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248 Cards in this Set

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Dividend Yield
A financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock. Dividend yield is calculated as follows:

Annual dividends per share/price per share
Expense Ratio
A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual calculation, where a fund's operating expenses are divided by the average dollar value of its assets under management. Operating expenses are taken out of a fund's assets and lower the return to a fund's investors.

Also known as "management expense ratio" (MER).
Front-End Load
A commission or sales charge applied at the time of the initial purchase for an investment, usually mutual funds and insurance policies. It is deducted from the investment amount and, as a result, it lowers the size of the investment.
Back-End Load
A fee (sales charge or load) that investors pay when selling mutual fund shares within a specified number of years, usually five to 10 years. The fee amounts to a percentage of the value of the share being sold. The fee percentage is highest in the first year and decreases yearly until the specified holding period ends, at which time it drops to zero.

Also known as a "contingent deferred sales charge or load."
Net Asset Value - NAV
A mutual fund's price per share or exchange-traded fund's (ETF) per-share value. In both cases, the per-share dollar amount of the fund is calculated by dividing the total value of all the securities in its portfolio, less any liabilities, by the number of fund shares outstanding.

In terms of corporate valuations, the calculation: value of assets less liabilities equals net asset value (NAV), or "book value", is used.
Discount To Net Asset Value
pricing situation that occurs with a closed-end mutual fund when its market price is currently lower than the net asset value of its components. Discounts can occur in times where the market has a pessimistic future outlook and fund investors have started to sell their holdings.

Also known as "discount to NAV"
Closed-End Fund
A closed-end fund is a publicly traded investment company that raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange.

Also known as a "closed-end investment" or "closed-end mutual fund."
Annualize
1. To convert a rate of any length into a rate that reflects the rate on an annual (yearly) basis. This is most often done on rates of less than one year, and usually does not take into account the effects of compounding. The annualized rate is not a guarantee but only an estimate, and its accuracy depends on the variance of the rate. This rate is also known as "annualized return" and is similar to "run rate".

For example, a security that returns 1% a month returns 12% on an annualized basis. If, however, the 12% value was computed after only one month of returns, it is not certain that the 12% will be achieved for the year.

2. To convert a taxation period of less than one year to an annual (yearly) basis. This helps income earners to set out an effective tax plan and manage any tax implications.

For example if after the first three months of the year you earn $10,000, you simply multiply the $10,000 by four to achieve $40,000, your annualized income.
Annual Percentage Yield - APY
The effective annual rate of return taking into account the effect of compounding interest. APY is calculated by:

= (1 + periodic rate)^(# periods) - 1

The resultant percentage number assumes that funds will remain in the investment vehicle for a full 365 days.
Commodity
A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade.

The basic idea is that there is little differentiation between a commodity coming from one producer and the same commodity from another producer - a barrel of oil is basically the same product, regardless of the producer. Compare this to, say, electronics, where the quality and features of a given product will be completely different depending on the producer. Some traditional examples of commodities include grains, gold, beef, oil and natural gas. More recently, the definition has expanded to include financial products such as foreign currencies and indexes. Technological advances have also led to new type
Option
A financial derivative that represents a contract sold by one party (option writer) to another party (option holder). The contract offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price (the strike price) during a certain period of time or on a specific date (excercise date).

In terms of speculation, option buyers and writers have conflicting views regarding the outlook on the performance of an underlying security.

For example, because the option writer will need to provide the underlying shares in the event that the stock's market price will exceed the strike, an option writer that sells a call option believes that the underlying stock's price will drop relative to the option's strike price during the life of the option, as that is how he or she will reap maximum profit.

This is exactly the opposite outlook of the option buyer. The buyer believes that the underlying stock will rise, because if this happens, the buyer wi
Short
Short Position
Short Sale
The sale of a borrowed security, commodity or currency with the expectation that the asset will fall in value.

For example, an investor who borrows shares of stock from a broker and sells them on the open market is said to have a short position in the stock. The investor must eventually return the borrowed stock by buying it back from the open market. If the stock falls in price, the investor buys it for less than he or she sold it, thus making a profit.
Long
Long Position
The buying of a security such as a stock, commodity or currency, with the expectation that the asset will rise in value.

For example, an owner of shares in McDonald's Corp. is said to be "long McDonald's" or "has a long position in McDonald's".
Call Option
An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period.

You profit on a call when the underlying asset increases in price.
Put
An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time. The buyer of a put option estimates that the underlying asset will drop below the exercise price before the expiration date.

When an individual purchases a put, they expect the underlying asset will decline in price. They would then profit by either selling the put options at a profit, or by exercising the option. If an individual writes a put contract, they are estimating the stock will not decline below the exercise price, and will not fall significantly below the exercise price.

Consider if an investor purchased one put option contract for 100 shares of ABC Co. for $1, or $100 ($1*100). The exercise price of the shares is $10 and the current ABC share price is $12. This contract has given the investor the right, but not the obligation, to sell shares of ABC at $10.

If ABC shares drop to $8, the investor's put option is in-the-money and he can
Preferred Stock
A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock generally has a dividend that must be paid out before dividends to common stockholders and the shares usually do not have voting rights.

The precise details as to the structure of preferred stock is specific to each corporation. However, the best way to think of preferred stock is as a financial instrument that has characteristics of both debt (fixed dividends) and equity (potential appreciation). Also known as "preferred shares".

There are certainly pros and cons when looking at preferred shares. Preferred shareholders have priority over common stockholders on earnings and assets in the event of liquidation and they have a fixed dividend (paid before common stockholders), but investors must weigh these positives against the negatives, including giving up their voting rights and less potential for appreciation.
Noncumulative
A type of preferred stock that does not pay the holder any unpaid or omitted dividends. If the corporation chooses to not pay dividends in a given year, the investor does not have the right to claim any of those forgone dividends in the future.
Arbitrage
The simultaneous purchase and sale of an asset in order to profit from a difference in the price. It is a trade that profits by exploiting price differences of identical or similar financial instruments, on different markets or in different forms. Arbitrage exists as a result of market inefficiencies; it provides a mechanism to ensure prices do not deviate substantially from fair value for long periods of time.

Given the advancement in technology it has become extremely difficult to profit from mispricing in the market. Many traders have computerized trading systems set to monitor fluctuations in similar financial instruments. Any inefficient pricing setups are usually acted upon quickly and the opportunity is often eliminated in a matter of seconds.
Indenture
A contract between an issuer of bonds and the bondholder stating the time period before repayment, amount of interest paid, if the bond is convertible (and if so, at what price or what ratio), if the bond is callable and the amount of money that is to be repaid.
Trustee
An individual who holds or manages assets for another individual.

For example, an indenture trustee is the agent of a bond issuer who handles all the administrative aspects of a loan, including ensuring that the borrower complies with the terms in the indenture.
Covenant
A promise in an indenture, or any other formal debt agreement, that certain activities will or will not be carried out.

The purpose of a covenant is to give the lender more security. Covenants can cover everything from minimum dividend payments to levels that must be maintained in working capital.
Lien
When a creditor or bank has the right to sell the mortgaged or collateral property of those who fail to meet the obligations of a loan contract.

This is typically enforced under provincial or state laws.
Debenture
A type of debt instrument that is not secured by physical asset or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Both corporations and governments frequently issue this type of bond in order to secure capital. Like other types of bonds, debentures are documented in an indenture.

Debentures have no collateral. Bond buyers generally purchase debentures based on the belief that the bond issuer is unlikely to default on the repayment. An example of a government debenture would be any government-issued Treasury bond (T-bond) or Treasury bill (T-bill). T-bonds and T-bills are generally considered risk free because governments, at worst, can print off more money or raise taxes to pay these type of debts.
Receiver
A person appointed by a bankruptcy court or secured creditor to run a company for a short period of time in a manner that will ensure as much debt is paid back to creditors as possible.

The main purpose of a receiver is to use a company's assets in a way that will most effectively pay back creditors. Depending on where a receiver is appointed, there are numerous restrictions on how he or she runs a business. For instance, in many jurisdictions a receiver can run a company only for 14 days. In turn, a receiver's main function is often simply to liquidate all available assets. When a receiver is appointed, the company is said to be "in receivership."
Collateral trust bond
A bond that is secured by a financial asset - such as stock or other bonds - that is deposited and held by a trustee for the holders of the bond.

If the issuing company were to default on the debt obligation, the debt holders would receive the securities held in trust, like collateral for a loan.

For example, say Company A issues a collateral trust bond, and as collateral for the bond it includes the right to Company A shares held by a trust company. If Company A were to default on the bond payments, the bondholders would be entitled to the shares held in trust.
Funded Debt
Synonymous with "long-term debt".

A company's debt, such as bonds, long-term notes payables or debentures that will mature in more than one year or one business cycle. This type of debt is classified as funded debt because it is funded by interest payments made by the borrowing firm over the term of the loan.
fee investors pay when selling an investment like a mutual fund or annuity
Back–end load
Savings account within an insurance company
Annuity
Bond issued by a corporation and sold to investors. High risk and high interest rate
Corporate bonds
ownership in a company based on number of shares owned. get money from corporation depending on how well it is doing
Stocks
Stock exchange member that maintains the inventory and stands ready to sell or buy shares in order to maintain an orderly market
Specialist
A sales charge paid when an individual buys an investment, such as a mutual fund,or an annuity. the first payment is made by an investor, so the total initial payment is higher than the later payments
Front–end load
Amount of money an investment earns. Expressed as percent.
Rate of return
A debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing.
Bonds
Shows ownership in a company
Stock certificate
certificate of deposit– savings certificate entitling the bearer to receive interest, bears a maturity date, fixed interest rate, and issued by commercial banks
CD
Issued by a state or county to finance its capital expenditures. Exempt from federal taxes.
Municipal Bonds
The speed and ease at which an investment can be converted to cash
Liquidity
Even if you do receive future money on schedule,it will have lost some of its buying pwoer because of increasing prices
Inflation
short–term debt obligation backed by US government with maturity of less than 1 year. Sold in denominations of $1000–$5 mil. Maturities of usually 1,3,or 6 months
Treasury bills
Real estate that generates income or intended for investment. Tax implications are different than residential real estate.
Real estate
An open–ended fund operated by an investment company which raises money from shareholders and invests in a group of assets. mutual funds raise money by selling shares of the fund to the public, much like any other type of company can sell stock in itself to the public.
Mutual fund
Marketable debt security with fixed interest and maturity of 1–10 years. Bought through government or bank
Treasury notes
Marketable, fixed–interest debt security with maturity of 10+ years. Make semi–annual interest payments and only taxed at federal level
Treasury bonds
A registered, non–callable, non–transferable bond issued by the U.S. Government, and backed by its full faith and credit. non–marketable, meaning that they cannot be bought and sold after they are purchased from the government. Fixed rate of insurance over period of time
US savings bond
typically mutual funds, are purchased in fixed dollar amounts at regular intervals.
Dollar cost averaging
Active investor
An investor who thinks anyone who has the smarts, time, and know-how can routinely beat the rest of Wall Street by a wide margin. Active investors have many different strategies, including trying to buy stocks when they think they're cheap or stocks that have been rising rapidly in the recent past.
After-hours trading
Regular trading of stocks ends at 4 p.m. EST, but investors can continue to buy and sell stocks after that time.
Ask price
The lowest price a prospective seller is willing to accept for a share of stock.
Bid price
The price a prospective investor is willing to pay for a share of stock.
Bond
IOUs issued mainly by governments, agencies of governments, or companies to finance their operations or projects. Buyers of bonds are given a promise they'll get their money back, plus interest, over a preset period of time. Bonds are often called fixed-income investments because interest payments are fixed.
Earnings season
The period of about three weeks following the end of a quarter when companies report their financial performance. Earnings reports contain information about a company's profits and financial standing.
Fundamental analysis
A method of evaluating investments by studying a company's earnings, growth rate, or other data related to the performance of the company's operations.
Index
A basket of stocks or other investments selected to represent a certain market, style of investing, or market. The three most popular stock market indexes are the Dow Jones industrial average, Standard & Poor's 500, and Nasdaq composite.
IPO
Short for initial public offering. IPOs are shares of companies offered to public investors for the first time and are the way that a private company becomes a publicly traded one.
Online brokerage
An organization that works on your behalf to buy, sell, and hold your stocks and other investments and allow you to access your account online. Brokers, including online brokers, must be registered with the Securities and Exchange Commission.
Options
Financial tools that give their owners the right, but not the obligation, to buy or sell a stock or other investment by a certain date at a prearranged price. Options can be used to guard against large losses or by speculators to enhance returns.
Passive investor
An investor who generally believes it's impossible for most people to consistently beat the stock market and therefore buys investments and hangs onto them. Many passive investors invest in broad and diversified index funds, which are highly tax-efficient and outperform many investors who try to beat the market with market timing and stock picking.
Prospectus
The in-depth document required to be filed with regulators by mutual funds, exchange-traded funds, and companies going public for the first time in an IPO.
Regulatory filings
Financial reports required by regulatory bodies, most typically the Securities and Exchange Commission, that give investors access to material information. Annual reports, quarterly reports, and proxy statements, often known by their technical names 10-K, 10-Q, and DEF 14, are available online and give investors information about a company.
Short seller
Investors who are betting that the value of an investment will fall. These investors borrow an investment, sell it immediately, and then buy it back later at a hopefully lower price in order to return it to the person they borrowed from.
Stock
A piece of ownership in a company that can be bought or sold to other investors. Stocks are sometimes referred to as equities.
Technical analysis
A method of evaluating investments based on the movements of the stock price in the past. Technical analysts generally study stock charts and look for patterns they say can help predict future price movements.
12b-1 Fees
Fees paid out of fund assets to cover the costs of marketing and selling fund shares. "Distribution fees" include fees to compensate brokers and others who sell fund shares, and to pay for advertising, and printing and mailing prospectuses to new investors. "Shareholder Service Fees" are fees that cover the cost of responding to investor inquiries and providing investors with information.
Large Cap, Mid Cap, Small Cap
Terms used to describe a company’s size and market value (market capitalization).
401(k) Plan
An employer-sponsored retirement savings plan that gives employees a choice of investment options, typically mutual funds. Employees who participate in a traditional 401(k) plan have a portion of their pre-tax salary invested directly in the option or options they choose. These contributions and any earnings from the 401(k) investments are not taxed until they are withdrawn.
403(B) Plan
A type of tax-deferred retirement savings program available to employees of public schools, certain non-profits, and some members of the clergy.
529 College Savings Plan
A tax-advantaged way to save for future college expenses, such as tuition and housing.
8-K
Public companies file Form 8-K, known as the "current report," to the SEC to announce major events that shareholders should know about, including bankruptcy proceedings, a change in corporate leadership (such as a new director or officer) and preliminary earnings announcements.
Account Fee
A fee that some funds separately impose on investors for account maintenance. For example, individuals with accounts below a specified dollar amount may have to pay an account fee.
Accrued Interest
Interest earned on a security but not yet paid to the investor.
After-hours Trading
Stock trading outside the regular hours of major exchanges such as the New York Stock Exchange and the Nasdaq Stock Market. Regular trading hours are 9:30 a.m. to 4:00 p.m. Eastern Time.
Annual Meeting
Once-a-year meetings where the chief executive officer reports on the year's results to shareholders. At this meeting, shareholders vote to elect the board of directors and on other corporate business.
Annual Report (10K)
A report filed to the SEC by public companies that includes the company's history, audited financial statements, a discussion of products and services, a review of the organization and its operations, and a discussion of the company's major markets.
Annual Return
An annual rate of return is the profit or loss on an investment over a one-year period. There are many ways of calculating the annual rate of return. If the rate of return is calculated on a monthly basis, multiplying it by 12 expresses an annual rate of return. This is often called the annual percentage rate (A.P.R.).
Annuity
An annuity is a contract between you and an insurance company, under which you make a lump-sum payment or series of payments. In return, the insurer agrees to make periodic payments to you beginning immediately or at some future date.
Ask Price
In the over-the-counter market, the term "ask" refers to the lowest price at which a market maker will sell a specific number of shares.
Asset
Any tangible or intangible item that has value in an exchange. A bank account, a home, or shares of stock are all examples of assets.
Asset Allocation
Asset allocation involves dividing your investments among different categories, such as stocks, bonds, and cash.
Asset Classes
Investments that have similar characteristics. The three main asset classes are stocks, bonds, and cash.
Back-end Load
A sales charge, also known as a "deferred sales charge," investors pay when they redeem (sell) mutual fund shares. Funds generally use these to compensate brokers
Basis Point
One one-hundredth (.01) of a percentage point. For example, eight percent is equal to 800 basis points.
Bear Market
A time when stock prices are declining and market sentiment is pessimistic. Generally, a bear market occurs when a broad market index falls by 20% or more over at least a two-month period.
Beneficial Owner
A beneficial owner holds stocks indirectly, for example, through a bank or broker-dealer. Beneficial owners are sometimes said to be holding shares in "street name."

Bid Price
The highest price a market maker will pay to buy a specific number of shares.
Board of Directors
A group of people elected by shareholders to oversee the management of a corporation.
Bond
A debt security, similar to an IOU. When you buy a bond, you are lending money to the issuer. In return for the loan, the issuer promises to pay you a specified rate of interest during the life of the bond and to repay the principal when it "matures," or comes due.
Bond Swap
The investor sells one bond and uses the proceeds to buy another bond, often at the same price.
Broker
An individual who acts as an intermediary between a buyer and seller, usually charging a commission to execute trades. Brokers are required to seek the best execution of trades they make for clients, and if they recommend investments to clients, those investments must be suitable for the client.
Bull Market
A time when stock prices are rising and market sentiment is optimistic. Generally, a bull market occurs when there is a rise of 20% or more in a broad market index over at least a two-month period.
Buying Long
Purchasing or owning shares of stock, with the expectation that the stock will rise in value.
Callable Bonds (or Redeemable Bonds)
Bonds that can be redeemed or paid off by the issuer prior to the bond's maturity date
Callable CDs
These give the issuing bank the right to terminate – or "call" – the CD after a set period of time, but they do not give the CD holder the same right. If interest rates fall, the issuing bank might call the CD.
Capital Gain
The profit that comes when an investment is sold for more than the price the investor paid for it.
Cash
Money that can be used to pay for goods or services.
CD Call Period
Don't assume that a "federally insured one-year non-callable" CD matures in one year. It doesn't. These words mean the bank cannot redeem the CD during the first year. A "one-year non-callable" CD may still have a maturity date that is years in the future.
Certificate of deposit (CD)
A certificate of deposit (CD) is a time deposit, a financial product commonly sold in the United States and elsewhere by banks, thrift institutions, and credit unions. CDs are similar to savings accounts in that they are insured "money in the bank" and thus virtually risk free.
Classes
Different types of shares issued by a single fund, often referred to as Class A shares, Class B shares, and so on. Each class of a fund holds identical investments and shares the same investment objectives and policies. But each class has different shareholder services with different fees and expenses, and therefore, each class will have different performance results.
Closed-end Fund
A type of investment company that does not continuously offer its shares for sale but instead sells a fixed number of shares at one time. After its initial public offering, the fund typically trades on a market, such as the New York Stock Exchange or the NASDAQ Stock Market. Legally, they are known as a "closed-end company."
College Savings Plan
A type of 529 plan that offers a choice of investment options, such as mutual funds, to save for future college costs. Many of these investments automatically shift to more conservative assets as the student gets closer to college age.
Commissions
You will likely pay a commission when you buy or sell a stock through a financial professional. The commission compensates the financial professional and his or her firm when it is acting as agent for you in your securities transaction.
Committee on Uniform Securities Identification Procedures (CUSIP)
The Committee on Uniform Securities Identification Procedures (CUSIP) number identifies most securities, including U.S. government and municipal bonds. CUSIP numbers are unique nine-character alphanumeric identifiers assigned to each series of securities.
Compound Interest
Interest paid on principal and on accumulated interest
Contingent Deferred Sales Load
A type of back-end load, the amount of which depends on the length of time the investor holds his or her shares. For example, a contingent deferred sales load might be 5% if an investor holds his or her shares for one year, 4% after two years, and so on until the load disappears completely.
Conversion
A feature some funds offer that allows investors to automatically switch from one fund class to another, typically one with lower annual expenses, after a set period of time. The fund's prospectus or profile will state whether the fund has a conversion feature.
Convertible Bond
A corporate bond that can be exchanged for a specific number of shares of the company's stock, usually common stock. In most cases, the holder of the convertible bond determines whether and when a conversion occurs.
Corporate Governance
A framework which may include rules and regulations, corporate charter and bylaws, formal policies, as well as customs and other processes, that determines the leadership, organization, and direction of a company.
Corporate Reports
Reports that public companies must file with the SEC.
Coupon
A feature of a bond that denotes the amount of interest due and the date that the payment will be made.
Coupon Payment
The dollar amount of interest paid to an investor. The amount is calculated by multiplying the interest of the bond by its face value.

Coupon Rate
The interest rate on a bond. It is expressed as a semi-annual rate.
Creation Unit
Large blocks of shares in an ETF, typically 50,000 shares or more
Credit Rating Agencies
Provide their opinion on the creditworthiness of a corporate or government borrower by issuing a grade, or credit rating, on bonds issued by that borrower.
Current Yield
The ratio of the interest rate payable on a bond to the actual market price of the bond, stated as a percentage. For example, a bond with a current market price of $1,000 that pays $80 per year would have a current yield of 8%.
Day Trading
Day traders rapidly buy, sell and short-sell stocks throughout the day in the hope that the stocks continue climbing or falling in value for the seconds or minutes they hold the shares, allowing them to lock in quick profits. Day trading is extremely risky and can result in substantial financial losses in a very short period of time
Debentures
An unsecured bond backed solely by the general credit of a company.
Default
A failure by an issuer to pay principal or interest when due, or to fulfill other obligations, such as reporting requirements
Deferred Annuity
With a deferred annuity, you make payments to an insurance company, which will be free from taxes until you reach a particular age or a date specified in your contact.
Deferred Sales Charge
A sales charge, also known as a "Back-end Load," investors pay when they redeem (sell) mutual fund shares. Funds generally use these to compensate brokers.
Defined Benefit Plan
Defined benefit plans also are known as pension plans. Employers sponsor defined benefit plans and promise the plan's investments will provide you with a specified monthly benefit at retirement. The employer bears the investment risks.
Derivatives
Financial instruments whose performance is derived, at least in part, from the performance of an underlying asset, security or index. For example, a stock option is a derivative because its value changes in relation to the price movement of the underlying stock.
Disclosure
Information about a company’s financial condition and business that it makes public. Investors can use this information to make informed investment decisions about the company’s securities.
Discount
A bond sold before it matures might not sell at full par value. If it sells below par, it is selling at discount.
Discount Note
Short-term obligations issued at a discount from face value. Discount notes have no periodic interest payments; the investor receives the note's face value at maturity. For example, a one-year, $1,000 face value discount note purchased at issue at a price of $950, would yield $50 or 5.26% ($50/$950).
Distribution Fees
Fees paid out of fund assets to cover marketing and selling fund shares. These fees may cover advertising costs, compensating brokers and others who sell fund shares, payments for printing and mailing prospectuses to new investors, and providing sales literature to prospective investors. Distribution fees sometimes are referred to as "12b-1 fees."
Diversification
Diversification is a strategy that can be neatly summed up as "Don't put all your eggs in one basket." The strategy involves spreading your money among various investments in the hope that if one loses money, the others will make up for those losses.
Dividend
A portion of a company's profit paid to shareholders. Public companies that pay dividends usually do so on a fixed schedule although they can issue them at any time. Unscheduled dividend payments are known as special dividends or extra dividends.
Early Withdrawal
If a CD is redeemed before it matures, you may have to pay a penalty or forgo a portion of the interest.
Earnings Per Share
A public company's net profit divided by the number of its common shares.
Electronic Data Gathering Analysis and Retrieval (EDGAR) database
The SEC's Electronic Data Gathering, Analysis and Retrieval database provides free public access to corporate information such as registration statements, prospectuses, and quarterly and annual reports.
Employee Retirement Income Security Act (ERISA)
The Employee Retirement Income Security Act of 1974, which is administered by the U.S. Department of Labor. ERISA does not require employers to offer a pension plan. But it does require employers who do offer them to meet certain minimum standards
Exchange-Traded Fund (ETF)
A type of exchange-traded investment product that must register with the SEC as either an open-end investment company (generally known as “funds”) or a unit investment trust. ETFs offer investors a way to pool their money in a fund that makes investments in stocks, bonds, or other assets and, in return, to receive an interest in that investment pool. ETF shares are traded on a national stock exchange.
Expense Ratio
The fund's total annual operating expenses, including management fees, distribution fees, and other expenses, expressed as a percentage of average net assets.
Financial Accounting Standards Board (FASB)
The Financial Accounting Standards Board (FASB) is the accounting standard setter for purposes of the Federal Securities Laws. See GAAP
Financial Industry Regulatory Authority (FINRA)
The Financial Industry Regulatory Authority, a self-regulatory organization for the brokerage industry.
Financial Planner
An investment professional who typically prepares financial plans for clients. The services financial planners offer can vary widely. Some financial planners assess every aspect of a client's financial life and help the client develop a detailed strategy or financial plan. Others may only be able to recommend investments in a narrow range of products that may or may not include securities
Fixed Annuity
An insurance product that promises a minimum rate of interest while your account is growing. The insurance company also guarantees that the periodic payment will be for a set amount for a fixed period, such as 20 years, or an indefinite period, such as your lifetime.
Fixed-rate Bond
A long-term bond with a set interest rate.
Floating-rate Bond (or Variable or Adjustable rate Bond)
A bond whose interest rate is adjusted periodically according to a predetermined formula; it is usually linked to an interest rate index such as LIBOR.
Floor
The lower limit for the interest rate on a floating-rate bond.
Foreign Corrupt Practices Act (FCPA)
The Foreign Corrupt Practices Act (“FCPA”) generally prohibits the bribing of foreign officials. The FCPA also requires publicly traded companies to maintain accurate books and records and to have a sys-tem of internal controls sufficient to provide reason-able assurances that transactions are executed and assets are accounted for in accordance with management’s authorization and recorded as necessary to permit the preparation of financial statements in conformity with generally accepted accounting principles (known as “GAAP”).
Foreign currency exchange (forex)

A foreign currency exchange rate is a price that represents how much it costs to buy the currency of one country using the currency of another country. Currency traders buy and sell currencies through forex transactions based on how they expect currency exchange rates will fluctuate. When the value of one currency rises relative to another, traders will earn profits if they purchased the appreciating currency, or suffer losses if they sold the appreciating currency.
Foreign Exchange Markets
Markets that trade currencies.
Form 10-K

You can find a wealth of information in the company’s annual report on Form 10-K. Among other things, the 10-K offers a detailed picture of a company’s business, the risks it faces, and the operating and financial results for the fiscal year. Company management also discusses its perspective on the business results and what is driving them.
Form 8-K
Form 8-K provides investors with current information to enable them to make informed decisions. The types of information required to be disclosed on Form 8-K are generally considered to be “material.” That means that, in general, there is a substantial likelihood that a reasonable investor would consider the information important in making an investment decision.
Fraudster
A person whose goal is to con people out of their money.
Free look Period
Variable annuity contracts typically have a "free look" period of ten or more days. During this period, you are free to terminate your contract without paying any surrender charges and you will receive a refund for the amount you paid. The "free look" period is a time for you to continue to ask questions so that you understand the variable annuity and are sure that it is right for you
Front-end Load
An upfront sales charge investors pay when they buy fund shares. It generally is used by the fund to compensate brokers. A front-end load is deducted from the purchase and reduces the amount available to buy fund shares.
Future Value
The value of an asset at a specified date in the future.
Futures contract
An agreement to buy or sell a specific quantity of a commodity or financial instrument at a specified price on a particular date in the future.
Futures Market
Markets that trade futures contracts for commodities such as gold, oil or wheat, as well as financial futures.
General Obligation Bond
A municipal bond not secured by any assets; instead it is backed by the issuer's power to tax residents to pay bondholders.
Generally Accepted Accounting Principles (GAAP)
GAAP (Generally Accepted Accounting Principles) are accounting standards, conventions and rules. It is what companies use to measure their financial results. These results include net income as well as how companies record assets and liabilities. In the US, the SEC has the authority to establish GAAP. However, the SEC has historically allowed the private sector to establish the guidance. See The Financial Accounting Standards Board.
Good-Til-Cancelled Order
An order to buy or sell a security at a specific (limit) price that remains in effect until the order is completed or cancelled.
High-yield Bond (or Junk Bond)
Bonds that are believed to have a higher risk of default and receive low ratings by credit rating agencies, namely bonds rated Ba or below (by Moody's) or BB or below (by S&P and Fitch). These bonds typically are issued at a higher yield (for example, a higher interest rate) than more creditworthy bonds, reflecting the perceived higher risk to investors.
High-Yield Investment Programs
High-Yield Investment Programs (HYIP) are unregistered investments typically run by unlicensed individuals – and they are often frauds. The hallmark of an HYIP scam is the promise of incredible returns at little or no risk to the investor. A HYIP website might promise annual (or even monthly, weekly, or daily!) returns of 30 or 40 percent – or more. Some of these scams may use the term “prime bank” program. If you are approached online to invest in one of these, you should exercise extreme caution - they are likely frauds
Immediate Annuity
This annuity has no accumulation phase. Instead, you start receiving annuity payments right after you purchase the annuity.
Index Fund
A type of mutual fund whose investment objective typically is to achieve approximately the same return as a particular market index, such as the Standard & Poor's 500 Index, the Russell 2000 Index, or the Wilshire 5000 Total Market Index.
Initial Public Offering (IPO)
An initial public offering occurs when a company first sells its shares to the public.
Interest
The price paid for borrowing money. It is expressed as a percentage rate over a period of time.

Interest rates may be fixed, meaning the rate is set and will not change, or may be variable or "floating," meaning the rate may move higher or lower over time.
Internet Fraud
The Internet allows individuals or companies to communicate with a large audience without spending a lot of time, effort, or money. Anyone can reach tens of thousands of people by building an Internet Web site, posting a message on an online bulletin board, entering a discussion in a live "chat" room, or sending mass e-mails. It's easy for fraudsters to make their messages look real and credible. But it's nearly impossible for investors to tell the difference between fact and fiction.Always determine if a securities offering is registered with the SEC or a state, or is otherwise exempt from registration, before investing.
Invest
To engage in any activity in which money is put at risk for the purpose of making a profit.
Investment Adviser
An investment adviser is a firm or an individual that, for compensation, engages in the business of advising others as to the value of securities or as to the advisability of investing in, purchasing, or selling securities. An investment adviser can also be a firm or individual that, for compensation and as part of a regular business, issues analyses or reports concerning securities.
Investment Company
A company that issues and invests in securities. The three types of investment companies are mutual funds, closed-end funds, and unit investment trusts
Investment-grade Bond (or High-grade Bond)
Bonds that are believed to have a lower risk of default and receive higher ratings by the credit rating agencies, namely bonds rated Baa (by Moody's) or BBB (by S&P and Fitch) or above. These bonds tend to be issued at lower yields than less creditworthy bonds
Issuer
The entity obligated to pay principal and interest on a bond.
Liability/Debt
An amount owed to a person or organization for borrowed funds. Loans, notes, bonds, and mortgages are forms of debt. These different forms all call for borrowers to pay back the amount they owe, typically with interest, by a specific date, which is set forth in the repayment terms.
Lifecycle Funds
A diversified mutual fund that automatically shifts towards a more conservative mix of investments as it approaches a particular year in the future, known as its "target date." A lifecycle fund investor picks a fund with the right target date based on his or her particular investment goal. The managers of the fund then make all decisions about asset allocation, diversification, and rebalancing. Lifecycle funds also are known as target date funds.
Limit Orders
A limit order is an order to buy or sell a security at a specific price. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.
Liquidity (or Marketability)
A measure of the relative ease and speed with which a security can be bought or sold in a secondary market.
Load
The amount that investors pay when they buy (front-end load) or redeem (back-end load) shares in a mutual fund, similar to a commission. The SEC's rules do not limit sales loads a fund may charge, but FINRA's rules cap mutual fund sales loads at 8.5% of the purchase or sale, or at lower levels, depending on other fees and charges.
London Interbank Offered Rate (LIBOR)
The interest rates banks charge each other for short-term loans. LIBOR is frequently used as the base for resetting rates on floating-rate securities
Lump Sum Payment
A payment of a sum of money at one time, such as an inheritance.
Management Fee
A fee paid out of fund assets to the fund's investment adviser for investment portfolio management. A fund's management fees appear under Annual Fund Operating Expenses in the fee table in the fund's prospectus.
Margin Account
In a margin account, your brokerage firm can lend you money to buy securities, with the securities in your portfolio serving as collateral for the loan. As with any other loan, you will incur interest costs when you buy securities on margin. There are risks from purchasing securities on margin that do not come with most other types of loans. For example, if the value of your securities declines significantly, you may be subject to a "margin call."
Margin Call
If you buy on margin and the value of your securities declines, your brokerage firm can require you to deposit cash or securities to your account immediately, or sell any of the securities in your account to cover any shortfall, without informing you in advance. The brokerage firm decides which of your securities to sell. Even if the brokerage firm notifies you that you have a certain number of days to cover the shortfall, it still may sell your securities before then. A brokerage firm may at any time change the threshold at which customers are subject to a margin call.
Market Capitalization
A measure of the size of a corporation. For publicly traded companies, market capitalization is calculated by multiplying the number of shares outstanding by the current market price per share. Companies may be considered to be large-cap, mid-cap or small-cap firms based on their market capitalization.
Market Index
A measurement of the performance of a specific "basket" of stocks considered to represent a particular market or sector of the U. S. economy. For example, the Dow Jones Industrial Average (DJIA) is an index of 30 "blue chip" stocks of U.S. companies.
Market Indices
A market index tracks the performance of a specific "basket" of stocks that represent a particular market or economic sector. U.S. examples include the Dow Jones Industrial Average, an index of 30 "blue chip" U.S. company stocks, the Standard and Poor's 500 Index, and the Wilshire 5000 Index, which includes most publicly traded U.S. stocks
Market Maker
A firm that stands ready to buy and sell a particular stock on a regular and continuous basis at a publicly quoted price.
Market Order
A market order is an order to buy or sell a stock at the current market price. Unless you specify otherwise, your broker will enter your order as a market order. The advantage of a market order is that as long as there are willing buyers and sellers, you are almost always guaranteed your order will be executed. The disadvantage is the price you pay when your order is executed may not be the price you expected.
Merger
The combining of two or more companies into a single entity.
Microcap stock
Stock in very small companies whose market capitalization, reflecting the total value of the company's stock, is low or "micro." Microcap stocks tend to be low priced and trade in low volumes.
Money Markets
A market that provides trading in short-term debt.
Mortgage-backed Securities (MBS)
Mortgage-backed securities, or MBS, are bonds or notes backed by a pool of mortgages on residential or commercial properties. As the mortgage borrowers pay the principal and interest on their loans, the investors in MBS receive payments of interest and principal.
Mutual Fund
The common name for an open-end investment company. Like other types of investment companies, mutual funds pool money from many investors and invest the money in stocks, bonds, short-term money-market instruments, or other securities. Mutual funds issue redeemable shares that investors buy directly from the fund or through a broker for the fund instead of from other investors.
Net Asset Value (NAV)
The value of a fund's assets minus its liabilities. SEC rules require funds to calculate their NAV at least once daily. To calculate the NAV per share, simply subtract the fund's liabilities from its assets and divide the result by the number of shares outstanding.
Net Income
The profit earned by a company after all expenses and taxes have been deducted from revenue. A simple way to think about net income is it’s the price of a widget multiplied by the number of widgets sold (this result is revenue) minus the cost to make and sell the widgets, other expenses and any interest or taxes.
No-load Fund
A fund that does not charge any type of sales load. But not every type of shareholder fee is a "sales load," and a no-load fund may charge fees that are not sales loads. No-load funds also charge operating expenses.
Offering Document (or Official Statement or Prospectus)
The disclosure document prepared by a bond issuer that gives detailed financial information about the issuer and the bond offering.

Municipal securities issuers must prepare an “Official Statement” before presenting the primary offering. These municipal disclosure documents provide information for investors, including the terms of the bond and financial information on the issuer. They also typically contain information regarding: the purpose of the bond; whether the issuer can redeem the bond prior to maturity; and when and how principal and interest on the bond will be repaid.
Open-end Company
The legal name for a mutual fund. An open-end company is a type of investment company.
Operating Expenses
The costs a fund incurs in running the fund, including management fees, distribution fees, and other expenses.
Options
Options are contracts giving the purchaser the right – but not the obligation -- to buy or sell a security at a fixed price within a specific period of time. Stock options are traded on a number of exchanges.
Ponzi Schemes
A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors until the scheme collapses. Ponzi schemes are named after Charles Ponzi, who ran a postage stamp speculation scheme in the 1920s and used funds from new investors to pay fake “returns” to earlier investors. Ponzi scheme organizers often promise high returns with little or no risk, but instead of investing, they use money from new investors to pay other investors or keep it for themselves.
Portfolio
The combined holdings of stock, bond, commodity, real estate and other investments by an individual or institutional investor.
Premium
The amount by which the price of a bond exceeds its principal (par) amount.
Prepayment
The unscheduled partial or complete payment of the principal amount outstanding on a loan, such as a mortgage, before it is due
Prepayment Risk
The risk that principal repayment will occur earlier than scheduled, forcing the investor to reinvest at lower prevailing rates.
Price-earnings (P/E) Ratio
A company's P/E ratio is a way of gauging whether the stock price is high or low compared to the past or to other companies. The ratio is calculated by dividing the current stock price by the current earnings per share. Earnings per share are calculated by dividing the earnings for the past 12 months by the number of common shares outstanding.
Primary Market
Markets in which newly issued securities are sold to investors and the issuer receives the proceeds
Principal
The total amount of money being borrowed or lent; the initial amount of money invested.
Product Description
A summary of key information about an ETF that explains how to obtain a prospectus.
Profit
Revenue minus cost; money made on a transaction
Promissory Notes
Promissory notes are a form of debt that companies sometimes use to raise money. They typically involve investors loaning money to a company in exchange for a fixed amount of periodic income. Although promissory notes can be appropriate investments for many individuals, some fraudsters use promissory notes to defraud investors, especially the elderly.
Prospectus
A document that describes the mutual fund to prospective investors. Every mutual fund provides a prospectus with information about the mutual fund's investment objectives, risks, past performance, and expenses. You can get a prospectus from the mutual fund company's website or by mail. A broker or other financial professional also can provide you with a copy.
Proxy Statement
A document sent to shareholders letting them know when and where a shareholders’ meeting is taking place and detailing the matters to be voted upon at the meeting. You can attend the meeting and vote in person or cast a proxy vote.
Proxy Voting
A way for shareholders to vote for corporate directors and on other matters affecting the company without having to personally attend the meeting.
Public Company
A company that offers its securities through an offering and now has those securities traded on the open market.
Pump and Dump
Pump-and-dump” schemes involve the touting of a company’s stock (typically small, so-called “microcap” companies) through false and misleading statements to the marketplace. These false claims could be made on social media such as Facebook and Twitter, as well as on bulletin boards and chat rooms. Pump-and-dump schemes often occur on the Internet where it is common to see messages posted that urge readers to buy a stock quickly or to sell before the price goes down, or a telemarketer will call using the same sort of pitch. Often the promoters will claim to have “inside” information about an impending development or to use an “infallible” combination of economic and stock market data to pick stocks. In reality, they may be company insiders or paid promoters who stand to gain by selling their shares after the stock price is “pumped” up by the buying frenzy they create. Once these fraudsters “dump” their shares and stop hyping the stock, the price typically falls, and investors lose their money.
Purchase Fee
A shareholder fee that some funds charge when investors buy mutual fund shares. This is not the same as, and may be in addition to, a front-end load
Purchasing Power
The amount of goods and services that can be purchased by a given unit of currency, taking into account the effect of inflation
Pyramid Schemes
In the classic "pyramid" scheme, participants attempt to make money solely by recruiting new participants. The hallmark of these schemes is the promise of sky-high returns in a short period of time. A pyramid scheme is closely related to a Ponzi scheme because they both involve paying longer-standing members with money from new participants, instead of actual profits from investing or selling products. Pyramid schemes collapse when the promoter cannot raise enough money from new investors to pay earlier investors.
Quarterly Reports (10Q)
Each quarter, public companies file reports to the SEC containing unaudited financial statements and information about the company's operations in the previous three months
Real Estate Investment Trust (REIT)
A company that owns and typically operates income producing real estate or real estate-related assets, such as office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans.
Real Return
Real return is what is earned on an investment after accounting for taxes and inflation. Real returns are lower than nominal returns, which do not subtract taxes and inflation.
Rebalancing
Rebalancing brings a portfolio back to its original asset allocation mix. This is necessary because over time, some investments will grow faster than others, and holdings may become out of alignment with investment goals.
Redemption Fee
A shareholder fee that some funds charge when investors redeem (sell) mutual fund shares. Redemption fees, which must be paid to the fund, are not the same as and may be in addition to a back-end load, which is typically paid to a broker. The SEC generally limits redemption fees to 2% of the sales amount.
Registered Owner
A registered owner or record holder holds stocks directly with the company, rather than in "street name." Registration Statement -- By law, public companies in the U.S. must disclose important financial information before they issue securities for sale to the public. This report, known as a registration statement, is filed with the SEC.
Revenue
The total amount of money, or gross income, generated by a company from selling its goods and services. A simple way to think about revenue is it’s the price of a widget multiplied by the number of widgets sold.
Revenue Bond
A municipal bond not backed by the government's taxing power but by revenues from a specific project or source, such as highway tolls or lease fees
Risk
In finance, risk refers to the degree of uncertainty about the rate of return on an asset and the potential harm that could arise when financial returns are not what the investor expected. In general, as investment risks rise, investors seek higher returns to compensate them for taking on such risks.
Risk Tolerance
An investor's ability and willingness to lose some or all of an investment in exchange for greater potential returns.
Roth 401(k) Plan
An employer-sponsored Roth 401(k) plan is similar to a traditional plan with one major exception. Contributions by employees are not tax deferred but are made with after-tax dollars. Income earned on the account from interest, dividends, or capital gains, is tax-free
Sales Charge (or Load)
The amount that investors pay when they buy (front-end load) or redeem (back-end load) shares in a mutual fund, similar to a commission. The SEC's rules do not limit sales loads a fund may charge, but FINRA's rules cap mutual fund sales loads at 8.5% of the purchase or sale, or at lower levels, depending on other fees and charges.
Savings
Income that is not spent on consumption but is put aside.
Secondary Market
Markets where existing securities are bought and sold.
Section 1035
This part of the U.S. tax code allows you to exchange an existing variable annuity contract for a new annuity contract without paying tax on the income and investment gains in your current account. But you may have to pay surrender charges on your old annuity if you are still within the surrender period.
Security
An investment instrument such as a stock or bond.
Senior Bond
A bond that has a higher priority than another bond's claim to the same class of assets in case of a default or bankruptcy. Settlement Date -- The agreed date for the delivery of bonds and payment of funds.
Shareholder
An individual or institution that owns one or more shares of stock in a company.
Shareholder Service Fees
Fees paid to respond to inquiries from investors and provide them with information about their investments.
Short Sale
A short sale occurs when you sell stock you do not own. Investors who sell short believe the price of the stock will fall. If the price drops, you can buy the stock at the lower price and make a profit. If the price of the stock rises and you buy it back later at the higher price, you will incur a loss.
Standard & Poor's Depositary Receipts (SPDR) Trust
An ETF designed to replicate the performance of the Standard & Poor's 500 Index. Because of its acronym, the SPDR instrument is referred to as a "spider."
Stock
An instrument that signifies an ownership position (called equity) in a corporation, and a claim on its proportional share in the corporation's assets and profits. Most stocks also provide voting rights, which give shareholders a proportional vote in certain corporate decisions, such as the election of corporate directors.
Stock Market
A general term for the organized trading of stocks through exchanges, over-the-counter, and computerized trading venues.
Stock Quotes
Listings of prices to buy and sell a specific stock. During trading, quotes show bids, the prices buyers are willing to pay, and offers, the prices sellers are willing to accept. Historical data provides the opening and closing price for each day of trading, and the daily high and low price for a stock, along with trading volume.
Stock Split
An increase in the number of shares of a corporation's stock without a change in the shareholders' equity. Companies often split shares of their stock to make them more affordable to investors. Unlike issuing new shares, a stock split does not dilute the ownership interests of existing shareholders. For example, if you own 100 shares of a company that trades at $100 per share and the company declares a two-for-one stock split, you will own 200 shares at $50 per share immediately after the split. If the company pays a dividend, your dividends paid per share also will fall proportionately.
Stop Order
A stop order is an order to buy or sell a stock once the price of the stock reaches a specified price, known as the stop price. When the specified price is reached, your stop order becomes a market order. The advantage of a stop order is you don't have to monitor how a stock is performing on a daily basis. The disadvantage is that a stop price purchase or sale could be activated by a short-term fluctuation in a stock's price. In addition, the price at which your trade is executed may differ from the stop price, especially in a fast-moving market where stock prices can change rapidly.
Surrender Charge
A type of sales charge that applies if you withdraw money from a variable annuity within a certain period of time, usually six to ten years. This is known as the surrender period. The charge declines over time until it no longer applies. For example, a 7% surrender charge might apply in the first year after purchase. The charge may fall to 6% in the second year, 5% in the third year and so on, until the eighth year, when it no longer applies
Target Date Fund
A diversified mutual fund that automatically shifts towards a more conservative mix of investments as it approaches a particular year in the future, known as its "target date." A target date fund investor picks a fund with the right target date based on his or her particular investment goal. The managers of the fund then make all decisions about asset allocation, diversification, and rebalancing. Target date funds also are known as lifecycle funds.
Tender Offer
A public offer to purchase the stated amount of stock of a corporation from its shareholders at the stated price within a stated time limit often in an effort to gain control of the company.
Ticker
Each publicly traded common stock in the U.S. receives a short abbreviation that identifies it, known as its stock symbol or stock ticker symbol. Some stocks have single-letter ticker symbols while others may have up to five. Letters that appear after a ticker provide additional information. For instance, the letter "Q" after a ticker signifies that the company is in bankruptcy.
Time Horizon
Your time horizon is the number of months, years, or decades you need to invest to achieve your financial goal.
Total Annual Fund Operating Expense
The total of a fund's annual fund operating expenses, expressed as a percentage of the fund's average net assets. You'll find the total in the fund's fee table in the prospectus.
Trustee
An institution, usually a bank, designated by the issuer as the custodian of funds and official representative of bondholders.
Unit Investment Trust (UIT)
A type of investment company that typically makes a one-time "public offering" of only a specific, fixed number of units. A UIT will terminate and dissolve on a date established when the UIT is created, which may be more than 50 years in the future
Variable Annuity
A variable annuity is a contract between you and an insurance company, under which the insurer agrees to make periodic payments to you, beginning either immediately or at some future date.
Variable-rate CDs
These have changeable interest rates. Some variable-rate CDs feature a "multi-step" or "bonus rate" structure in which interest rates increase or decrease over time according to a pre-set schedule. Other variable-rate CDs pay interest rates that track the performance of a specified market index, such as the S&P 500 Index.