Key Terms

Screen Shot 2020-04-19 at 11.07.16 AMAccrual Bond
A bond which is sold at a deep discount to its face value, and pays no coupons. Accrual bonds tend to be illiquid, and very sensitive to changes in interest rates. Although there is no actual cash flow of interest, the imputed interest on an accrual bond is taxable as it accrues under U.S. tax laws.

Accrued Interest
The amount of interest the buyer owes the seller on transactions of fixed income securities, such as most bonds and notes.

Accumulation Bond
A bond sold at a price below its face value and can be redeemed at its face value when matured. Also called discount bond.

Acquisition
The act of acquiring control of another corporation, by either stock purchase or exchange. This can be achieved either through hostile or friendly means.

Adviser
The firm primarily responsible for a fund’s day-to-day operation.

After-hours Trading
The buying and selling securities when the major markets are closed. After-hours trading was once a privilege of institutional investors, individual investors can now participate. Stocks are traded after hours on ECNs, which match buyers and seller with a computer system in order to execute trades.

Aftermarket
Markets in which an investor purchases a security from other investors rather than the issuer, subsequent to the original issuance in the primary market. Also called secondary market.

Aggressive Growth Funds
Mutual funds that focus on small-company stocks, the fund’s high level of risk is justified by potential for accelerated earnings.

Alpha
The measure of a fund’s risk-adjusted return. Alpha is derived by compares the fund’s actual returns and the expected returns as determined by its level of risk (beta). A positive alpha indicates the fund has performed better than expected, while a negative alpha indicates the fund has underperformed.

Annual Report
The audited report of a corporation’s year-end financial results and operations filed annually with the SEC. The report contains information on the company’s financial condition, legal liabilities and future plans. Shareholders may obtain a free copy of the Annual Report from the corporation.

Annual Report (Mutual Fund)
A report that gives an overview of a fund’s performance and operations. SEC requires funds to distribute the report to shareholders at least semiannually.

Annualized Returns
The return on an investment over a specified number of years, calculated as what an investor would have received each year if the cumulative return were distributed evenly over each year within the specified time period.

Ask (Asked Price)
The lowest round lot price at which a broker will sell a security.

Ask Price (Mutual Funds)
Also known as the offering price, the ask price is the price at which a mutual fund’s shares can be bought. The ask price is calculated by adding a fund’s current net asset value per share to its sales charges, if any.

Bear
A pessimistic investor who believes a stock or the overall market will decline.

Bear Market
A market in which prices of securities are generally declining.

Beta
Beta measures the volatility of a stock’s returns relative to the S&P 500. It is based on a 36-month historical regression of the return on the security compared to the return on the S&P 500. For example, a beta of 1.5 indicates that a stock tends to move 50% more than the S&P 500 in the same direction. So if the S&P rises 10%, the stock will move higher by 15%; but if the S&P falls 10%, the stock will fall 15%. Generally speaking, a higher beta represents a riskier investment.

Bid
The highest price buyers have declared that they are willing to pay for a security.

Bid/Ask Size
The number of shares buyers are willing to purchase at the quoted bid price and the number of shares offered for sale at the quoted ask price.

Blue-Chip
A term used to describe the common stocks of corporations with the strongest reputation for generating earnings and paying dividends.

Bond
1) A debt instrument; a security that represents the debt of a corporation, a municipality of the federal government, or any other entity. A bond is usually long-term in nature (10 to 30 years), to be repaid to investors on a specified date. 2) An investment in a government or corporation which is structured like a loan, the difference being payments are made to individual bondholders rather than to a lending institution. Most bonds offer a regular, scheduled income with relatively low risk, making them attractive to retirees and others living off their investments.

Bond Fund
A type of mutual fund that invests in bond and preferred stocks, providing a stable income with low risk.

An optimistic investor who believes the market or the price of a security will rise.

Bull Market
A market in which prices of securities are generally rising.

Bullish
A term used to describe rising security prices.

Buyer’s Option (Contract)
A settlement that calls for delivery and payment according to the number of days specified by the buyer.

Buying Power
In a margin account, the maximum dollar amount of marginable securities that the client can purchase or sell short without having to deposit additional funds.

Call
An option contract gives the holder of the option the rights (but not the obligation) to purchase, and obligates the writer to sell a specified number of shares of the underlying asset at the given strike price on or before the expiration date of the contract.

Call Date
The date when callable bonds are eligible to be redeemed before maturity.

Call Protection
The degree of security that an investor has against a bond being called, usually measured by the number of years between today and the call date.

Call Spread
Simultaneously buying and selling a call options contract on the same underlying security but with different expiration dates, different exercise prices, or both.

Capital Growth
The increase in value of an investment when either its price rises or its profits are reinvested.

Capitalization
The total dollar value of all stocks and bonds issued by a corporation

Capital Loss
The decrease in the value of an investment or asset. Opposite of capital gain.

Capital Stock
The common and preferred stock of a corporation.

Cash Flow
Sometimes called cash earnings, it is the net earnings before depreciation, amortization and non-cash charges, useful in determining the solvency of a company. Cash flow is calculated by adding depreciation to net earnings then subtracting preferred dividends.

Cash Dividend
A dividend paid in cash to the shareholders of a corporation. The amount, which is usually based on the profitability of the corporation and decisions of the board of directors, is considered taxable income.

Common Equity
The amount of shareholders’ equity attributable to common stock. Common equity usually consists of the common stock at par value, capital surplus and retained earnings.

Common Stock
A security issued representing ownership of a corporation. Common stockholders may vote to elect management, participate in corporate decision making, and receive dividends.

Consumer Price Index
An inflationary indicator published monthly to reflect the upward price movement of a fixed basket of common goods and services.

Control Securities
Securities owned by a control person.

Covered Call
A short call option position where the writer sells a call option while simultaneously owning the number of shares represented by the option contracts. Covered calls can limit the risk the writer since he/she has already purchased the deliverable security.

Covered Put
A put option position where the writer of the option is also short on the corresponding stock. This limits the option writer’s risk because the put can be used to cover the short stock position.

Current Assets
Liquid assets that can be converted to cash within 12 months. These include cash, marketable securities, accounts receivable and inventory.

Current Income
Regular income generated by investments (as opposed to capital growth).

Current Liabilities
Accounting term describing obligations that must be paid within 12 months. These include accounts payable, short-term debt and interest on long-term debt.

Current Yield
The actual yield of a bond determined by the bond’s current price on the secondary market. The current yield can be calculated by dividing the coupon by the bond’s current market price. For example, a bond with a $1,000 face value and a coupon of 5% purchased at $900 has a current yield of 6.56% (50 / 900). When the market price of a bond declines, its current yield rises. Conversely, when the market price rises, the current yield declines.

Cyclicals
Stocks whose performance is heavily influenced by the business cycle. An example would be the hosing industry, where sales slow down during winter and picks up during the warmer months.

Debt/Equity Ratio
A comparison of the assets provided by creditors to the assets provided by shareholders. It is calculated by dividing long-term debt by common stockholders’ equity, and serves as an indicator of financial leverage.

Defensive Stocks
Stocks whose prices stay stable when the market declines. Defensive stocks are usually those of industries that are less affected by recessions, such as stocks of food and utility companies.

Depreciation
Depreciation is a non-cash charge that represents the decline in the value of fixed assets due to deterioration, age, or obsolescence.

Derivative
The securities whose value are derived from or linked to an underlying stock, bond, currency or mortgage.

Derivative Security
A financial security such as an option or a future, whose value is derived in part from the value of another security. For example, the price of an options contract is tied closely to the market price of the underlying stock.

Diversification
The process of dividing investments among a variety of securities to lower or even eliminate risk.

Dividends
A portion of a corporation’s earnings paid to stockholders on a per-share basis. Preferred stock is supposed to pay a regular and prescribed dividend amount. Common stock pays varying amounts as determined the company.

Dividend Reinvestment
Automatic reinvestment of shareholder dividends into more shares of a company’s stock. This is often done without having to pay commissions.

Dividend Reinvestment Plan
Automatic reinvestment of shareholder dividends in more shares of a company’s stock without commission. Dividend reinvestment plans allow shareholders to accumulate capital over the long-term using dollar cost averaging.

Dividend Yield (Funds)
Indicated yield represents return on a share of a mutual fund held over the past year.

Dividend Yield (Stocks)
Indicated yield represents annual dividends divided by current stock price.

Dividends per Share
Dividends paid for the past year divided by the number of common shares outstanding. The number of shares outstanding is determined by a weighted-average of shares outstanding over the specified year.

Dollar Cost Averaging
An investment strategy used in mutual funds by which clients invest a fixed dollar amount periodically, regardless of the performance of the fund. Since mutual funds permit the buying of fractional shares, the fixed amount will acquire more shares when the fund decreases in price, and fewer shares when the price rises.

Dow Jones Industrial Average (DJIA)
Also known as the Dow, it is the most famous and widely accepted U.S. index of stocks, containing 30 stocks from various industries that trade on the New York Stock Exchange and NASDAQ.

Earnings
The net income for a company during the reporting period.

Earnings Growth %
A weighted average of the one-year earnings growth rates of the stocks in the fund. This calculation excludes stocks whose earnings changed from a loss to a gain and stocks whose earnings gains exceeded 999.99%.

Earnings Report
A corporate financial statement released by the company quarterly or annually netting all earnings and expenses to a profit or loss.

Earnings Yield
The ratio of earnings per share to the current share price, after allowing for tax and interest payments on fixed interest debt. It is calculated by taking the total twelve months earnings divided by the number of outstanding shares, divided by the recent price, multiplied by 100.

Earnings Per Share (EPS)
The net income divided by the number of shares of common stock outstanding.

EE Savings Bond
A zero-coupon bond issued directly by the Treasury in par values up to $10,000. Purchased at half of par, EE savings bonds mature in 12 years and are eligible for extended maturity. Individuals can purchase up to $30,000 EE savings bonds per year.

Estimated EPS Growth
The mean estimate of earnings-per-share growth from the Wall Street analysts estimates.

Exchange-Traded Fund (ETF)
A type of fund that tracks an index, but can be traded like a stock.

Expense Ratio
The operating costs, management fees, administrative fees, 12b-1 fees and all other costs incurred by the fund expressed as a percentage of the fund’s total asset.

Expiration
The day on which an option contract becomes void.

Expiration Cycle
The cycle of 3 months on which options on a particular security expire. Options are placed in one of three cycles: the January cycle (January, April, July, October), the February cycle (February, May, August, November), or the March cycle (March, June, September, December).

Federal Funds Rate
The interest rate that banks charge each other for the use of Fed funds. The Feds control this rate indirectly through setting the yield of Treasury security issues.

Fractional Shares
A share of equity that is less than one full share. Fractional shares usually come about from stock splits, dividend reinvestment plans (DRIPs) and similar corporate actions. Normally, fractional shares cannot be acquired from the market.

Free Cash Flow
Free cash flow is calculated as operating cash flow minus capital expenditures and dividends. Free cash flow can be used to pay dividends, buy back stock or pay off debt.

Free Cash Flow per Share
Free cash flow divided by the number of common shares outstanding.

Free Stock
The securities that can be used for a loan.

Fundamental Analysis
The security valuation method involving the analysis of the company’s financials and operations, especially sales, earnings, growth potential, assets/ debt ratio, management, and competition. This valuation method seeks to find the intrinsic value of a company, and locate undervalued stock in the market.

Futures
An agreement to buy or sell a set amount of a commodity or financial instrument at a certain price on a predetermined date.

Futures Contract
Agreement to buy or sell a set number of shares of a specific stock in a predetermined future month at a price agreed upon by both sides of the transaction. The contracts themselves are traded on the futures market. The difference between a futures contract and an options contract is that the futures contract is an agreement to actually make a transaction, whereas the option contract is the right to buy or sell.

Gross Profit
The net sales before tax minus cost of sales.

Growth and Income Funds
Mutual funds that invest in companies whose earnings are expected to grow, sacrificing some future profits in order to provide current income.

Growth Stock
Stock of a company in an emerging young industry.

Head & Shoulders
A technical analysis term, describing the chart formation where a stock price peak is preceded and followed by two smaller peaks, both at the resistance point of a stock cycle. This formation sometimes indicates a trend reversal. The name is derived from the similarity in appearance to the human head and shoulders.

Hedge
To reduce the risk in one security by taking an offsetting position in a related security.

HH Savings Bonds
A savings bond that pays semiannual coupon interest, unlike EE savings bonds. No more than $30,000 can be purchased by any individual in one year.

High-Yield Bond
A high-yield bond is one that is rated poorly by a credit rating system. These bonds offer higher yields compared to bonds of financially sound companies, justifying the greater credit risk.

Holding Company
A corporation that owns enough voting stock in another firm influence the election of its board of directors, gaining control of the management and operations.

Income
The portion of investment return from interest or dividend payments, taxable at an individual’s ordinary income tax rate.

Income Bonds
Bonds issued by a corporation in poor financial condition, interest is paid only if earned by the issuer. These bonds are speculative instruments that pay high rates of interest for its high risks.

Income Funds
Funds that focus on a variety of securities that earn high interests or dividends.

Income Stock
Common stock that unusually pays a high dividend.

Income Stream
A strategy arranging bonds so that they produce a consistent series of payments.

Indenture
The terms and agreement of a corporate bond, usually on the face of the bond certificate.

Index Fund
A mutual fund whose portfolio matches that of an index, such as the S&P 500 or Dow Jones Industrial Average. This allows the fund to reflect the performance of the overall market.

Indicated Dividend
An estimate of the dividends per share that would be paid over the next 12 months if each dividend were the same amount as the most recent dividend.

Indicated Yield
The yield based on the annualized value of the most recent dividend, calculated by dividing the annual dividend by the price of the stock.

Industrial Revenue Bond
A type of municipal bond whose issuer’s ability to pay interest and principal is based on the revenue generated from the industrial complex which the bond financed.

Inflation
The rate at which the general level of prices for goods and services is rising, usually measured by the Consumer Price Index or Producer Price Index.

Inflation Risk
The risk that the yield of an investment will be diminished by rising inflation rates.

Inflation-indexed Bonds
These Treasuries are designed to keep pace with inflation. The principal is adjusted to match changes in the consumer price index, while the interest rate remains fixed. In this way, inflation can not erode the value of your principal. New in 1997, they are officially known as Treasury Inflation Protection Securities or TIPS.

Initial Investment
The amount required to make the first investment in a mutual fund.

Initial Public Offering (IPO)
A company’s first sale of stock to the public, usually by a young company to capitalize for further expansion and growth.

Inside Information
Relevant information about a company that has not yet been made public. It is illegal to execute make trades based on this information.

Insider
A person with nonpublic information on a corporation. Directors and officers who have access to nonpublic information before the public are usually considered insiders.

Insider Trading
The illegal purchase or sale of shares by someone who possesses inside information about the company. For example, an executive who purchases shares with knowledge of a new invention soon to be announced by his company would be performing illegal insider trading.

Institutional Investor
Entities with large amounts of funds to invest, such as investment companies, mutual funds, brokerages, insurance companies, and endowment funds. Institutional Investors account for the majority of overall market volume.

Interest
The rate charged by the lending for borrowing money over a specified amount of time.

Junk bond
Bonds rated with the lowest credit rating, usually issued by companies in financial turmoil. Since they are riskier, they offer a much higher yield.

Large-Cap Stocks
Stocks issued by companies that are valued at over $5 billion.

Limit Order
An order instruction which sets the highest price the client is willing to pay for a buy order, or the lowest price the client is willing to accept for a sell order. If the security reaches the price specified by the limit order, the order will be executed at the specified price or possibly better.

Liquidity
The degree of ease to convert an asset into cash.

Liquidity Ratio
A measure of how much dollar volume is required to move the stock’s price up or down one percentage point. A high ratio indicates that relatively heavy trading is required to change its price, while a low liquidity ratio indicates that the stock moves on relatively light volume.

Liquidity Risk
Risk from the difficulty in selling an asset. High liquidity risk could lower the value of the asset.

Listed Options
Options that are traded on a national option exchange.

Listed Securities
Securities that are traded on a national exchange.

Listed Stock
Stock that has met the qualifications for trading on an exchange.

Load
The sales charge assessed upon the initial investment in or redemption of a mutual fund.

Load Fund
A mutual fund with shares sold at a price including a sales charge, usually purchased through a salesperson.

Loan Consent Agreement
The agreement required by the SEC that authorizes a securities broker to lend securities that are in a customer name.

Loan Stock
A stock bearing a fixed rate of interest. Unlike a debenture, loan stocks may be unsecured.

Loan Value
The amount of money the client may borrow from the firm, expressed as a percentage of market value.

Long Position
The state of an investor owning a security.

Long-Term Assets
Value of long term property, equipment and other capital assets minus the depreciation over time.

Long-Term Bond
Bonds that mature in more than ten years.

Long-Term Debt
Liabilities to be paid after 12 months from the date of the last balance sheet.

Long-Term Debt/Capitalization
The ratio of long-term debt as a proportion of the capital available, serves as an indicator of financial leverage. Calculated by dividing long-term debt with the sum of long-term debt, preferred stock and common stockholders’ equity.

Long-Term Liabilities
Amount owed for interests, bond repayment, and other debt that are due after one year.

Low
The lowest closing price of a stock over a certain period of time.

Limit Order
An order instruction which sets the highest price the client is willing to pay for a buy order, or the lowest price the client is willing to accept for a sell order. If the security reaches the price specified by the limit order, the order will be executed at the specified price or possibly better.

Limited Tax Bond
A municipal bond whose ability to pay back principal and interest is based on a special tax.

Liquidity Ratio
A measure of how much dollar volume is required to move the stock’s price up or down one percentage point. A high ratio indicates that relatively heavy trading is required to change its price, while a low liquidity ratio indicates that the stock moves on relatively light volume.

Liquidity Risk
Risk from the difficulty in selling an asset. High liquidity risk could lower the value of the asset.

Long-Term Assets
Value of long term property, equipment and other capital assets minus the depreciation over time.

Long-Term Bond
Bonds that mature in more than ten years.

Long-Term Debt
Liabilities to be paid after 12 months from the date of the last balance sheet.

Long-Term Debt/Capitalization
The ratio of long-term debt as a proportion of the capital available, serves as an indicator of financial leverage. Calculated by dividing long-term debt with the sum of long-term debt, preferred stock and common stockholders’ equity.

Long-Term Liabilities
Amount owed for interests, bond repayment, and other debt that are due after one year.

Mid-Cap Stocks
Stocks of medium-sized companies. They offer more growth potential than large caps but are less volatile than small cap companies.

Moving Average
A technical analysis term measuring the average of data for a certain number of time periods. It is calculated using data from a fixed number of time periods, when a new value is added, the last trailing value is removed, hence the name “moving” average.

Municipal Bond
A long-term debt instrument issued by a state or municipal government.

Mutual Fund
An investment company that actively manages a portfolio and continuously offers new shares to investors. Mutual funds have various different objectives, some aim for growth and others aim for stability; the portfolio is managed to meet these criteria.

Naked Call
An investor selling a call options contract without actually owning the underlying security.

NASDAQ
An automated communication network used to facilitate transactions of qualified over-the-counter or exchange listed securities. Unlike the AMEX or NYSE, the NASDAQ does not have a physical trading floor, all trades are completed through the computer system.

Net Assets
The total assets held in a mutual fund.

Net Margin
A measure of company profitability after deducting all costs, expenses and taxes. It is calculated by dividing net earnings by revenues, the resulting percentage is the operating efficiency of a company.

Open Interest
The number of outstanding option contracts for a particular class or series currently in the exchange market.

Operating Margin
A company’s profitability before non-cash charges, it is a measure of a company’s operating efficiency. Operating margin is calculated by dividing EBITDA by revenues then multiplying by 100.

Option
A contract that gives the buyer the right to buy (call) or sell (put) a predetermined quantity of an underlying security during a specific period of time at a predetermined price.

Option-Income Fund
A mutual fund which tries to generate additional income by continuously writing options.

Other Current Assets
Accounting term describing the value of non-cash assets, including prepaid expenses and accounts receivable due within the year.

Payout Ratio
The percent of earnings-per-share that was paid out as dividend, calculated by dividing the quarterly dividend by the quarterly EPS then multiplying by 100.

Penny Stocks
Securities priced less than $5 per share, often highly speculative investments.

Premium (Bonds)
A bond selling at a current market price that is above its face value. Bonds sell at a premium when the coupon on the bond is higher than prevailing rates.

Premium (Options)
The price paid by the buyer to the option writer for the rights to the option contract.

Pre-Tax Margin
The profitability of a company before paying taxes, calculated by dividing pre-tax earnings by revenues.

Price/Book
The ratio of a stock’s latest closing price divided by its book value per share. Book value per share is obtained by dividing the book value (total assets minus total liabilities) by total shares outstanding.

Price/Cash Flow
The ratio of a stock’s latest closing price divided by cash flow per share of the last 12 months.

Price/Earnings Ratio
The ratio obtained by dividing the current share price by the latest earnings per share. The historical average PE ratio for stocks has been around 15.

Price/Sales
The ratio of a stock’s latest closing price divided by revenue per share. Since this ratio reveals little about the profitability of a company, it is usually used for companies with no earnings, since those companies have an undefined P/E ratio.

Principal (Bond)
The face value of a bond.

Private Company
A company where all ownership is held privately.

Public Market
The listed exchanges through which zero-coupon investments can be purchased and sold.

Public Offering Date
The first-day

new security issues are offered to the public.

Purchase Price
The price paid for the purchase of a Treasury or agency security.

Put
An option contract that gives the holder the right to sell a stated number of shares of the underlying security at a specified strike price to the writer of the put, up to the expiration date.

Quarterly Report
An unaudited financial report submitted every quarter to the SEC by public companies, containing the company’s financials and other relevant information.

Quick Ratio
Also know as acid test, it is an indicator of a company’s financial condition, calculated by taking current assets less inventories, then divide by current liabilities.

Russell 2000 Index
An index tracking the performance of 2,000 small-cap stocks.

Savings Bonds
A registered, non-callable, non-negotiable bond sold at a discount, redeemable at face value upon maturity. Savings bonds can be purchased for $50 up to $10,000, with a maximum of $30,000 each year per individual.

Sector Funds
Mutual funds that focus on investing in a specific industry, these funds have higher risks because of their lack of diversity.

Securities and Exchange Commission (SEC)
The primary regulatory federal agency responsible for the enforcement of laws in the securities industry.

Securities Investor Protection Corporation (SIPC)
A non-profit organization established by the Congress consisting of members of the securities industry. Should a member fail, the SIPC insures the securities and cash in customer’s accounts up to a maximum of $500,000, including up to $250,000 in cash.

Short Position
A technique used by investors who believe the price of a stock is going down, selling stocks he does not yet own then later buying it back at a lower price to close out the transaction.

Short Sell
The sale of securities that are not owned with the intention to buy it back at a later date at a lower price.

Short-Term Bond
A bond that matures within five years.

Short-Term Bond Funds
Funds that invest in bonds with average maturities of three years or less.

Short-Term Government Bond
A government bond that matures within five years.

Small-Cap Stocks
Stocks issued by companies that are valued at less than $1 billion. Small-cap stocks can offer high-growth opportunities, but are more risky and pay little dividends, if not none at all.

Stock Power
A power of attorney a person the right to transfer ownership of a stock in behalf of the owner.

Stock Splits
The exchange of existing shares for more newly issued shares from the same corporation. Splits do not increase or decrease the capitalization of the company, shareholders equity is simply redistribute over more shares, making the price of each individual share cheaper.

Stop Limit Order
Similar to a stop order, but instead of becoming a market order when the price is reached or passed, it becomes a limit order at the specified price.

Stop-Loss
A stop order to sell set below the current price, mostly used for volatile stocks, so that potential losses are limited if the stock declines rapidly.

Stop Order
A type of order not executed until the specified price has been reached or passed, at which it becomes a market order. In contrast to limit orders, buy stops are entered above the current market price; sell stops are entered below it.

Straddle
An option strategy involving a simultaneous long or short positions of both put and call option contracts, on the same underlying security and same series designation.

Strangle
An option strategy that involves writing a call and a put with different strike prices on the same underlying security.

Street Name
A term describing securities that are registered in the name of a brokerage firm, bank, or depository.

Strike Price
Also known as exercise price, it is the stated price per share at which the underlying asset may be purchased or sold by the option holder upon exercising of the options contract.

Technical Analysis
A method of evaluating securities by relying on market data, such as price charts and volume to predict future market trends. It is believed that investor psychology has a significant influence on the market, creating patterns that can be used to estimate whether the price of a security will rise or fall. In contrast to fundamental analysis, understanding of a company’s intrinsic value is not necessary for technical analysis.

Total Assets
Total sum of current assets plus total long term assets.

Total Liabilities
Accounting term referring to total current liabilities plus long-term debt and deferred taxes.

Total Revenue
Total sales and other revenue for a specific period.

Trade
A transaction involving one party buying a security from another party.

Trade Confirmation
A verification with information concerning a transaction, sent to the client on or before the first business day following the trade date.

Trade Date
The date on which a trade occurs. Settlement date is 2 business days after the trade date.

Trading Range
The difference between the high and low prices at which a security was traded during a period of time.

Trailing P/E Ratio
The ratio of a stock’s latest closing price divided by last reported annual earnings per share.

Transfer
The process by which securities are reregistered to new owners.

Transfer Agent
An agent employed by a corporation or mutual fund to maintain a record of share ownership and transactions.

Treasuries
Debt obligations issued by the U.S. Department of Treasury, so interest and principal is guaranteed by the U.S. Government. Income from Treasuries is taxable at the federal level, but exempt from state and local taxes.

Turnover Ratio
A measure of a how frequently a fund’s portfolio is traded, expressed as a percentage. For example, a fund with a 50% turnover generally changes the composition of approximately half the portfolio each year.

Uncovered Put
A short put option position in which the writer of the put does not have a short position or the underlying security of the option contract.

Volatility
A relative measure of a security’s price movement during a specific time period, calculated mathematically using standard deviation of daily price changes.

Volume
The total number of shares of a stock traded during a specific time period. High volumes usually correspond to news announcements regarding the company.

Yield (Bond)
The interests earned on a bond investment. If the security was bought on the primary market, the yield will be equal to the interest rate. If the bond was acquired on the secondary market, the yield could be higher or lower depending whether the bond was bought at a premium or discount to face value.

Yield (Stock)
The annual rate of return on a stock as paid in dividends, calculated by dividing the latest dividend rate by the latest closing price, expressed as a percentage.

Yield Curve
This is a graph showing the yields for different bond maturities.

Zero-Coupon CD
A certificate of deposit that pays interest only upon maturity.

Zero-Minus Tick
A stock trade at a price that is equal to the preceding trade but lower than the last different price.

Zero-Plus Tick
A stock trade at a price that is equal to the preceding trade but higher than the last different price.

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