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60 Cards in this Set
- Front
- Back
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growth investor
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An investor seeking rapidly growing companies, with fundamental considerations secondary to growth.
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growth of income
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A portfolio investment seeking to generate an income stream that increases over time. The initial level on income is less than the maximum the funds could generate if no growth were required.
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growth stock
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A stock in which the company reinvests most of its earnings into profitable investment opportunities rather than returning them directly to the shareholders.
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handholding
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The full set brokerage firm function of a broker providing personal face-to-face contact for clients, particularly those who need frequent reassuarance regarding investment matters.
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harmonic mean
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A measure of central tendency, calculated as one divided by the arithmetic average of the reciprocal of the data points.
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hedge fund
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A limited partnership, not required to register with the SEC as long as there are no more than 99 investors, wiht no limits on the security universe or how the fund concentrates its holdings and with no diversification requirement.
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hedger
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An entity engaged in some type of business activity who chooses to reduce or eliminate an unacceptable level of price risk.
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herding
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The lemming-like behavior of investors and analysts who follow the crowd.
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hindsight bias
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The tendency to remember positive outcomes and repress negative outcomes.
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holding period return
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The simplest measure of return, independent of the passage of time, incorporating only a beginning point and an ending point. The holding period return equals income plus change of price, all divided by beginning price.
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illusion of control
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The belief that one has control over an outcome that is actually random, often leading to perpetuation of a behavior even after this reality has been recognized.
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immunization
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A fixed income portfolio management technique seeking to reduce or eliminate interest rate risk.
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improving on the market
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The practice on writing short-term, deep-in-money put or call options to effectively buy or sell stock at a slightly better market price. In essence, the practice captures the small amount of time value associated with substantial levels of intrinsic value.
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in-the-money
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A warrant whose exercise price is below the current stock price or an option that has intrinsic value.
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income distribution
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A mutual fund's proportional payment of interest and dividends received on the portfolio to the accountholders.
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income objective
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A portfolio investment objective seeking to generate maximum income for a given level of risk. It differs from the stability of principal objective in that there is no specific proscription against downward fluctuations in the principal value.
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income stock
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A common stock that has historically paid a large percentage of its net income as dividends to the shareholders.
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indenture
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A legal document describing the details of a bond issue.
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index fund
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An investment company whose management seeks to have its performance mimic some market index.
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indexing
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The investment practice of constructing a portfolio so as to mirror the performance of a market index.
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information trader
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A growth investor who believes there are profits to be made by processing the news better than the next person and who also believes that there are information differentials in the marketplace.
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informational efficiency
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A measure of how quickly and accurately the market reacts to new information.
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initial margin
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The minimun percentage of cost an investor must pay toward new purchases, established by Federal Reserve Board Regulation T.
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Initial Public Offering (IPO)
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A primary market sale of securities to the general public.
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inside information
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Formally called material, non-public information. This is information not available to public which, if known, could reasonably be expected to cause a change in security prices.
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insider
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An employee or consultant with special knowledge of corporate plans that are not generally known to the public.
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Insider Trading and Securities Fraud Enforcement Act of 1988
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Fines up to 1 mln, 10 years in jail, firms are liable for employee insider trading.
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interest
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The cost of borrowed money.
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interest rate risk
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The chance on a loss in portfolio value due to an adverse change in interest rate.
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interest rate sensitive
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The characteristic on an asset whose value will change if interest rate changes.
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interest-only (IO) securities
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A stripped mortgage backed security in which the security holder is entitled to the interest payments on a mortgage pool, but not to any principal payments.
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intrinsic value
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A warrant or option that is in-the-money. For a call option or warrant, it equals stock price minus striking price; for a put, it equals striking price minus stock price.
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investing
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Putting money into a long-term, risky endeavor.
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investment advisor
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A person or firm who actually selects the specific investments in which a mutual fund invests.
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investment grade
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Bond ratings of BBB and higher.
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investment objective
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A mutual fund's stated purpose.
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January effect
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The anomaly finding that stock returns are inexplicably hign in January, especially with small firms.
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Jensen measure
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A traditional performance measure stemming directly from the implications of the capital asset pricing model. It indicates an average trend in security returns inexplicable by financial theory; alpha.
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junk bond
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A bond rated below BBB.
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laddered stratege
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A bond portfolio investment strategy with fixed income investments distributed across the range of yield curve.
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large-cap stock
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A firm with capitalization more than $2 billion.
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law of one price
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A fundamental rule in economics stating that equivalent assets should sell for the same price.
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lending portfolio
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An efficient portfolio partually invested in the riskless rate.
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limit order option
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An order to buy or sell in which the investors specifies a certain price or better and a time limit as conditions for the order.
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line chart
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The simplest and most familiar type of chart; merely a line connecting a series of data points.
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interest-only (IO) securities
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A stripped mortgage backed security in which the security holder is entitled to the interest payments on a mortgage pool, but not to any principal payments.
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intrinsic value
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A warrant or option that is in-the-money. For a call option or warrant, it equals stock price minus striking price; for a put, it equals striking price minus stock price.
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investing
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Putting money into a long-term, risky endeavor.
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investment advisor
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A person or firm who actually selects the specific investments in which a mutual fund invests.
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investment grade
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Bond ratings of BBB and higher.
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investment objective
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A mutual fund's stated purpose.
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January effect
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The anomaly finding that stock returns are inexplicably hign in January, especially with small firms.
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Jensen measure
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A traditional performance measure stemming directly from the implications of the capital asset pricing model. It indicates an average trend in security returns inexplicable by financial theory; alpha.
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junk bond
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A bond rated below BBB.
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laddered stratege
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A bond portfolio investment strategy with fixed income investments distributed across the range of yield curve.
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large-cap stock
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A firm with capitalization more than $2 billion.
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law of one price
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A fundamental rule in economics stating that equivalent assets should sell for the same price.
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lending portfolio
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An efficient portfolio partually invested in the riskless rate.
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limit order option
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An order to buy or sell in which the investors specifies a certain price or better and a time limit as conditions for the order.
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line chart
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The simplest and most familiar type of chart; merely a line connecting a series of data points.
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