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Series 6 Glossary

Series 6 Glossary

by Austin-Madsen, Apr. 2013

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	ACATS	The Automated Customer Account Transfer Service (ACATS) is a system that automates the transfer process of customer assets from one broker-dealer to another. See also: Broker-dealer.
	Account Statement	A report summarizing all transactions and positions that a customer has with a broker-dealer. These statements must be issued at least quarterly, and in some cases, monthly.
	Adjustment Bond	A corporate bond on which interest payments are contingent upon the issuer creating sufficient earnings.
	ADR	American depositary receipts represent shares of a foreign security that trade in the U.S. Typically, foreign securities are deposited in a U.S. bank and the receipts trade on U.S. exchanges and in the over-the-counter market. See also: OTC.
	Accrued Interest	The accumulated interest on a bond since the last interest payment date up to, but not including, the settlement date. Accrued interest is generally added to the purchase price of thebond. See also: Settlement.
	Accumulation Unit	An accounting measure used to determine an annuitant's proportional interest during the accumulation phase. See also: Fixed Annuity; Variable Annuity.
	Ad Valorem Tax	A method of assessing taxes on property or goods.
	Adjusted Gross Income	Income on which an individual computes federal income tax. Adjusted gross income is used as a benchmark for computing most allowable tax deductions.
	After Tax Contribution	The act of putting money into an account after federal income tax has been deducted.
	Agent	A broker-dealer or individual that effects transactions for customers without assuming risk. In reality an agent is acting as a middleman. The compensation earned is a commission. On anyone transaction a broker-dealer will act as either an agent or principal. See also: Principal.
	Aggressive Growth Fund	A management company (either open-end or closed-end) that invests in emerging growth companies. These companies generally share a common characteristic: above average earnings growth potential. See also: Mutual Fund; Closed End Management Company; Open End Management Company.
	AIR	The rate of interest that an insurance company uses to determine the initial payout on a variable annuity.
	All or None Underwriting	An offering that gives the issuer the right to cancel the deal if the underwriting is not fully subscribed.
	Alternative Minimum Tax	A separate, but parallel income tax system that ensures that individuals pay at least a minimum amount of tax. Individuals are required to pay the greater of their regular income tax or the alternative minimum tax.
	American Stock Exchange	One of the largest national securities exchanges in the United States. Today, it is best known for trading exchange-traded funds.
	Annuitize	Relinquishing control of a lump-sum of money in return for a guaranteed series of payments for the life of the contract.
	Annuity	A contract offered by an insurance company that guarantees the purchaser a stream of income for the life of the contract. A variable annuity is a security and an insurance product, while a fixed annuity is only an insurance product.
	Annuity Unit	An accounting measure used to determine the amount of each payment during the annuity payout phase.
	Arbitrage	The simultaneous purchase and sale of the same or related securities designed to take advantage of inefficiencies in the marketplace.
	Arbitration	A process for settling securities industry disputes between member firms, members and their registered reps, and member firms/registered reps and their customers.
	Asset Allocation	The balancing of investment risk by determining the appropriate percentages to allocate to various asset classes. The objective is to achieve the maximum return for an acceptable level of risk. See also: Asset Class.
	Asset Class	Categorizing of investments into various categories. Some examples of asset classes are cash equivalents, large company stocks, small company stocks, international stocks, corporate bonds, and U.S. Government bonds.
	Auction Market	A market in which securities are bought and sold through brokers on the securities exchanges (such as the New York Stock Exchange), as distinguished from the OTC market, which is a negotiated market. See also: New York Stock Exchange; OTC.
	Authorized Shares	The maximum number of shares that a company may create under the terms of its corporate charter. See also: Corporate Charter.
	Backup Withholding	A system used by the Internal Revenue Service that requires taxes withheld on earned income and investment income if a Social Security number is not provided by the taxpayer. See also: Earned Income.
	Balance Sheet	A financial report representing the value of a company's assets, liabilities, and owners' equity on a specific date.
	Balanced Fund	A mutual fund that purchases both stocks and bonds. The objective is to obtain the highest return consistent with a low-risk strategy.
	Bank Secrecy Act	An act of Congress that authorized the Treasury Department to require financial institutions to maintain records of personal financial transactions. The act also requires financial institutions to report any suspicious transactions to the Financial Crimes Enforcement Network. See also: FinCEN.
	Bankers' Acceptance	A check drawn on and accepted by a bank. This is a source of financing used extensively in international trade.
	Basis Point	A yield measurement used in the bond market. The value of one basis point is 1/100 of 1%.
	Bearer Bonds	A type of bond where the bondholder's name is neither imprinted on the bond nor on the books and records of the issuer.
	Bearish	The expectation or outlook that the market as a whole or individual securities are going to decline.
	Bear Market	A Bear Market occurs when there is market decline of 20% or more.
	Best Efforts Underwriting	An arrangement whereby investment bankers act in an agency capacity, and do not accept the risk of owning unsold securities.
	Bid	An indication or willingness to purchase a security. The bid price for a security is the price a client can sell a security at in the market
	Blue Chip Stock	A well-established company having a long history of stable earnings and dividend payments.
	Blue Sky Laws	A term used to describe state securities laws. In addition to federal securities laws, each state has its own securities laws.
	Board of Directors	A group of individuals that carry out tasks that are spelled out in a firm's corporate charter. See also: Corporate Charter.
	Bond	A debt security whereby an issuer promises to repay bondholders principal and interest. Issuers include corporations, municipalities, and the federal government.
	Book Entry Form	A type of security issuance without physical certificates. Evidence of ownership is maintained on the books and records kept by a central agency .
	Book Value	A measure of the net worth per share of common stock. Book value can be used as a guideline in choosing undervalued companies, and is an indication of the value of a company in liquidation. See also: Net Worth.
	Breakpoint	A schedule by which mutual fund investors are offered a reduced sales charge based upon the amount of money invested. See also: Sales Charge.
	Breakpoint Sale	An intentional act of a registered rep whereby money invested in a mutual fund by a customer is just below the amount needed to qualify for a reduced sales charge. This is a specific violation of the FINRA's Conduct Rules. See also: Conduct Rules.
	Broad Based Index	A benchmark that is designed to reflect the movement of the overall market. Some examples include the S&P 500, the Wilshire Equity Index, and the NYSE Composite Index.
	Broker-Dealer	The official term used to describe a brokerage firm. On anyone transaction, firms may act in the capacity of an agent (broker) and do not assume risk, or in the capacity of a principal (dealer) and assume risk. Since most firms act in both capacities during the course of doing business, the term broker-dealer is commonly used. See also: Agent.
	Brokered CDs	A Certificate of Deposit (CD) issued by a bank which a broker-dealer purchases in bulk to obtain a better rate of interest. The CDs are usually broken up and sold to the customers of the broker-dealer.
	Bullish	The expectation or outlook that the market as a whole or for individual securities is going to rise.
	Business Cycle	A pattern of expansion and contraction in economic activity. These patterns have an impact on unemployment rates, growth, and inflation.
	Call	An option contract giving the holder the right to buy the underlying security at a specific price, until a specific date. See also: Option.
	Call Premium	The price exceeding par value that a bond issuer must pay a bondholder for redeeming (calling) her bonds prior to maturity. See also: Call Provision.
	Call Protection	A provision in a bond stating that the issue cannot be called for a certain period of time.
	Call Provision	A feature in a bond that allows the issuer to redeem its bonds prior to maturity.
	Callable Preferred Stock	A feature of a preferred stock that allows the issuer to redeem its preferred stock. Since stock does not have a maturity date, the only methods for an issuer to redeem its stock are through a call feature or buying the stock back in the marketplace. See also: Call Provision.
	Capital Gain	The difference between a security's cost basis and sale proceeds. When sale proceeds are greater than the investor's cost basis, a capital gain is produced.
	Capital Loss	The difference between a security's cost basis and sale proceeds. When sale proceeds are less than the investor's cost basis, a capital loss is produced.
	Capital Risk	The risk associated with losing all or a large percentage of one's principal in an investment. For example, the purchase of call options carry a high degree of capital risk.
	Capitalization	The way that a company has raised capital on a long-term basis. Types of financing include common stock, preferred stock, and long-term deb!. See also: Bond; Common Stock; Preferred Stock.
	Capping	A form of illegal and manipulative activity whereby selling pressure is placed on a security to stop its price from moving higher. See also Manipulation.
	Cash Dividend	A cash payment to shareholders of a corporation. These dividends are usually distributed from retained earnings. See also: Retained Earnings.
	Cash Equivalent	Investments that are highly liquid, and generally very safe. Some examples are money market mutual funds, and Treasury Bills. See also: Money Market Fund; Treasury Bills.
	Cash Settlement	A process whereby money and securities are exchanged the same day in which the transaction takes place.
	Cash Value	A feature of permanent life insurance policies, whereby money builds up (cash value) on a tax deferred basis. The three main kinds of cash value life insurance are whole life, variable life, and universal life insurance. See also: Universal Life Policy; Variable Life Policy; Whole Life Policy.
	Certificate of Incorporation	A formal declaration documenting that an organization has become a corporation.
	Churning	Excessive trading of a customer's account by a registered representative. The representative's primary motive is to generate commissions. See also: Commission.
	Civil Penalty	A monetary penalty assessed for a violation of federal securities laws.
	Class A Shares	Shares of a mutual fund that have an up-front sales charge. See also: Mutual Fund; Sales Charge.
	Class B Shares	Shares of a mutual fund that have a contingent deferred sales charge. With this type of fee, investors pay a sales charge only when they redeem fund shares. This will typically decrease to zero if the investor holds his shares long enough.
	Class C Shares	Shares of a mutual fund that carry a level load. See also: Level Load.
	Closed End Indenture	A provision in a bond contract ensuring bondholders that any additional bonds issued cannot be secured by the same collateral. See also: Indenture.
	Closed End Management Company	An investment company that issues a fixed number of shares. Investors wanting to buy or sell shares may do so on the secondary market. Most secondary market activity for closed-end funds takes place on the New York Stock Exchange and the American Stock Exchange. See also: Secondary Market.
	Code of Arbitration	FINRA's process for settling disputes between broker-dealers and customers and between broker-dealers.
	Code of Procedure	FINRA's process for dealing with trade practice violations involving member firms.
	Coincident Economic Indicators	Economic measurements that occur simultaneously with the current pace of the economy.
	Cold Call Rule	Federal law outlines rules that govern RRs when making unsolicited telemarketing calls to prospects. See also: Telephone Consumer Protection Act of 1991.
	Collateral Trust Bond	A corporate bond backed by securities such as stocks and bonds.
	Commercial Paper	A short-term debt obligation of an issuer that does not exceed 270 days. Commercial paper is considered a money market instrument. See also: Money Market Instrument.
	Commission	Compensation allotted on a transaction when a broker-dealer is acting in the capacity of an agent.
	Commission Broker	An agent (broker) on the floor of the New York Stock Exchange who executes orders for customers of the firm. See also: Agent; New York Stock Exchange.
	Common Stock	A security that represents equity or ownership in a company.
	Comptroller Of The Currency	A federal official who is responsible for examining, supervising, and liquidating all national banks. Also known as the OCC (Office of the Comptroller of the Currency).
	Conduct Rules	Rules established by FINRA to ensure fair treatment of customers by member firms.
	Confinnation	A document sent to a customer verifying the terms of a transaction.
	Conflict of Interest	Involving competing concerns or benefits. For example, acting as a financial advisor to a municipal bond issuer and acting as an underwriter in a negotiated sale of new issue municipal bonds is considered a conflict of interest. As a result, the MSRB prohibits broker-dealers from acting in both capacities on the same deal. See also: Municipal Securities Rule making Board; Negotiated Sale.
	Consolidated Quotation System	A FINRA operated system that consolidates bid and offer prices on listed securities from the exchanges and over-the-counter market.
	Consolidated Tape	A service that delivers real-time trade information on securities trading on the New York Stock Exchange, American Stock Exchange, and the regional stock exchanges.
	Contingent Deferred Sales Charge	A back end sales charge assesses against mutual fund investors usually associated with Class B Shares. It is familiarly known as a CDSC, and it is a charge that decreases on a percentage basis the longer the investor holds the fund shares. Eventually, the investor will not pay a charge upon redemption.
	Continuing Education	Ongoing education requirements for registered representatives in order to keep their securities licenses active. See also: Registered Representative.
	Contractual Plan	A type of plan whereby a mutual fund investor agrees to invest a specific sum of money within a specific period of time.
	Conversion Price	A price set at bond issuance which is used to determine the number of shares a bondholder will receive if he uses the conversion feature on his convertible bond See also: Conversion Ratio; Convertible Bond.
	Conversion Ratio	A relationship that determines the number of common stock shares that will be received in exchange for each convertible bond tendered. See also: Convertible Bond.
	Convertible Bond	A corporate bond which gives bondholders the right at their discretion to convert the bond into shares of common stock of the same corporation. See also: Conversion Price; Conversion Ratio.
	Convertible Preferred Stock	Preferred stock that is exchangeable into a fixed number of shares of common stock.
	Cooling Off Period	The period time that begins when a registration statement on a new issue is filed with the SEC and ends when an effective date is set, unless a stop order or deficiency letter is issued. The cooling-off period usually lasts twenty days. See also: Effective Date; Registration Statement.
	Coordination	A form of state securities (blue-sky laws) registration. The state registration becomes effective when the registration becomes effective with the SEC. See also: Blue-Sky Laws.
	Corporate Charter	A document evidencing a corporation's legal existence.
	Corporate Portfolio	Securities owned by a corporation (IE stocks, bonds, notes)
	Corporate Resolution	A document stating who is authorized to execute securities transactions on behalf of a company.
	Cost Basis	The purchase price of a security, which may be adjusted over time. The cost basis is used to determine if the investor has a capital gain or loss when a security is sold.
	Coupon	The stated annual rate of interest that a bond issuer promises to pay bondholders until maturity. Most bonds pay interest on a semiannual basis.
	Coverdell Education Savings Account	A savings account designed for education that allows contributions (within limitations) to an account on behalf of a child. See also: Education IRA
	Covered Option	An option is considered covered when the holder is in possession of an equity position that will be delivered if the option is exercised. In the case of a covered put, the equity position is a short position, which will necessitate the delivery of the cash received when the short sale was initiated.
	Credit Rating	An evaluation of a corporation's ability to repay its debt obligations. Standard and Poor's and Moody's assign ratings based on a bond issuer's ability to repay interest and principal. See also: Standard and Poor's.
	Criminal Penalty	A penalty assessed for violation of securities laws which may include a prison sentence.
	Cumulative Voting	A policy of voting that enables stockholders to cast all of their votes for anyone director or to cast their total number of votes in any proportion deemed appropriate.
	Current Assets	Assets that can be converted into cash within twelve months.
	CUSIP	An acronym for Committee on Uniform Securities Identification Procedures. The committee identifies stocks, U.S. Government bonds, and municipal bonds.
	Custodian Bank	A bank that safeguards or holds bond and stock certificates for its customers.
	Cyclical Stock	A stock that is sensitive to changes in the business cycle. When the economy is healthy, cyclical stocks tend to perform well. When the economy is weak, cyclical stocks tend to perform poorly. Historically, auto stocks are sensitive to changes in the economy. See also: Business Cycle.
	Dated Date	Date on which interest begins accruing on a new bond issue.
	Day Order	An order to purchase or sell securities that will expire at the end of the day, if it is not executed or canceled.
	Dealer	An individual or firm acting in a principal capacity (assuming risk) on a securities transaction.
	Death Benefit	The dollar amount of money paid to beneficiaries when a policy owner dies.
	Death Certificate	Certificate evidencing the death of a person, universally accepted as official proof of death.
	Debenture	An unsecured bond backed by the full faith and credit of the issuer. See also: Unsecured Bond.
	Declaration Date	The date on which the board of directors of a company announces the amount and date of its next dividend payment. See also: Board of Directors.
	Default	The failure of a bond issuer to make timely payments of interest or principal on its debt.
	Defensive Stock	A stock that is relatively unaffected by changes in the business cycle. Historically, drug stocks are unaffected by the ups and downs of the economy.
	Deferred Annuity	An annuity policy that delays payments of income until the annuity owner elects to receive them.
	Deferred Compensation Plan	A plan that allows participants to defer compensation earned in the current year to a later year. The compensation is not taxable until the participant withdraws funds in a later year .
	Defined Benefit Plan	A qualified retirement plan that promises to pay a stream of income (benefit) to each employee at retirement. See also: Qualified Retirement Plan.
	Defined Contribution Plan	A qualified plan that defines the amount that will be contributed annually to the plan.
	Deflation	A decline in the prices of goods and services. This is the opposite of inflation, and is an indicator of a poor economic climate.
	Depression	An economic climate characterized by deflation, rising unemployment, and an overall decline in business activity. The Great Depression that began in 1929 is the best example in the United States. See also: Deflation.
	Designated Examining Authority	An SRO that has the primary supervisory responsibility for a specific broker-dealer. A broker-dealer that has a membership on several different exchanges is assigned one Designated Examining Authority.
	Dilution	A reduction in a common stock's earnings per share. This may occur if convertible bonds and convertible preferred stocks are tendered, or additional shares of common stock are issued. See also: Convertible Preferred Stock.
	Direct Rollover	The transfer of funds from one qualified plan to an iRA or from one qualified plan to another qualified plan. See also: IRA; Qualified Retirement Plan.
	Discount Bond	A bond that is trading below par value. The bond may have been originally issued below par value or, as a result of rising interest rates and falling bond prices, is now trading below par value. See also: Par Value.
	Discount Rate	The base lending rate at which Federal Reserve Board (FRB) member banks can borrow from the FRB. See also: Federal Reserve Board.
	Discount Window	The department of the New York Federal Reserve Bank which lends to commercial banks with reserve deficiencies. These banks are charged the discount rate for these loans.
	Discount Yield	The yield on a security sold below par (discount). A Treasury bill is an example of a security that trades on a discounted yield basis. See also: Par Value; Treasury Bill.
	Discretionary Authority	Giving a third party the ability to buy and sell in a customer's account without prior permission before each transaction. Third party authorization is often given to investment advisers and brokers. See also: Investment Adviser.
	Disinflation	An economic climate wherein the rate of inflation declines from one quarter to the next. See also: Inflation.
	Disintermediation	The movement of money from low-yielding bank accounts to alternative investments that may produce a higher yield or potentially greater retum.
	Distributor	A mutual fund wholesaler or principal underwriter.
	Diversified Investment Company	A pooled account (investment company) that meets certain tests as to the percentage of assets invested. These tests are outlined in the Investment Company Act of 1940. See also: Investment Company; Investment Company Act of 1940.
	Dividend Yield	The annual yield (interest rate) on mutual funds, and common or preferred stock. This yield is calculated by dividing the annual dividend by the purchase price of the security.
	Dollar Cost Averaging	A method of investing a fixed number of dollars in mutual fund shares at regular intervals. See also: Mutual Fund.
	Dow Jones CompOSite	A price-weighted average of 65 stocks which includes the Dow Jones Industrial Average, Dow Jones Transportation Average, and the Dow Jones Utility Average.
	Dow Jones Industrial Average	A price weighted average of 30 well-established actively traded companies.
	Due Diligence Meeting	A meeting conducted by the issuer and underwriter of a new offering. Prospective investors are afforded the opportunity to ask questions regarding the new issue. See also: Underwriting.
	Earned Income	Income derived from wages, salary, tips, and pensions. Bond interest and cash dividends are not considered eamed income.
	Earnings Per Share (EPS)	A calculation that allocates a portion of a corporation's net income (after payment of bond interest and preferred stock dividends) to each share of common stock outstanding.
	Easy Money	Federal Reserve Board policy of providing ample credit to the economy through an increase in the money supply or by using other expansionary tools.
	Economics	The study of the economy. Microeconomics looks at the force of supply and demand and pricing. Macroeconomics concentrates on the effect of fiscal and monetary policy on the business cycle.
	Education IRA	A type of tax advantaged savings vehicle that may be used to save for college or other forms of higher education. Eamings on these accounts are not subject to taxation upon distribution as long as the funds are used for qualified educational expenses.
	Effective Date	The date following the cooling-off period when the SEC deems that a new issue may be offered to the public.
	Efficient Market Theory	Securities market valuation theory which assumes that all relevant knowledge about a security is known by the marketplace and reflected in the instrument's market price. Proponents of this theory believe that it is not possible to "beat the market" through either technical or fundamental analysis.
	Equipment Trust Certificate	A type of secured bond, typically backed by machinery used in the transportation of goods or persons such as airplanes, railroad box cars, or ships.
	Equity	The ownership interest in a corporation that is quantified in shares of common or preferred stock.
	Equity Option	A derivative security whose owner is entitled to buy or sell shares of a particular stock at a specified price for a specified time period. Equity options are often described as derivatives of the underlying security.
	Equity Security	A measurement of an investor's ownership interest in a corporation after all debts have been paid. (Assets - Liabilities = Stockholders' Equity). Equity is typically measured in units of common or preferred stock, called shares.
	ERISA	The Employee Retirement Income Security Act of 1974 (ERISA) is a body of federal law that govems work sponsored private sector retirement plans. The Act sets minimum standards for plan funding, eligibility, and vesting. Retirement Plans that meet these minimum standards created under this act are known as "qualified plans".
	Erroneous Report	Term used to describe an RRs conveyance of factually inaccurate information to a customer. Examples include stating an incorrect execution price or quantity. Generally, the client must accept the actual execution price/amount provided it was not contrary to their instructions.
	Escrow Account	Typically, a commercial bank account where money, or other collateral is held by a third party until the conditions of a contract are fulfilled.
	ESOP	Employee stock ownership plans are company sponsored plans designed to facilitate employee purchase of stock in the employing firm. These purchases are often made at a discount to the current market value of the stock.
	Estate	Total value of a person's possessions at the time of his or her death. Estate assets include real estate, cash, securities, and personal possessions.
	Estate Tax	Federal or state tax assessment that is based on the assets owned by an individual at the time of his or her death.
	Ex Dividend Date	The first day that a buyer of a stock is not entitled to receive the declared dividend. The ex-date on a stock is typically two business days prior to the record date. See also: Record Date.
	Excess Contribution	The funding of a retirement plan in excess of the statutory maximum annual amount. Excess contributions are normally subject to a 6% penalty.
	Exchange Privilege	A feature offered by a mutual fund that allows shareholders to transfer an investment from one fund to another without incurring an additional sales charge. See also: Mutual Fund; Sales Charge.
	Exchange Rate	The price that one instrument (such as currency) may be converted into another based on the relative value of each.
	Exchange Rate Risk	From a U.S. investor's perspective, exchange rate risk is the risk that the currency in which a foreign investment is denominated may fall in value versus the dollar.
	Exclusion Ratio	The amount of an annuity distribution that is considered a retum of capital and free from federal taxation.
	Execution Price	The price at which a trade occurred.
	Executor	The person who is given authority to manage a deceased person's estate. The executor is typically named in the decedent's will or appOinted by a court if the decedent dies intestate (i.e., without a will). See also: Estate.
	Exempt Securities	These securities are not subject to the filing requirements under the Securities Act of 1933. Examples include U.S. Government and municipal issues as well as many short-term securities. Note: Even exempt securities are subject to the '33 Act's antifraud provisions. See also: Securities Act of 1933.
	Exercise	An exercise occurs when the owner of a preemptive right, warrant, or option uses the derivative instrument to acquire or liqUidate the underlying security. See also: Preemptive Right; Warrant; Option.
	Expansion	The period of the business cycle characterized by increased business activity. See also: Business Cycle.
	Expense Ratio	A calculation that compares the annual operating expenses of a mutual fund (Le., management fees, administrative fees, 12b-1 fees) to its net assets. Sales charges are not considered when computing this ratio. See also: Mutual Fund; 12b-1 fees.
	Expiration	The date when an option, warrant, or right becomes void.
	Face Amount (Insurance)	The dollar amount that the beneficiary of a life insurance policy will receive when the insured dies.
	Face Amount Certificate Company	A type of investment company that issues securities at a discount which mature in the future at a par.
	Face Value	The value of a security as stated on the certificate. The face value of a bond is typically the dollar amount due at maturity. Most debt instruments have a face value of $1,000 per bond. See also: Par Value.
	Family of Funds	A group of mutual funds offered under the same brand name. Most switches between funds in the same family are done at NAV.
	FDIC	The Federal Deposit Insurance Corporation is a governmental agency that insures bank and thrift deposits for member institutions. This entity may also make loans to or facilitate mergers of troubled institutions.
	Fed Funds	Funds placed on deposit at the federal reserve bank by a commercial bank.
	Fed Funds Rate	The interest rate charged between banks for the overnight borrowing of funds in excess of those needed to meet the Fed's reserve requirement.
	Federal Reserve Board	The U.S. Governmental body responsible for enacting monetary policy. Tools of the Fed include controlling the physical money supply and controlling the availability of credit by setting reserve requirement for commercial banks. See also: Monetary Policy.
	Fidelity Bond	An insurance policy purchased by a broker- dealer to insure against loss due to employee theft or embezzlement.
	FIFO	First in, first out (FIFO) is an inventory valuation method that assumes that goods or securities are sold in the chronological order of their acquisition date (the oldest positions are sold first).
	Filing Date	The date on which an issuer submits its registration statement for the sale of a new issue of securities to the SEC. Upon receipt, the 20-day review (cooling off) period begins. See also: Registration Statement; SEC; 20 Day Cooling Off Period.
	FinCEN	Acronym for the Treasury Departments Financial Crimes Enforcement Network. This organization enforces money laundering regulations and tracks the flow of funds to undesirables such as foreign terrorist organizations.
	Firm Commitment Underwriting	A type of investment banking relationship in which the underwriter purchases securities from the issuer and resells them to institutional and retail customers. The broker-dealer is acting in a principal capacity when engaged in a firm commitment offering. See also: Investment Banking; Principal.
	Firm Element	Firm designed Continuing Education Requirement that must be completed each year. Examples include classes, seminars, and workshops on various financial topics.
	Firm Quote	The price displayed by a broker-dealer for the purchase or sale of a security. The quote is typically valid for at least one round lot (100 shares.) All quotes shown by a broker-dealer are considered firm unless qualified.
	Fitch Investors Services	A bond rating agency that assesses the risk of default for various municipal issues. Other bond rating agencies include Moody's and Standard and Poor's.
	Five Percent Policy	A FINRA guideline that covers the maximum allowable commission or sales charge that may be levied on an over-thecounter trade. Securities sold via prospectus such as mutual funds and new issues are exempt from this guideline. See also: Prospectus.
	529 Savings Plans	State sponsored tax advantaged saving vehicles that may be used to fund college or other forms of higher education. Earnings on these accounts are not subject to taxation as long as the funds are used for qualified educational expenses.
	Fixed Annuity	A type of insurance contract in which the insurance company guarantees a fixed rate of return on invested assets. Fixed annuities typically offer a guaranteed payment stream for the lifetime of the investor and they are not considered securities.
	Fixed Assets	Physical asset owned by a business that is not readily convertible into cash. Examples of fixed assets include the buildings and land owned by a company.
	Flat Tax	A tax structure under which all individuals are taxed at the same percentage rate regardless of income.
	Floor Broker	An NYSE member firm employee who executes trades for the firm and its customers on the NYSE. See also: Commission Broker.
	Follow On Offering	Any additional primary public offering subsequent to an issuers IPO. See also: Secondary Offering.
	Foreign Currency	Non-U.S. denominated coin and paper money.
	Form 4	A form filed with the SEC in which insiders report changes in their holdings of a subject security.
	Form 1099	The tax form provided by an investment company which details each shareholder's dividend and capital gains distributions for the year.
	Fonn U4	The form used to collect information on applicants to various SROs such as FINRA.
	Fonn US	The form filed by a member firm that notifies an SRO of the departure of an associated person. See also: Self Regulatory Organization.
	Forward Pricing	Method of mutual fund pricing in which all purchases and sales are based on the next calculated price. Prices are typically calculated once per day as of the 4 p.m. NYSE close.
	Frozen Account	An account where no credit is given based on violation(s) of Reg T. Frozen accounts must have cash on deposit with a broker-dealer prior to purchases, and securities on deposit prior to sales. See also: Regulation T.
	401 (k)	A type of salary deduction retirement plan established for private sector employees.
	403 (b)	A type of salary reduction retirement plan established for employees of certain non-profit organizations and public school systems.
	Fiduciary	A person who is appointed to act in the best interests of others such as a guardian or tnustee.
	Fiscal Policy	U.S. Government economic policy pertaining to taxation and government spending. Fiscal policy is carried out by the executive and legislative branches of the government.
	Free Look Provision	The ability of investors in mutual fund contractual plans and certain life insurance policies to change their minds within a specific window without forfeiting any of their investment.
	Front End Load	A mutual fund pricing structure in which the fee or "load" is paid at the time of purchase. Front end loaded shares are sometimes referred to as Class A shares. See also: Class A Shares.
	Full Discretion	Written permission given by the account owner that authorizes a third party to execute trades, and make depositslwithdrawals of funds within the account. See also: Power of Attomey.
	Full Faith and Credit	A legal term describing a bond issuers uncond~ional promise to pay. Full faith and credit issues are not backed by physical collateral.
	Fully Registered	A security that contains the name of the owner on the face of the instrument. Fully registered bonds do not have physical coupons, with all interest and principal payments being sent directly to the owner of record.
	Fundamental Analysis	A method of securities valuation which employs data collection from financial reports and interviews with the senior management of a corporation to assess the value of a security. Analysis of individual companies is based on sales trends, asset valuation, strength of management, and relative competitive position.
	General Account	The account in which an insurance holds all assets backing tradition products such as whole life and fixed annuity contacts. The return on investments held in this account is guaranteed by the insurance company.
	General Creditor	A person or business that is owed money but does not have specific collateral backing the claim. General creditors are paid after secured ered itors.
	General Obligation Bond	A type of municipal bond that is backed by the full faith, credit, and taxing powers of the issuer.
	General Partnership	A form of ownership in which individuals jointly own a business with all profits and losses being reported on each partner's personal tax return. In this form of ownership, each individual partner is responsible for any and all debt of the partnership and has unlimited liability.
	Gift Tax	A federal tax that is levied on the donor of gifts exceeding a certain dollar amount. Spouses are not subject to the gift tax.
	Global Fund	A type of closed or open-end fund that may invest in both the U.S. and overseas.
	Good Delivery	A delivery that meets the basic standards as to size, timeliness, and form that have been set forth in the applicable SRO rules.
	Graduated Tax	A tax structure in which the tax rate increases as the income level increases. This type of tax places more of the burden on higher income individuals.
	Gross Domestic Product	Also known as GDP, it is the total value of all goods and services produced on U.S. soil by both U.S. and foreign owned corporations. It is now the prevailing measure of output for the U.S. economy.
	Gross National Product	Also known as GNP, it is the total value of all goods and services produced by U.S. corporations both on U.S. soil and abroad.
	Growth Fund	A type of open-end or closed-end fund which invests in companieswith expected rates of growth above that of the general economy. Many growth company funds pay little or no dividends. See also: Closed-End Fund.
	Guaranteed Bond	A type of corporate issue whose payment of principal and interest is guaranteed by some entity other than the issuer. Often a parent company will guarantee the debt of a subsidiary to reduce the interest costs to the issuer.
	Guaranteed Minimum Return	The minimum return that is promised to the purchaser of a fixed annuity. See also: Fixed Annuity.
	Hearing Panel	The section of FINRA that initially examines the facts surrounding a customer complaint or other activity that may result in disciplinary action against an RR.
	Hedge Fund	A private investment pool typically open only to wealthy investors which is not considered to be an investment company under federal securities law.
	High Yield Bond	A non-investment grade bond (rated BB or lower) that typically carries a higher coupon to compensate investors for the higher perceived default risk. See also: Junk Bond.
	High Yield Fund	Closed or open end fund that concentrates its investment holding in junk bonds or distressed equities that pay above average dividends.
	Illiquid	A term used to describe a security or investment that can not be readily converted into cash. Examples include limited partnership interests and some collectibles.
	Immediate Annuity	A type of annuity in which payments begin directly after purchase.
	In Whole Call	The mandatory early retirement of an entire bond issue by an issuer. Issuers typically call in bonds to take advantage of lower interest rates. Some calls do not cover the entire issue. Partial or lottery calls are sometimes used to meet sinking fund obligations.
	Inactive Status	Term used to describe an individual who has not completed the regulatory portion of her CE training and is ineligible to collect commissions or other sales related compensation.
	Income Bond	A type of bond often issued in reorganizations in which interest payments are contingent upon the corporation meeting certain earnings tests. Due to the unsure nature of the payment stream, income bonds trade without accrued interest.
	Income Fund	A type of open or closed-end fund that concentrates its holdings in high yielding investments such as debt instruments and public utility stocks.
	Income Statement	An accounting statement that shows a businesses profit and loss for a given time period.
	Indenture	A legal contract between a bond issuer and trustee bank. It contains promises called covenants that are put in place to protect the interests of the bondholders. The covenants cover the payment of debt service, remedies in case of default, and describes collateral (if any) backing the issue.
	Index Fund	A type of passively managed mutual fund that attempts to match the performance of a particular group of stocks such as those contained in the S&P 500. Index funds often have lower expenses when compared to actively managed funds.
	Index Option	Index Option An option contract on an index of stocks. Index options settle in cash as opposed to the physical delivery of the underlying shares.
	Individual Retirement Account	A tax advantaged retirement plan that is established by an individual. IRAs are not covered under ERISA guidelines.
	Industrial Development Revenue Bond	A municipal issue that is backed by corporate lease payments on property such as office buildings and warehousing facilities.
	Inflation	An economic term describing a general rise in prices that usually accompanies a rapidly expanding economy. In an inflationary period, many consumers experience a loss in purchasing power as their income fails to keep up with rising prices.
	Initial Public Offering	An issuer's first primary distribution of securities to the public. Also referred to as IPO.
	Inside Market	The best pricing currently available for a given security represented by the high bid and low offer.
	Insider	A member of a senior management team or board of directors of a corporation. Any individual with a 10% or greater equity position in a company is also automatically considered an insider regardless of his relationship, if any to the corporation.
	Insider Trading	IIegal practice of trading on material, nonpublic information. Persons convicted of insider trading are potentially liable both criminally and civilly.
	Intangible Assets	A non physical item such as a patent, trademark, copyright, or goodwill that adds value to a business or individual.
	Interbank Market	The unregulated international market for the trading of foreign currencies. This market is dominated by commercial banks and is open 24 hours a day.
	Interdealer Quote	The published quote that is distributed by registered market makers within the NASDAQ system. These quotes do not include any sales charge or commission.
	Interest	The profit eamed on lending or cost associated with borrowing money.
	Interest Rate	The cost of borrowed funds which is typically expressed in annual percentage terms.
	Interest Rate Risk	The risk that an investment may fluctuate in price due to changes in the level of interest rates. This type of risk is most often associated with fixed income investments and preferred stock.
	Intennediation	Placing funds with a financial institution such as a bank, broker-dealer or mutual fund.
	International Fund	A type of closed or open-end fund which invests exclusively in non U.S. stocks and bonds.
	Inventory	1) The value of a company's raw materials, supplies, or finished products. 2) The number of shares a market maker currently owns of a particular security.
	Investment Advisor	A person or entity that makes investment recommendations for a fixed fee or percentage of assets under management.
	Investment Advisers Act of 1940	A federal securities law that sets the SEC registration requirements for investment advisors and sets general guidelines to protect the interests of the public when dealing with investment advisors.
	Investment Company	A type of company that pools investors' monies and manages these funds through securities investments. Example include mutual funds, closed end funds, UITs and face amount certificate companies. See also: Mutual Fund; Closed-end Fund; Unit Investment Trust.
	Investment Company Act of 1940	A federal securities law that covers the registration requirements and activities of investment companies such as mutual funds, closed end funds, UITs and face amount certificate companies.
	Investment Grade Bond	A high quality bond with a low perceived chance of default. Investment grade bonds carry an S&P rating of BBB or better.
	IRA	The Individual Retirement Account is a type of tax advantaged personal retirement plan that may be opened by any individual with earned income.
	Issued Shares	The number of stock shares which a corporation has sold to either insiders or the public.
	Joint And Last Survivor Annuity	An annuity payout option in which payments will continue over the lifespan of two persons. Payouts cease at the time date of death of the last survivor.
	Joint Venture	A type of direct participation program in which the profits and losses of a jointly owned business are split between two corporations and reported on the income statement of each.
	Joint With Rights Of Survivorship	A form of account ownership between two or more persons in which the survivor receives all account assets upon the death of one or more of the account owners.
	Junior Lien	The right of a creditor to attach to the physical assets of a debtor that is secondary to that of other lenders.
	Keogh	A fonm of retirement plan that may be established by self employed persons.
	Keynesian Theory	Economic theory that supports government intervention to add stability to the business cycle. Government fiscal policy tools include adjusting the levels of taxation and government spending to counter balance the extremes of recession and inflation.
	Know Your Customer Rule	The NYSE rule that requires RRs to collect adequate information on a customer prior to making a recommendation.
	Lagging Economic Indicators	Economic indicators that confinn the state of the economy after the fact. Examples include the unemployment rate and bank interest rates.
	Lead Underwriter	The manager of a group of underwriters that established the syndicate and determines each member's participation. Also known as the syndicate manager.
	Leading Economic Indicators	Economic indicators which foretell the state of the economy. Examples include building permits and the performance of the stock market.
	LEAPS	Long Term Equity Anticipation Securities (LEAPS) are long term equity options that may have a life of two or three years.
	Legislative Risk	The risk that sales of a company's product or the value of its securities may be negatively impacted by changes in the law or tax code.
	Letter of Intent	A letter of intent (LOI) is a document signed by a customer that states his intention to buy additional shares of a mutual fund for the purposes of qualifying for a breakpoint. The customer generally has a maximum time frame of 13 months to complete his purchase.
	Letter Testamentary	A document issued by a court that confirms the appointment of an executor to an estate.
	Level Load	A mutual fund pricing stnucture in which a fixed percentage sales charge is assessed each year for a limited period.
	Leverage	Financial leverage is the use of borrowed funds (debt) in an attempt to increase investment retums.
	Life With Period Certain	An annuity payout option that promise to pay the annuitant for a minimum specified time period (5, 10,15 years) or life, whichever is greater. If the annuitant were to die before the specified minimum period the annuitant's beneficiaries would continue to be paid for the remaining balance of time.
	LIFO	Last in, first out (UFO) describes the tax treatment of withdrawals from a variable annuity prior to annuitization.
	Limit Order	A type of order that specifies the maximum price a buyer is willing to payor the minimum price a seller is willing to accept on a trade.
	Limited Partnership	A structure of business ownership in which ownership is shared between one general partner who is responsible for all management functions and numerous silent investors called limited partners. The limited partners do not take part in any management functions and have only limited liability (to the extent of their investments) in the case of a lawsuit against the partnership. All profits and losses of the business is reported on the personal tax returns of the partners. See also: General Partner; Limited Partner.
	Limited Discretion	Permission given by the account owner that authorizes her RR to select the timing of a trade once given the security and quantity desired.
	Liquidation	1) The sale of a financial asset such as a stock, bond, or option. 2) The sale of a business in the event of bankruptcy.
	Liquidity	The ability to quickly and easily convert an asset into cash. The amount of a particular security that may be sold without affecting its price.
	Liquidity Risk	This type of risk refers to the potential for loss based on an investor's inability to quickly convert a security into cash.
	Loss Carry Forward	Capital losses that cannot be used in the current year to offset capital gains. Excess losses are carried forward and can potentially be used in future years.
	Management Company	An entity that pools investor dollars and invests them into a portfolio of securities according to the objectives stated in a prospectus. These portfolios are actively managed and a management fee is taken for this service. It offers a cost efficient way for investors to attain diversification, professional management, and liquidity.
	Management Fee	The fee charged by the investment adviser of an investment company, normally a percentage of assets under management. This fee is charged on an annual basis and is usually the largest expense of a mutual fund.
	Manager's Fee	A portion of the underwriting spread of a new issue of securities. This fee is taken by the syndicate manager for organizing the syndicate, leading the syndicate, keeping its books, and for expenses associated with the distribution.
	Manipulation	Buying or selling securities to create the appearance of active trading in those securities, or to artificially raise or lower the price of the securities. This behavior is prohibited by every securities regulator since it may influence other investors to authorize trades in their accounts based on this fraudulent activity.
	Margin	Borrowing money from a broker-dealer to buy or sell securities. Such activity creates leverage in a customer's account and is governed by Regulation T. See also: Leverage.
	MarkDown	The amount that is subtracted from the amount that a customer receives when selling an OTC equity to a broker-dealer who is acting as a principal. The sale of OTC equities on a principal basis creates proceeds to the customer equal to the bid price minus a mark down. See also: Principal.
	Market Maker	A FINRA member firm that provides a two-sided quote (bid and ask) at all times. This quote indicates the prices at which the member is willing to buy and sell stock from its own inventory. See also: Bid; Ask.
	Market Order	A customer order that should be executed at the best available price at the time it reaches the market. Such orders, when placed on the NYSE, are guaranteed to be executed. However, the ultimate price of the transaction is not guaranteed.
	Market Price	The value of a security as determined by market forces.
	Market Risk	The risk that an investment will lose value as a result of a general fall in the market. According to Modem Portfolio Theory, this is the risk that cannot be eliminated through diversification. Also called systematic risk. See also: Modern Portfolio Theory.
	MarkUp	The amount that is added to the amount that a customer pays when buying an OTe equity from a broker-dealer who is acting as a principal. When purchasing OTe equities from a dealer on a principal basis, the customer pays the ask price plus a mark up. See also: Principal.
	Matched Sale	A reverse repurchase agreement. When the U.S. Government transacts a matched sale, it is selling securities with the agreement to buy them back at a future date. Such activity pulls money out of the banking system and has a tightening effect on the money supply. See also: Repurchase Agreement.
	Maturity	The date on which a fixed-income security is retired and the final interest and principal payment is made to bondholders.
	Member Firm	A broker-dealer that is a member of FINRA.
	Mini-Max Underwriting	A type of underwriting often used in connection with limited partnerships. In this type of deal, the underwriter has a specific time period to raise a minimum amount of capital. If unsuccessful, the underwriting is canceled. Also, there will be a maximum established for the amount of capital that can be raised.
	Minimum Death Benefit	Minimum amount paid to the beneficiary of a variable life contract regardless of the performance within the separate account. See also: Variable Life Policy; Separate Account.
	Monetary Theory	The economic theory that states that the U.S. Government can steer the economy clear of extreme recession and inflation by increasing and decreasing the money supply. The goal of monetary theory is slow, steady growth of the U.S. economy. Monetary theory is also known as monetarism.
	Money Laundering	The illegal act of taking the proceeds of a crime and running it through the financial system to disguise its illegal origins and make it appear to be legitimate funds. Most often associated with organized crime and terrorism, money laundering can be linked to any crime that generates significant proceeds, such as extortion, drug trafficking, arms smuggling, and white-collar crime.
	Money Market Mutual Fund	A mutual fund that invests in only short-term securities. The objective of such a fund is capital reservation and it will attempt to sustain a stable net asset value. These funds do not charge any sales charges and are therefore no load funds.
	Money Market Instrument	Short-term debt obligations that mature in one year or less, such as Treasury bills, negotiable CDs, and repurchase agreements. See also: Treasury bills; Negotiable CDs; Repurchase Agreements.
	Money Purchase Plan	A qualified defined contribution retirement plan in which the employer promises to contribute a definite amount each year on behalf of each participant. All contributions plus earnings are allocated to individual accounts, which determine the individual's benefit at retirement. In addition, the employer must meet minimum funding requirements and the percent contribution chosen by employer when plan is adopted must be met annually
	Money Supply	The total amount of currency in circulation and deposits in savings and checking accounts. According to monetary theory, the level of the money supply is a major determinant of economic activity and health.
	Moody's Investor Services	A credit rating agency that is hired by bond issuers to evaluate and publish the credit worthiness of bond issues. These ratings make it easy for investors to evaluate the relative risk of bond issues and to determine if they are suitable for such investments.
	Mortality Expense	This charge compensates the issuer of an annuity for the risk that the annuitant will die prematurely and the issuer will need to pay a death benefit to a beneficiary. Profit from the mortality and expense risk charge is sometimes used to pay the insurer's costs for selling the variable annuity.
	Mortgage Bond	A bond issue secured by a mortgage on the issuer's property. Secured bonds are generally safer than unsecured bonds and will therefore have lower coupon rates.
	MSRB	The Municipal Securities Rulemaking Board. The MSRB is a self-regulatory organization responsible for regulating brokerdealers and dealer banks in the business of buying and selling municipal securities.
	Municipal Bonds	Bonds issued by state, city, and local governments. Interest paid to investors is usually federally tax exempt and in certain cases triple tax exempt. See also: Triple Tax Exempt.
	Mutual Fund	An open-end fund that raises money from shareholders and invests in a diversified portfolio of securities. They offer the advantage of liquidity, diversification, and professional management
	Narrow-Based Index	A stock index that is comprised of securities either in a single industry, market segment, or geographic location.
	NASD	An acronym for the National Association of Securities Dealers. The NASD was a self-regulatory organization created in 1939 to govern the activities of broker-dealers in the over-the-counter market. The NASD and NYSE regulatory bodies merged in 2007 to create FINRA.
	NASDAQ Stock Market	An interdealer system that provides bid and ask quotes for NASDAQ listed securities. Those securities are comprised of Global Select Market, Global Market, and Capital Market securities. Each tier has its own listing standards.
	National Adjudicatory Council	The National Adjudicatory Council (NAC) is the national committee that has initial appellate authority regarding decisions rendered in FINRA disciplinary proceedings under the Code of Procedure.
	Negotiable CDs	Certificates of Deposit that are issued at par and trade with accrued interest. They are issued by large banks and purchased primarily by institutional investors. These securities can have maturities longer than one year, although typically they have maturities less than six months. In addition, they tend to be issued in denominations of $1,000,000 or more.
	Net Asset Value	The value of each share of a management company that is calculated by taking the total assets of the portfolio, subtracting any liabilities and dividing the result by the total number of shares outstanding. This calculation is also used to value variable annuity units.
	Net Income	A company's earnings after all expenses, taxes, and interest on debt have been subtracted from revenues. It is also referred to as a company's bottom line.
	Net Investment Income	Income received by a mutual fund from dividends and interest eamed by its portfolio, minus its expenses. These expenses include administrative fees, the management fee, and other operational expenses. A fund must distribute at least 90% of this figure to receive preferential tax treatment.
	Net Worth	1) An individual's total assets minus total liabilities. Assets include cash, marketable securities, and home, while liabilities include the individual's mortgage, credit card debt, and other loans outstanding. This is a measure of a person's financial health. 2) A company's stockholders' equity. It is calculated by taking total assets and subtracting short and long-term liabilities.
	Neutrality	An investment strategy in which the investor hopes that the market price of his investment shows little or no change. This is associated with covered call writing and short straddles.
	New Account Form	Document completed by broker-dealers to gather important information about new customers. In addition, this form will state the client's investment objectives and give a clear indication of the client's risk tolerance. This is vital to determining the suitability of investment opportunities.
	New Construction Limited Partnership	A limited partnership in which residential or commercial property is constructed in order to create space that will be rented or leased. The primary risk is overbuilding, but this type of real estate limited partnership will offer strong tax relief as many building expenses are immediately tax deductible.
	New York Stock Exchange	The oldest and largest stock exchange in the United States. The NYSE conducts auctions for its more than 3,000 listed securities. These auctions, which take place on the exchange floor, are run by exchange members called speCialists.
	No Load Fund	A mutual fund that does not charge a sales charge. See also: Class 8 Shares.
	Nominal Quote	A quote for a security that is only for information purposes and is not a commitment to buy or sell. This type of quote has traditionally been found in the paper version of the Pink Sheets .
	Nominal Yield	The coupon rate of a bond. For example, an 8% coupon bond trading at $500 has a nominal yield of 8%. It has the same nominal yield if the bond were trading at $1 ,500.
	Nonmember	Any party who is not a member of FINRA. Such parties must be treated as members of the public and cannot receive price discounts.
	Nonqualified Retirement Plan	A retirement plan established outside of the restrictions imposed by ERISA. These plans, in retum, do not receive some of the tax benefits afforded to qualified retirement plans. Common examples are deferred compensation plans and payroll deduction plans. See also: Deferred Compensation Plan; Payroll Deduction Plan.
	Nonqualified Variable Annuity	A variable annuity in which contributions are made on an aftertax basis and all capital grows tax-deferred. See also: Variable Annuity.
	Notification	A way to register securities with the states. This method is used by well-established companies and it entails a simple filing with the state administrator and the payment of a fee.
	Numbered Account	A type of customer account in which the account registration reflects a number assigned by the broker-dealer instead of the customer's name. This is allowable under all rules as long as the broker-dealer has the person's identity on file and properly reports all taxable income.
	Odd Lot	A securities transaction for less than the normal trading unit. For equities, any trade for less than 100 shares is considered an odd lot.
	OFAC	The Office of Foreign Assets Control of the U.S. Department of the Treasury administers and enforces economic and trade sanctions and national security goals against targeted foreign countries, terrorists, and intemational narcotics traffickers.
	Offer	The price at which an individual or firm is willing to sell stock. Also known as the ask price. The offer price for a security is the price a client can buy a security at in the market.
	Open Market Committee	Members of the Federal Reserve Board that determine monetary policy for the U.S. Govemment.
	Open Market Operations	The act of buying and selling U.S. Government securities to carry out monetary policy set by the Federal Open Market Committee. These transactions are carried out by the trading desk of the Federal Reserve Bank of New York. If the desk is buying, they are looking to increase the money supply, which should lead to lower interest rates (easing). If the desk is selling, they are looking to decrease the money supply, which should lead to higher interest rates (tightening).
	Option	A contract for a specified time period that provides either the right to buy or sell 100 shares of a specific equity at a specific price.
	Ordinary Income	Income derived from normal activities that is taxed at the individual's marginal tax rate (tax bracket).
	OTC	The Over-the-Counter market is a negotiated market. between dealers as opposed to an auction market which takes place on the floor of a stock exchange. FINRA regulates the OTe market.
	OTC Bulletin Board	An electronic system that disseminates quotes for NonNASDAQ OTC equities. The system is administered by FINRA, but there are no listing requirements to place quotes on the Bulletin Board.
	Outstanding Shares	Shares that have been issued, either by a corporate issuer or a mutual fund, that have not been redeemed or bought back by the corporate issuer. Outstanding shares = Issued shares - Treasury stock.
	Painting the Tape	A violation of industry rules whereby people working in concert trade among themselves to create the appearance of active trading. This is done in the hope that it will draw investors toward the stock, causing a sudden rise in price.
	Par Bond	A bond trading at par ($1 ,000).
	Par Value	An amount equal to the face value of a security at the time it is issued. 1) For equities: a bookkeeping figure in the stockholders' equity section. 2) For bonds: the amount that a bondholder receives when the bond matures. 3) For preferred stock: the number on which dividend payments are based (Le., 5% of par is normally 5% of $100 or $5/year).
	Parity	The price of a convertible bond at which the bond and the stock into which it can be converted are equal in value. Convertible bonds normally trade at a discount to parity.
	Participating Preferred Stock	Preferred stock may allow investors to participate in a very strong earnings year beyond the usual dividend. Specifically, it may pay an additional dividend above the normal dividend once common stockholders have received a specified level of dividend. See also: Preferred Stock.
	Passive Income	Income that is generated from a passive activity. A passive activity is one in which the owner of the business does not materially participate in the running of the business (e.g., limited partnerships).
	Payable Date	The date on which a corporation will pay a cash dividend to its shareholders of record on the record date. See also: Record Date.
	Payout Options	The varying conditions that may be placed on the annuity payout to an annuitant after annuitizing an annuity contract. One type is straight life annuity. Under this payout option, the annuitant receives income for as long as she lives, but when she dies, payments cease and there is no beneficiary.
	Payroll Deduction Plan	A type of nonqualified retirement plan in which the employee authorizes his employer to make deductions from his paycheck on an after-tax basis. Examples of payroll deduction plans include plans used to purchase U.S. Savings Bonds or nonqualified annuities .
	PIE Ratio	Stands for the Price/Earnings ratio. A ratio used by fundamental analysts to determine the relative value of an equity security. It is calculated by taking a stock's market price and dividing it by the company's earnings per share. It is also known as a stock's multiple. See also: Eamings Per Share.
	Peak	One of the four phases of the business cycle characterized by high inflation and interest rates, which cause the economy to fall into a recession. See also: Recession.
	Pegging	Pegging is the manipulation of a stock's price which prevents the price from dropping below a certain level. This is prohibited activity and it is often used to ensure that an option based on the stock is in-the-money at expiration.
	Penny Stock	An unlisted equity with a market price of less than $5/share. Such securities are subject to special rules on account opening and order execution.
	Pink Sheets	Pink Sheets makes available its Electronic Quotation Service, which displays real-time quotes for Non-NASDAQ OTC equities. This means market makers can change their quotations at any time and the new quotes are immediately displayed to subscribers to the service. The Pink Sheets still publishes a print edition, mainly for historical and reference purposes. It is printed weekly and updated daily by fax or e-mail.
	Political Risk	The risk that political events in a country will affect the value of the companies in that country and subsequently have a negative effect on their stock prices.
	Portfolio Manager	The person responsible for the investment decisions within securities portfolios. Portfolio managers are hired by mutual funds, profit-sharing plans, insurance company separate accounts, and pension funds. See also: Separate Account.
	Post Registration Period	In the process of bringing a new issue of securities to the market, this is the time period after the effective date set by the SEC. At this time, the issuer and its agents may affect binding sales of securities to the public.
	Power of Attorney	Written document that authorizes someone to make decisions on behalf of the person that signed the document. In securities, this type of arrangement is typically associated with discretionary accounts. Limited power of attorney gives an RR the ability to effect transactions in a person's account without prior approval and full power of attorney also allows the RR to remove funds from the account. See also: Discretionary Authority
	Preemptive Right	The right given to common stockholders in which they can purchase a portion of new issues of common before they are offered to the public. This way, the stockholders who take advantage of their preemptive rights will maintain their proportionate interest in the company.
	Preferred Stock	Ownership in a corporation that pays a fixed dividend and therefore trades more like a bond than an equity. Preferred stock has preference over common stock in a corporate liquidation and normally does not have voting rights.
	Premium	1) The amount that a bond is trading above its par value 2) The market price of an option.
	Premium Bond	A bond trading at a price higher than its par value.
	Prepayment Risk	An important risk when investing in mortgage backed securities and CMOs. A measure of the possibility that homeowners will prepay the principal on their mortgages, accelerating the cash flow to the investment. This forces investors to reinvest those excess dollars into the current market, which is likely a low interest rate environment.
	Preregistration Period	In the process of bringing a new issue of securities to the market, this is the time period before the issuer has filed a registration statement with the SEC. During this period, no discussions of the issue can take place with the public.
	Pre-tax Contribution	A contribution to a retirement plan that is made with dollars that have not been subjected to federal income tax. Such contributions are taxable as ordinary income when the plan participant retires and begins to make withdrawals.
	Primary Market	The new issue marketplace.
	Prime Rate	The lending rate that banks charge their best corporate customers. This rate is often a base rate for other lending rates (e.g., credit card rates).
	Principal	1) A registered supervisor at a broker-dealer. 2) A term used to describe the original investment amount of an customer position. 3) Also known as par value and face value, the amount a bond-holder receives when a bond matures. 4) The role that an underwriter assumes in a firm commitment underwriting.
	Principal Risk	The risk that an investor can lose a part or all of their invested capital.
	Principal Transaction	A transaction in which a broker-dealer acts as a dealer, selling the security to the customer out of the firm's inventory or buying the security from the customer using its own capital. The firm will earn a mark up when it is selling and will charge a mark down when it is buying.
	Private Placement	A new issue of securities that is sold to a select group of sophisticated investors. Because the issue is not offered to the public, the issuer is exempt from registering the securities with the SEC.
	Probate	A legal process in which a deceased person's ill is submitted in court and an executor is assigned.
	Profit Sharing Plan	A type of retirement plan in which employer contributions are largely dependent on the profitability of the company.
	Progressive Tax	A tax structure in which, as the amount of taxable income increases, so does the rate of tax (e.g., income tax).
	Prospectus	The disclosure document used in new issues of corporate securities. For public offerings, it must be filed with the Securities and Exchange Commission and it contains a description of the issuer's business, the proposed use of the offering's proceeds, and a current picture of the issuers financial situation.
	Public Offering Price	The price at which securities are sold to the public in the primary market. See also: Primary Market.
	Purchaser's Representative	An individual who is knowledgeable and experienced in the ways of business, and it therefore qualified to represent nonaccredited investors in private placements.
	Put	1) An option that gives the owner the right to sell 100 shares of a specific stock at a specific price for a specified amount of time. 2) With bonds, it gives the bondholder the right to redeem her bond back to the issuer prior to maturity at a price specified in the bond indenture. See also: Indenture.
	Qualification	A way to register securities with the states. This method is usually reserved for smaller companies with unproven track records, as they need to independently qualify with each state and wait for approval.
	Qualified Distribution	In the context of Roth IRAs, this is a withdrawal made by an individual who has held the Roth IRA for five years and is at least age 59 1/2. This type of distribution is tax-free to the investor.
	Qualified Higher Education Expenses	Acceptable uses of money held in Coverdell Education Savings Accounts and Section 529 Plans. Such expenses render the eamings in the aforementioned accounts tax-free. See also: Coverdell Education Savings Account; Section 529 Savings Plan
	Qualified Retirement Plan	A retirement plan that is subject to ERISA guidelines and in turn receives the benefits afforded by ERISA. See also: ERISA.
	Quotation	Also known as a quote, it is the highest price that a firm or individual is willing to pay for a security and the lowest price at which that firm or individual is willing to sell a security.
	Random Walk Theory	A technical theory that claims that securities analysis is unnecessary and throwing darts will be just as successful. According to the theory, all public information has already been considered by the market when it determines the price of a security. So unless an individual is using inside information to form an opinion, that person is just playing a hunch. This theory is based on the efficient market theory. See also: Efficient Market Theory.
	Real Interest Rate	A measure of the purchasing power of an investment. It is found by taking the expected rate of interest from an investment and subtracting the current inflation rate. If an investment is providing a rate of return of 4% and inflation is growing at 3%, the individual's ability to buy goods and services (i.e., purchasing power) only increases by 1% annually.
	Recession	Technically, it is two consecutive quarters of declining GDP (gross domestic product). It is also one of the phases of the business cycle and it is characterized by a Fed tight money policy, which should lower interest rates and inflation. See also: Gross Domestic Product; Tight Money.
	Recommendation	A term used to describe an investment choice for which the RR is responsible.
	Record Date	The date set by a corporation or mutual fund preparing to pay a dividend. Whoever is on the books of the corporation or mutual fund at the close of business on that date will receive the dividend.
	Red Flag	An event that is seen as a sign of improper behavior and one that requires closer scrutiny.
	Red Herring	A preliminary prospectus. An abridged version of the final prospectus that is used to obtain indications of interest during the cooling off period of a new issue registration. The issuer andits underwriters cannot accept any investor monies based on the red herring.
	Redemption Fee	A fee paid by mutual fund investors upon redemption of shares. Normally, it is apprOximately 1 % of the value of the redemption.
	Registered As To Principal Only	There are various ways to register bond holdings. Using this method, bondholders will automatically receive their principal when the bond reaches final maturity. However, to receive semiannual interest payments, bondholders need to clip and redeem coupons at a bank.
	Registered Representative	Licensed employee of a FINRA member firm.
	Registration Statement	A document filed with the SEC that provides the details regarding a proposed public offering of securities. Once the SEC reviews this document and provides an effective date, the issuer will create a final prospectus and begin selling the securities to the public.
	Regressive Tax	A tax structure in which all taxpayers pay the same rate of tax (e.g., sales tax). A sales tax is considered regressive because those with lower incomes pay a larger percentage of that income in sales tax than do those who eam much more.
	Regular Way Settlement	The time frame in which a securities transaction will settle between firms, absent any special agreement. For corporate securities, regular way settlement is T + 3 (trade date plus three business days).
	Regulated Investment Company	An investment company that distributes, at a minimum, 90% of its net investment income to shareholders is considered a regulated investment company under Subchapter M of the IRS code. Having this distinction means that the investment company will not pay tax on the income that it distributes.
	Regulation T	A regulation created by the Federal Reserve Board to govern the extension of credit by broker-dealers to their customers. Regulation T says that broker-dealers can lend a maximum of 50% of an investor's transaction value. This regulation also governs customer payment requirements. Customers must pay for transactions in cash and margin accounts within T + 5 or their accounts will be frozen for 90 days. See also: Frozen Account; Federal Reserve Board.
	Regulatory Element	One part of the securities industry continuing education requirements that RR must fulfill. This is a training session that must be completed in the allotted time to maintain an active license. It is required to be completed within 120 days of each RRs second anniversary of initial registration, and every three years thereafter.
	Reinvestment Risk	The risk for bond investors that they will reinvest their semiannual interest payments at rates lower than the yield to maturity calculated when the investment was made. If this happens consistently over the life of the bond, the actual yield to maturity will be inferior to the calculated yield to maturity and the amount of money present when the bond matures will be less than was expected.
	REIT	A company that manages a portfolio of real estate in order to eam profits for shareholders. To be a REIT, a company must pay at a minimum 90% of its net investment income to its shareholders every year. REITs can either be equity REITs or mortgage REITs.
	Repurchase Agreement	The sale of securities with an agreement to buy back those securities at a future date at an agreed upon price. Also known as repos, they are money market instruments.
	Required Minimum Distribution	When an individual participating in a qualified retirement plan reaches the April 1 of the year following the attainment of age 701/2, she must begin withdrawals from her plan. The minimum amount that must be withdrawn is found by taking the value of the account and dividing that by her life expectancy. That amount is the required minimum distribution (RMD). Failure to withdraw the RMD will result in a 50% IRS penalty on the amount not withdrawn.
	Reserve Requirement	The percentage of deposits that banks must keep in reserve for the Fed.
	Respondent	The accused in a FINRA proceeding under the Code of Procedure.
	Restricted Stock	Stock normally issued in a private placement. The investor will sign an investment letter which states that she understands that the stock cannot be resold unless it is registered or unless it is sold under an exemption to the Securities Act of 1933.
	Revenue Bond	A municipal bond that is issued to finance a project or public work and is subsequently backed by the revenues from that project or public work.
	Rights of Accumulation	A feature of most mutual funds that allows shareholders to combine purchases made over time to reach breakpoints.
	Rollover	Movement of funds from one retirement plan to another in which the participant takes physical receipt of the funds and then reinvests within 60 days to avoid taxation and possible penalties.
	Roth IRA	A type of Individual Retirement Account into which investors can make nondeductible contributions that can be withdrawn taxfree if the withdrawal is a qualified distribution. See also: Qualified Distribution.
	Rule 405	The NYSE "know your customer rule" which states that RRs must obtain all important facts about a customer before opening a new account.
	Russell 2000	An index used to measure the movement of securities in the small-cap sector of the over-the-counter market.
	S &P 100	A Standard & Poor's index based on the stocks of the 100 largest companies on which listed options are traded. Also known by its ticker symbol: OEX.
	S&P500	A broad-based Standard & Poor's index of the largest companies in a variety of business sectors. Also known by its ticker symbol: SPX.
	Sales Charge	A fee deducted from the public offering price (front-end load) or redemption value (back-end load) of an investment company security, used to pay dealer compensation and other distribution charges.
	SON	Acronym for specially designated national: a person or company who has been named by the U.S. Govemment as supporting terrorism or the drug trade, or as representing a country against which the U.S. has imposed economic or trade sanctions. When assets belonging to SONs are located, they are frozen by the Office of Foreign Assets Control (OFAC).
	Secondary Market	Term applied to all investor-to-investor trading of securities that have been previously issued. See also: Primary Market.
	Secondary Offering	The redistribution of a block of securities that has been previously issued. An example is a block of stock being sold to the public that is owned by insiders of a corporation. It is not a primary offering because the issuer does not receive the proceeds from the sale.
	Section 529 Savings Plan	A state-sponsored investment fund that has tax advantages under the Intemal Revenue Code. Distributions are used to pay educational expenses. The securities issued under these plans are technically municipal securities and the broker-dealers selling them are subject to MSRB regulation.
	Sector Fund	A mutual fund that invests in stocks of companies in one business segment, such as biotechnology.
	Secured Bond	A bond with specific collateral pledged as backing for the bond. If there is a default on the bond, the trustee may seize and sell the assets securing the bond.
	Secured Creditor	A party to whom money is owed, and who has claim to specific assets of the debtor if the money is not paid.
	Securities Act of 1933	The first federal securities law, regulating the sale of new issues of securities.
	Securities and Exchange Commission	Independent federal agency responsible for enforcing and interpreting federal securities laws.
	Securities Exchange Act of 1934	Federal law that regulates secondary markets, broker-dealers, and issuers with outstanding publicly-traded securities.
	Securities Investor Protection Corporation	Not-for-profit corporation, funded by broker-dealers, that provides limited financial protection to customers of bankrupt broker-dealers. SIPC provides up to $500,000 of compensation per separate customer for assets that cannot be located during the liquidation of an insolvent broker-dealer, although only $100,000 coverage is provided for customer cash held by the firm. SIPC does not protect against market losses and does not cover non-securities products.
	Self Regulatory Organization	Entities organized by their broker-dealer members with the authority to create sales practice and other rules that are binding on members. Examples are FINRA and the MSRB.
	Selection Risk	The chance that the choice of a particular investment within a category may not provide as good a return as the average for the category.
	Self-Employment Income	Income generally reported on Schedule C of Form 1040, generated by an individual who operates a business or profession as a sole proprietor, independent contractor, or consultant.
	Selling Dividends	The practice of encouraging a customer to purchase common stock or mutual fund shares just prior to the payment of a dividend, implying that the investor will receive an immediate return on her capital. The investor is, in effect, receiving her own money back as taxable income. The practice violates FINRA Conduct Rules.
	Selling Group	The broker-dealer's participating in a distribution of securities who have no liability for unsold shares. Selling group members generally earn the concession as their compensation.
	Senior Lien	A legal claim by a creditor on property belong to a debtor that supersedes claims by other creditors.
	SEPIRA	A retirement plan in which an employer makes contributions to IRA accounts of employees. Also called a Simplified Employee Pension Plan IRA.
	Separate Account	An investment company set up and managed by an insurance company to invest contributions by purchasers of variable contract insurance products, such as variable annuities and variable life insurance.
	Series EE Savings Bond	A type of savings bond issued by the federal government. These bonds are issued at a discount and they mature at face value.
	Series HH Savings Bond	A type of savings bond issued by the federal government. These bonds can only be obtained in exchange for EE bonds.
	Settlement	The process in which broker-dealers who arranged a trade complete the contract by ex-changing money for securities.
	Short Selling	Transactions in which an investor sells stock she does not own, borrowing shares, through her broker-dealer, to complete delivery. At some later time, the short seller will purchase shares in the open market and return them to the stock lender. This is called covering a short position.
	Short Swing Profit	Capital gains earned by corporate insiders on stock of their corporation that they have held for less than six months. SEC rules permit the corporation and/or its shareholders to sue the insiders for the amount of any short swing profits eamed.
	Simplified Arbitration	A proceeding under an arbitration code in which there is one arbitrator who generally makes a decision based on submitted evidence rather than a hearing. Used for disputes involving $100,000 or less. This threshold increased from $25,000 in March of 2009.
	Sinking Fund	An account under a trust indenture used to accumulate and hold funds that will eventually be used to call and retire all or part of the bond issue.
	Sinking Fund Call	A mandatory redemption prior to a bond's maturity in which the redemption value is paid from monies accumulated in a sinking fund.
	Size ofthe Market	The total amount of shares at the best bid and best offer prices currently available in the market for a security, usually expressed in round lots. For example, if the size of the market is "3 x 5," this indicates that there are a total of 300 shares at the highest bid and 500 shares at the lowest offer.
	Small Cap	A company with common stock outstanding that has a relatively low market capitalization compared to other issuers.
	Solicited	A designation indicating that an order was entered by a customer at the suggestion or recommendation of a registered representative.
	Specialist	A member of an exchange appointed to act as both a broker and as the exclusive dealer (market maker) in a stock on the floor of that exchange. As a broker, the specialist is responsible for keeping the specialist book of orders for the stock. As a dealer, the specialist is responsible for keeping the market in the stock fair and orderly.
	Specialist's Book	A physical or electronic system used to maintain orders left with the specialist by floor brokers. Orders are left on the book if they cannot be immediately executed. The specialist will execute the orders when market conditions permit.
	Speculation	An investment strategy which attempts to earn large profits by investing in risky securities. The potential for loss is large as well.
	Spot Rate	The current exchange rate for a currency in the interbank market.
	Spousal IRA	An IRA for the nonworking spouse of a tax-payer with earned income.
	Spread	Primary Market: The difference between the amount paid to an issuer by a syndicate for a new offering, and the amount charged by the syndicate to the public for the securities. Secondary Market: The difference between the best bid and best offer prices in the market, or the difference between a particular market maker's bid and offer prices.
	Spread Load .	A method of assessing a sales charge on an investment in a contractual plan permitted by Section 27(h) of the Investment Company Act of 1940. Under this method, the sales charge may be no more than 20% of any payment, nor may the average sales charge over the first four year exceed 16%, nor may the sales charge over the life of the plan exceed 9%
	Stabilization	The purchase of securities in the secondary market by a syndicate which is distributing an issue of the same class of securities. The purpose of stabilization is to support the price of the securities to facilitate a successful distribution. While stabilization is a form of market manipulation, it is permitted if carried out according to SEC rules.
	Stagflation	An economic condition marked by a weak economy and high unemployment, but in which inflation persists at high levels.
	Standard & Poor's	A nationally recognized statistical rating agency, best known for its ratings of corporate and municipal bonds. It also supplies a number of other services to the financial community, such as the Standard & Poor's stock guide.
	Standby Underwriting	An agreement by an underwriter or a syndicate to purchase any securities that are not purchased by existing shareholders in a rights offering.
	Statutory Disqualification	The prohibition of a registered rep from continued association with a self-regulatory organization.
	Statutory Voting	A method of electing members of a corporation's board of directors in which each shareholder receives one vote per share for each position being contested. The votes allocated to the shareholder for each contested position can only be voted for that position. See also: Cumulative Voting.
	Stock	An equity security issued by a corporation that represents an ownership interest in the corporation. See also: Common Stock; Preferred Stock.
	Stock Dividend	A dividend paid to shareholders in additional stock rather than in cash. A stock dividend is not a taxable distribution unless the investor has the option of taking stock or cash.
	Stock Split	A significant increase in the number of shares of stock outstanding that is distributed to existing stockholders. For example, in a 2 for 1 split, every shareholder will receive one additional share for each share currently owned.
	Straight Life Annuity	An annuity payout option in which the annuitant receives a stream of payments until she dies, whereupon there is no residual benefit to pay to a beneficiary.
	Street Name	A method of holding customer securities in the name of the brokerage firm as nominee for the customer. The customer is considered the beneficial owner of the securities.
	Strike Price	The price at which an option contract is exercised. In call contracts, it is the price at which the call owner may purchase the underlying security. In put contracts, it is the price at which the put owner may sell the underlying security.
	Sub-accounts	Investment options in a separate account of an insurance company into which purchasers of a variable annuity or variable life insurance contract may allocate all or part of their investment.
	Subchapter M	A provision of the Internal Revenue Code that relieves investment companies and REITs from taxation on income that is distributed to their shareholders.
	Subchapter S Corporation	A form of business organization with a corporate structure, but which is a direct participation program for tax purposes (flow through of income and expenses).
	Subject Quote	A bid and/or offer by a dealer or market maker that is provided for information only, and which the dealer or market maker is not required to honor.
	Subordinated Debenture	An unsecured corporate bond which is junior to all of that issuer's other bonds.
	Suspicious Activity Report (SAR)	A document that must be filled out and filed by financial institutions if a customer or transaction raises a red flag regarding possible money laundering. SARs are filed with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department.
	Syndicate	A group of broker-dealers distributing a new issue, operating jointly, and that have liability for unsold securities in the distribution.
	Syndicate Manager	A member of the syndicate responsible for running the syndicate's books and allocating shares to members.
	Systematic Risk	The possibility that a stock might decline in value due to a downturn in the overall market, rather than due to factors associated with the specific company or its industry. In the Capital Asset Pricing Model, systematic risk is measured by beta.
	Tax Credit	A tax benefit that is subtracted from an individual's tax liability. $1 of tax credit reduces an individual's tax bill by $1.
	Tax Deduction	A tax benefit that is subtracted from taxable income prior to the calculation of an individual's income tax liability.
	Tax Deferred Income	Income received or earned that is not subject to current taxation, which must generally be reported as taxable income at a later time.
	Tax Exempt	Not subject to income taxation, either at the federal level, the state level, or both.
	Taxable Equivalent Yield	The yield on a taxable bond that would be equivalent, after taxes, to the yield on a tax-exempt bond. The formula is T.E.Y. = Tax-exempt yield 0 0 (1 - investo~s tax bracket).
	Taxable Event	A financial or other action that requires an individual to determine whether taxable income must be reported on her Form 1040.
	Technical Analysis	An approach to determining which securities to buy or sell and when to buy or sell that relies on market data about stock prices and volume of trading, but not on financial information about specific companies or the economy in general.
	Tenants by Entirety	A form of joint ownership in which each joint owner effectively owns the entire account. As with Joint Tenants with Rights of Survivorship, if one owner dies, the account passes to the surviving tenant. However, Tenants by Entirety may be used only by married couples.
	Tenants In Common	A form of joint ownership in which the economic interest of a deceased owner passes to his estate, rather than to the other joint owner(s).
	Term Life Policy	A type of life insurance policy that provides temporary coverage (a specific number of years) in the event of the insured's death. Term insurance does not build any cash value. See also: Cash Value.
	Third Market	Transactions in listed stocks that are executed off of an exchange floor in the over-the-counter market.
	Tight Money	An economic situation in which the money supply is reduced and interest rates are high, making it difficult for businesses to borrow money.
	Timing Risk	The chance that an investor might suffer a loss by purchasing or selling a security at an inopportune time, such as investing a lump sum in stocks just before a general market decline.
	Tippee	A person who receives inside information from another individual.
	Tipper	A person who discloses inside information to another individual.
	Tombstone Ad	An brief announcement of an upcoming sale of new securities or of a sale that is in process. The only general advertisement of a registered offering permitted by the Securities Act of 1933.
	Trading Post	The location on an exchange floor designated as the area in which transaction in a certain stock must be executed through an open-outcry process.
	Traditional IRA	An individual retirement account that allows contributions to be deducted under certain circumstances, as distinguished from a Roth IRA, which does not permit deductible contributions.
	Transfer	The placing of the name of the buyer of a security on the issuer's records as the owner of the security in place of the seller. Where appropriate, transfers also involve the issuance of a certificate to the new owner. See: Transfer Agent.
	Transfer Agent	The entity (often a bank) responsible for the transfer function for a specific issue of securities. See also: Transfer.
	Transfer on Death	A form of ownership that facilitates the transfer of the property involved to a beneficiary upon the death of the owner of the property. It is not a form of joint ownership.
	Transportation Bond	A municipal debt security used to finance public transportation projects, such as roads, bridges, tunnels, commuter rail systems, etc.
	Treasury Bills	Short-term debt securities issued by the U.S. Treasury to fund the operations of the U.S. government. Also called T-bills, Treasury bills are discount securities rather than interest-bearing securities paying a regular coupon. The maximum maturity of a T-bill is one year.
	Treasury Bonds	Long-term, interest bearing debt obligations of the U.S. Government. Treasury securities with initial maturities of more than 10 years are considered T -bonds.
	Treasury Notes	Intermediate-term, interest-bearing debt obligations of the U.S. government, with initial maturities ranging from 2 years to 10 years.
	Treasury Receipt	Zero-coupon securities created and issued by broker-dealers backed by U.S. Treasury securities held in escrow. Displaced in the market by Treasury STRIPS.
	Treasury Shares	Common stock that has been repurchased in the open market by the issuer. Treasury shares have no voting rights and receive no dividends.
	Treasury STRIPS	Zero-coupon U.S. Government securities created by reselling rights to future principal and/or interest payments on selected Treasury securities.
	Treble Damages	A civil penalty for insider trading violations equal to three times the amount gained or loss avoided.
	Triple Tax Exempt	A municipal bond that is not subject to income taxation on the federal, state, or local levels.
	Trust Indenture Act of 1939	Federal law that regulates the issuance of corporate bonds by requiring the issuer (where not exempt) to create a written document (the trust indenture) describing the terms of the issue. It also requires the issuer to appoint a bank or trust company as trustee to protect the interests of bondholders.
	Trustee	In general, a person responsible for administering a trust on behalf of the beneficiaries of the trust. With respect to bonds, the trustee is the bank or trust company responsible for protecting the rights of bondholders.
	Trough	The low point in an economic downturn. Usually measured by the point at which GOP is at a low ebb just prior to the start of a recovery.
	12b-1 Fee	A fee, calculated on an annualized basis, that is deducted from the portfolio of an investment company under a plan approved in accordance with Rule 12b-1 of the Investment Company Act of 1940, and which is used to pay distribution expenses of the fund, such as advertising and commissions to fund dealers and their RRs.
	Two-Dollar Broker	An individual who owns or leases a seat on the New York Stock Exchange and who does not execute orders exclusively for the customers of one member firm. A two-dollar broker accepts orders from other members who have too many orders to execute efficiently with their own floor brokers.
	Uncovered Option	A short option position in which the writer does not currently have the cash or securities (or their equivalent) necessary to complete the contract if she receives an exercise notice.
	Underwriting	The process of one or more broker-dealers distributing an offering of securities to investors.
	Underwriting Spread	The difference between the amount paid by an underwriting syndicate to an issuer and the public offering price of the distribution.
	Uniform Gifts to Minors Act	A model statute used as the basis for many states' laws governing the giving of property to minors and the protection of those assets.
	Uniform Practice Code	A section of FINRA rules governing transactions between member firms.
	Uniform Prudent Investors Act	A model statute used as the basis of many states' laws governing the actions of fiduciaries managing the assets of others, such as trustees, custodians, and executors.
	Uniform Securities Act	A model statute used as the basis for many states' securities laws. Also known as the blue sky law.
	Uniform Transfers to Minors Act	An updated version of the Uniform Gift to Minors Act.
	Unit Investment Trust	An investment company in which securities are deposited into a fixed trust, and shares of beneficial ownership are issued to investors. At some point the trust is liquidated, either by selling the assets or through self-liquidation, such as in a bond unit investment trust. Also called a UIT.
	Unit Life Refund	A type of life annuity payout option in which the beneficiary named by the annuitant receives the difference between the value of the annuitant's account at annuitization and the amount that was paid to the annuitant if the annuitant dies prior to receiving a payout equal to at least the value of the account at annuitization.
	Universal Life Policy	A type of life insurance policy that combines the low-cost protection of term life insurance with a savings portion. The savings portion is invested in a tax-deferred account earning money market rates of interest. See also: Money Market Instrument; Tax-Deferred Income.
	Unsecured Bond	A debt security with no specific asset promised as collateral. See also: Debenture.
	Unsolicited	A transaction for a client that was not suggested or recommended by a registered representative or the brokerdealer.
	Utility Bond	A corporate bond issued by a public utility, such as an electric company.
	USA PATRIOT Act	A federal law, passed in the wake of the events of September 11 , 2001, whose goal is to fight terrorism through enhanced money laundering rules and other provisions.
	Variable Annuity	An insurance company contract in which contributions are invested in a separate account and eamings are tax deferred.
	Variable Life Policy	A type of life insurance policy that allows the cash value of the policy to be invested in stock, bond, or money market funds.
	Versus Purchase Of	A method of identifying shares sold in a securities transaction for purposes of determining the cost basis to be used in the calculation of capital gain or loss. Using this method, the seller identifies to the broker that the shares to be sold are those purchased on a certain date or dates.
	Vesting	Providing a pension plan participant with the right to contributions and the earnings on those contributions if the employee leaves the employer. Employee are always 100% vested in their own contributions. Vesting in employer contributions may be conditioned upon the tenure of the employee.
	Volatility	The degree of fluctuation in the price of a security. The greater the amount of fluctuation over a given period, the higher the security's volatility.
	Warrants	Securities that give the holder the right to purchase other securities (usually common stock) at a fixed price for a certain period. Warrants typically expire three to five years after issuance, although some never expire (perpetual warrants). They are often issued and attached to another security as a "sweetener."
	Wash Sale	A sale of a security at a loss, but in which the loss may not be currently deducted because the seller repurchased a substantially identical security within 30 days before or after the sale at a loss.
	Whole Life Policy	A type of life insurance policy that provides permanent protection and also builds up cash value.
	Wilshire 5000	Common name for the Wilshire 5000 Total Market Index, a capitalization-weighted index which measures the performance of all U.S. headquartered equity securities with readily available price data. Covering about 5,000 issues when originally created, the index is now comprised of about 6,500 issues. Considered the most broad-based of the major indexes.
	Wrap Fee	A charge levied by an investment advisor for managing an account, where the services provided for the fee are inclusive of investment advice and transaction costs.
	Writer	The seller of either a put or a call option, and who receives a premium in exchange for accepting an obligation. The writer of a put option is obligated to buy the underlying security at the strike price, if the buyer decides to exercise the option. The writer of a call option is obligated to sell the underlying security at the strike price, if the buyer decides to exercise the option. See also: Call; Put; Strike Price.
	Yield Curve	A graph of yield to maturity against time to maturity.
	Yield To Call	The yield to maturity of a bond calculated to the first call date. See also: Yield To Maturity.
	Yield To Maturity	The interest rate necessary to discount a bond's future cash flows to its current price. Yield to maturity is an internal rate of retum.
	Zero Coupon Bond	A non-interest bearing bond whose return is provided by the difference between its discounted price and its maturity value. See also: Accretion.

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