administration is subject to registration and exam licensing as a registered representative. Syn. account executive; stockbroker. |
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|
Term
|
Definition
| The independent organization or part of a corporation responsible for accounting for all of the issuer's outstanding stock and certifying that its bonds constitute legal debt. |
|
|
Term
| registration by coordination |
|
Definition
| A process that allows a security to be sold in a state. It is available to an issuer that files for the security's registration under the Securities Act of 1933 and files duplicates of the registration documents with the state Administrator. State registration becomes effective at the same time the federal registration becomes effective. |
|
|
Term
|
Definition
| Process that allows a security to be sold in a state. It is available to an issuer that files for the security's registration under the Securities Act of 1933, meets minimum net worth and certain other requirements, and notifies the state of this eligibility by filing certain documents with the state Administrator. State registration becomes effective at the same time the federal registration statement does. Syn. notification. |
|
|
Term
| registration by qualification |
|
Definition
| A process that allows a security to be sold in a state. It is available to an issuer who files for the security's registration with the state Administrator, meets minimum net worth, disclosure, and other requirements and files appropriate registration fees. The state registration becomes effective when the Administrator so orders. Syn. qualification. |
|
|
Term
|
Definition
| The legal document that discloses all pertinent information concerning an offering of a security and its issuer. It is submitted to the SEC in accordance with the requirements of the Securities Act of 1933, and it forms the basis of the final prospectus distributed to investors. |
|
|
Term
|
Definition
| A tax that takes a larger percentage of the income of low-income earners than that of high-income earners. Examples include gasoline and cigarette tax. |
|
|
Term
|
Definition
| A settlement contract that calls for delivery and payment within a standard payment period from the date of the trade. The Uniform Practice Code sets the standard payment period. The type of security being traded determined the amount of time allowed for regular way settlement. |
|
|
Term
| regulated investment company |
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Definition
| A investment company to which Subchapter M of the Internal Revenue Code grants special status that allows the flow-through of tax consequences on a distribution to shareholders. If 90% of its income is passed through to the shareholders, the company is not subject to tax on this income. |
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Term
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Definition
| A service provided by most mutual funds for the automatic reinvestment of a shareholder's dividend and capital gain distributions in additional shares. |
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Term
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Definition
| The risk that a purchaser of a fixed income security incurs that interest rates will be lower when the purchaser seeks to reinvest income received from the security. |
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Term
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Definition
| An unregistered, nonexempt security acquired either directly or indirectly from the issuer, or an affiliate of the issuer, in a transaction that does not involve a public offering. See also holding period. |
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Term
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Definition
| A customer account established to provide retirement funds. |
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Term
| return of investment (ROI) |
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Definition
| Profit or loss resulting from a security transaction, often expressed as an annual percentage. |
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Term
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Definition
| A municipal debt issue whose interest and principal are payable only from the specific earnings of an income-producing public project. See also double barreled bond; general obligation bond; municipal bond; special revenue bond. |
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Term
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Definition
| Security representing a stockholder's entitlement to the first opportunity to purchase new shares issued by the corporation at a predetermined price (normally less than the current market price) in proportion to the number of shares already owned. Rights are issued for a short time only, after which they expire. Syn. subscription right; subscription right certificate. |
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Term
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Definition
| A benefit offered by a mutual fund that allows the investor to qualify for reduced sales loads on additional purchases according to the fund account's total dollar value. |
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Term
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Definition
| An Investment Company Act of 1940 provision that allows an investor in a mutual fund contractual plan to terminate the plan within 45 days from the mailing date of the written notice detailing the sales charges that will apply over the plan's life. The investor is then entitled to a refund of the sales charge. |
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Term
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Definition
| A benefit of a mutual fund front-end load plan that entitles an investor who cancels the plan within 18 months to receive the investment's current value and a refund of sales charges exceeding 15%. |
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Term
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Definition
| Issuing corporation's agent responsible for maintaining current records of the names of rights certificate owners. |
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Term
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Definition
| An issue of new shares of stock accompanied by the opportunity for each stockholder to maintain a proportionate ownership by purchasing additional shares in the corporation before the shares are offered to the public. |
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Term
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Definition
| The transfer of funds from one qualified retirement plan to another qualified retirement plan. If this is not done within a specified time period, the funds are taxed as ordinary income. |
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Term
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Definition
| A security's normal unit of trading, which is generally 100 shares of stock or five bonds. |
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Term
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Definition
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Term
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Definition
| Any written material a firm distributes to costumers or the public in a controlled manner (e.g., circulars, research reports, form letters, market letters, text for seminars). |
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Term
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Definition
| Amount added to a mutual fund share's net asset value to arrive at the offering price. |
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Term
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Definition
| A government debt security that is not negotiable or transferable and that may not be used as collateral. |
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Term
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Definition
| A variable life insurance policy under which the insurer fixes both the amount and the timing of the premium payments. |
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Term
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Definition
| The market in which securities are bought and sold subsequent to their being sold to the public for the first time. |
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Term
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Definition
| A mutual fund whose investment objective is to capitalize on the return potential provided by investing primarily in a particular industry or sector of the economy. Syn. industry fund; specialized fund. |
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Term
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Definition
| Other than an insurance policy or a fixed annuity, any piece of securitized paper that can be traded for value. Under the act of 1934, this includes any note, stock, bond, investment contract, debenture, certificate of interest in a profit-sharing or partnership agreement, certificate of deposit, collateral trust certificate, preorganization certificate, option on a security, or other instrument of investment commonly known as security. |
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Term
| self-regulatory organization (SRO) |
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Definition
| One of the membership organizations responsible for regulating the securities markets and enforcing federal securities laws in the United States within an assigned jurisdiction. For example, the Financial Industry Regulatory Authority (FINRA) regulates the over-the-counter markets and the members of the New York Stock Exchange. The Municipal Securities Rulemaking Board (MSRB) supervises state and municipal securities. The Chicago Board Options Exchange (CBOE) regulates standardized option trading. SROs, which are not themselves federal agencies, write and enforce rules for their members, the broker/dealer firms that engage in the securities business, but are accountable to the SEC. |
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Term
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Definition
| To convey ownership of a security or another asset for money or value. This includes giving or delivering a security with or as a bonus for a purchase of securities, a gift of assessable stock, and selling or offering a warrant or right to purchase or subscribe to another security. Not included in the definition is a bona fide pledge or loan or a stock dividend if nothing of value is given by the stockholder for the dividend. Syn. sale. |
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Term
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Definition
| Associated person engaging in private securities transactions without the employing broker/dealer's knowledge and consent. Violates the Conduct Rules. |
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Term
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Definition
| (1) Illegal practice of inducing customers to buy mutual fund shares by implying that an upcoming distribution will benefit them. (2) Combining dividend and gains distributions when calculating current yield. |
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Term
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Definition
| Selected broker/dealers who contract to act as selling agents for underwriters and who are compensated by a portion of the spread called selling concession on newly issued securities. They assume no personal responsibility or financial liability to the issuer, as opposed to a syndicate member. |
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Term
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Definition
| The account that holds funds paid by variable annuity contract holders. The funds are kept separate from the insurer's general account and are invested in a portfolio of securities that match the contract holders' objectives. |
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Term
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Definition
| Completion of a trade through the delivery of a security or commodity and the payment of cash or other consideration. |
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Term
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Definition
| Date on which ownership changes between buyer and seller. The Uniform Practice Code standardizes settlement provisions. |
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Term
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Definition
| An accounting method that identifies the specific shares selected for liquidation in the event that an investor wishes to liquidate shares. The difference between the buying and selling prices determines the investor's tax liability. |
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Term
| share of beneficial interest |
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Definition
| See unit of beneficial interest. |
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Term
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Definition
| Term used to describe the selling of a security, contract, or commodity that the seller does not own (e.g., an investor who borrows shares of stock from a broker/dealer and sells them on the open market has a short position in the stock). |
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Term
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Definition
| A method of arbitration to be used when there is a small amount in dispute, no more than $25,000. This method can be used for disputes between members (simplified industry arbitration) and for disputes between a customer and a member (simplified arbitration) if the customer has agreed to arbitration. |
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Term
| simplified employee pension plan (SEP) |
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Definition
| A qualified retirement plan designated for employers with 25 or fewer employees. Contributions made to each employee's individual retirement account grow tax deferred until retirement. See also individual retirement account. |
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Term
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Definition
| An account in which only one individual has control over the investments and may transact business. |
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Term
| single payment deferred annuity |
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Definition
| Method of purchasing an annuity in which the annuitant deposits one lump sum of money into account and elects to have the money remain in the account and accrue tax deferred until the annuitant elects to begin the pay-out phase at a later time (deferred). |
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Term
| single payment immediate annuity |
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Definition
| This method of purchasing an annuity is one in which the annuitant deposits one lump sum of money into the account and elects to begin the pay-out phase immediately. |
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Term
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Definition
| A mutual fund underwriter's improper practice of disbursing anything of material value (more than $100) in addition to normal discounts or concessions associated with the sale or distribution of investment company shares. |
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Term
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Definition
| A mutual fund whose objective is to capitalize on the profit potential of corporations in nonrecurring circumstances, such as those undergoing reorganizations or being considered as takeover candidates. |
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Term
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Definition
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Term
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Definition
| A person who is instrumental in organizing, selling, or managing a limited partnership. |
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Term
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Definition
| A separate individual retirement account established for a nonworking spouse. Contributions to the account made by the working spouse grow tax deferred until withdrawal. |
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Term
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Definition
| In a quotation, the difference between a security's bid and ask price. |
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Term
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Definition
| A system of sales charges for a mutual fund contractual plan. It permits a decreasing scale of sales charges, with a maximum charge of 20% in any one year and 9% over the life of the plan. Rights of withdrawal with no penalty exist for 45 days. |
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Term
| standby underwriting agreement |
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Definition
| An agreement between an investment banker and a corporation, whereby the banker agrees, for a negotiated fee, to purchase any or all shares offered as a subscription privilege that are not bought by the rights holders by the time the offer expires. Because this guarantees the issuer that all shares will be sold either to the rights holders or the investment banker, this is considered a form of firm commitment underwriting. |
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Term
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Definition
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Term
| statutory disqualification |
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Definition
| Prohibiting a person from associating with a SRO because the person has been expelled, barred, or suspended from association with a member of an SRO; has had registration suspended, denied, or revoked by the SEC; has been the cause of someone else's suspension, barment, or revocation; has been convicted of certain crimes; or has falsified an application or a report that he must file with or on behalf of a membership organization. |
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Term
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Definition
| Voting procedure that permits stockholders to cast one vote per share owned for each position. The procedure tends to benefit majority stockholders. |
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Term
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Definition
| Written evidence of ownership in a corporation. |
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Term
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Definition
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Term
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Definition
| A standard form that duplicates the back of a stock certificate and is used for transferring the stock to the new owner's name. A separate stock power is used if a security's registered owner does not have the certificate available for signature endorsement. Syn. irrevocable stock power; power of substitution. |
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Term
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Definition
| A list of representative prices bid and asked for a stock during a particular trading day. Stocks are quoted in points; one point equals $1. Stock quotes are listed in the financial press and most daily newspapers. |
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Term
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Definition
| An increase in the number of a corporation's outstanding shares, which decrease its stock's par value. The market value of the total number of shares remains the same. The proportional reductions in orders held on the books for a split stock are calculated by dividing the stock's market price by the fraction that represents the split. |
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Term
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Definition
| See registered representative. |
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Term
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Definition
| A debt obligation, backed by the general credit of the issuing corporation, that has claims to interest and principal subordinated to ordinary debentures and all other liabilities. See also debenture. |
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Term
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Definition
| Determination made by a registered representative as to whether a particular security matches a customer's objectives and financial capability. The representative must have enough information about the customer to make this judgment. |
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Term
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Definition
| System implemented by a broker/dealer to ensure that its employees and associated persons comply with the rules and regulations of the SEC, exchanges, and SROs. |
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Term
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Definition
| A group of investment bankers formed to handle the distribution and sale of a security on behalf of the issuer. Each syndicate member is responsible for the sale and distribution of a portion of the issue. Syn. underwriting syndicate. |
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Term
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Definition
| Amount of tax payable on earnings, usually calculated by subtracting standard and itemized deductions and personal exemptions from adjusted gross income, then multiplying by the tax rate. |
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Term
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Definition
| See tax-sheltered annuity. |
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Term
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Definition
| Rate of return a taxable bond must earn before taxes in order to equal the tax-exempt earnings on a municipal bond. This number varies with the investor's tax bracket. |
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Term
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Definition
| Mutual fund whose investment objective is to provide maximum tax-free income. Invests primarily in municipal bonds and short-term debt. Syn. tax-free bond fund. |
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Term
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Definition
| See tax-exempt bond fund. |
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Term
| tax-sheltered annuity (TSA) |
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Definition
| An insurance contract that entitles the holder to exclude all contributions from gross income in the year they are made. Tax payable on the earnings is deferred until the holder withdraws funds at retirement. TSAs are available to employees of public schools, church organizations, and other tax-exempt organizations. Syn. tax-deferred annuity. |
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Term
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Definition
| Risk erosion of investment income through taxation. |
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Term
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Definition
| The portion of a sale or distribution of mutual fund shares subject to taxation. |
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Term
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Definition
| A form of joint ownership of an account whereby a deceased tenant's fractional interest in the account is retained by his estate. |
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Term
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Definition
| (1) A customer account for which the owner has given power of attorney to a third party. (2) A customer account opened by an adult naming a minor as beneficial owner. (3) A customer account opened for another adult. This type of account is prohibited. |
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Term
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Definition
| Sum of money left with a bank (or borrowed from a bank and left on deposit) that the depositing customer has agreed not to withdraw for a specified time period or without a specified amount of notice. |
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Term
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Definition
| Printed advertisement that solicits indications of interest in a securities offering. Text is limited to basic information about the offering, such as the name of the issuer, type of security, names of the underwriters, and where a prospectus is available. |
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Term
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Definition
| A printed document that contains details of a transaction, including the settlement date and amount of money due from or owed to a customer. It must be sent to the customer on or before the settlement date. |
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Term
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Definition
| Date on which a securities transaction is executed. |
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Term
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Definition
| See full trading authorization; limited trading authorization. |
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Term
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Definition
| Person or corporation responsible for recording the names and holdings of registered security owners, seeing that certificates are signed by the appropriate corporate officers, affixed the corporate seal, and delivering securities to the new owners. |
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Term
| transfer and hold in safekeeping |
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Definition
| A securities buy order settlement and delivery procedure whereby the securities bought are transferred to the customer's name, but are held by the broker/dealer. |
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Term
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Definition
| A securities buy order settlement and delivery procedure whereby the securities bought are transferred to the customer's name and sent to the customer. |
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Term
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Definition
| A written agreement between issuer and creditors by which the terms of a debt issue are set forth, such as rate of interest, means of payment, maturity date, terms of prior payment of principal, collateral, priorities of claims, and trustees. |
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Term
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Definition
| Person legally appointed to act on a beneficiary's behalf. |
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Term
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Definition
| An investment banker who works with an issuer to help bring a security to the market and sell it to the public. |
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Term
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Definition
| The procedure by which investment bankers channel investment capital from investors to corporations and municipalities that are issuing securities. |
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Term
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Definition
| The difference in price between the public offering price and the price an underwriter pays to the issuing corporation. The difference represents the profit available to the syndicate or selling group. Syn. underwriting discount; underwriting split. |
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Term
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Definition
| Income derived from investments and other sources not related to employment services. Examples of unearned income include interest from a savings account, bond interest, and dividends from stock. |
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Term
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Definition
| That portion of authorized stock not distributed (sold) to investors by a newly chartered corporation. |
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Term
| unit investment trust (UIT) |
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Definition
| An investment company that sells redeemable shares in a professionally selected portfolio of securities. It is organized under a trust indenture, not a corporate charter. |
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Term
| unit of beneficial interest |
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Definition
| A redeemable share in a unit investment trust, representing ownership of an undivided interest in the underlying portfolio. Syn. share of beneficial interest. |
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Term
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Definition
| Insurance contract in which the insurance company makes monthly payments to an annuitant over the annuitant's lifetime. If the annuitant dies before receiving an amount equal to the account's value, money remaining in the account goes to the annuitant's named beneficiary. |
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Term
| unrealized capital appreciation or depreciation |
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Definition
| The amount by which the market value of portfolio holdings on a given date exceeds or falls short of their cost is considered unrealized gains or loss. |
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Term
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Definition
| Amount by which a security appreciates in value before it is sold. Until it is sold, the investor does not actually posses the sale proceeds. |
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Term
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Definition
| An insurance contract in which at the end of the accumulation stage, the insurance company guarantees a minimum total payment to the annuitant. The performance of a separate account, generally invested in equity securities, determines the amount of this total payment. |
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Term
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Definition
| The amount paid to a decedent's beneficiary that depends on the investment performance of an insurance company's separate account. The amount is added to any guaranteed minimum death benefit. |
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Term
| variable life insurance policy |
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Definition
| Insurance contract that provides financial compensation to the insured's named beneficiary if the insured dies. The insurance company guarantees payment of the minimum amount plus an additional sum according to the performance of a separate account, usually invested in equities or other high-yield securities. |
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Term
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Definition
| (1) an ERISA guideline stipulating that an employee must be entitled to their entire retirement benefits within a certain period of time even if he no longer works for the employer. (2) The amount of time that an employee must work before retirement or before benefit plan contributions made by the employer become the employee's property without penalty. The IRS and the Employee Retirement Income Security Act of 1974 set minimum requirements for vesting in a qualified plan. |
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Term
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Definition
| The magnitude and frequency of changes in the price of a security or commodity within a given time period. |
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Term
| voluntary accumulation plan |
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Definition
| A mutual fund account into which the investor commits to depositing amounts on a regular basis in addition to the initial sum invested. |
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Term
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Definition
| An additional contribution an employee makes to a Keogh plan to supplement plan benefits. Contribution amount is limited to 10% of the employee's compensation. Although the contribution is not tax deductible, the resultant earnings are not subject to tax until retirement. |
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Term
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Definition
| A stockholder's right to vote for members of the BOD and on matters of corporate policy, particularly the issuance of senior securities, stock splits, and substantial changes in the corporation's business. A variation of this right is extended to variable annuity contract holders and mutual fund shareholders, who may vote on material policy issues. |
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Term
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Definition
| Security that gives the holder the right to purchase securities from the warrant issuer at a stipulated subscription price. Usually long-term instruments with expiration dates years in the future. |
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Term
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Definition
| Selling a security at a loss for tax purposes and, within 30 days before or after, purchasing the same or a substantially identical security. The IRS disallows the claimed loss. |
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Term
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Definition
| Benefit offered by a mutual fund whereby a customer receives the proceeds of periodic systematic liquidation of shares in the account. The amounts received may be based on a fixed dollar amount, a fixed number of shares, a fixed percentage, or a fixed period of time. |
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Term
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Definition
| The seller of an option contract. An option writer takes on the obligation to buy or sell the underlying security if and when the option buyer exercises the option. Syn. seller. |
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Term
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Definition
| Rate of return on an investment, often expressed as an annual percentage rate. |
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Term
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Definition
| A graphic representation of the actual or projected yields of fixed-income securities in relation to their maturities. |
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Term
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Definition
| The rate of return on a bond that accounts for the difference between the bond's acquisition cost and its maturity proceeds, including interest income. See also bond yield. |
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Term
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Definition
| Corporate or municipal debt security traded at a deep discount from face value. The bond pays no interest, but it may be redeemed at a maturity for its full face value. It may be issued at a discount or stripped of its coupons and repackaged. |
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