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A B C D E G H I L M N O P R S T V W Y Z

ALL OR NONE ORDER A market or limited price order that is to be executed in its entirety or not at all. It is treated as canceled if not executed as soon is it is presented in the Trading Crowd. Bids are offers on behalf of all or none. Orders may not be made in stocks, but may be made in bonds when the number of bonds is fifty or more.

ANNUITY A series of payments over a period of time. Usually a contract issued by an insurance company, that guarantees an income for a specified period, such as a number years or for life.

ARBITRAGE A technique employed to take advantage of differences in price. If, for example, XYZ stock can be bought in New York for $10 a share and sold in London at $10.50, an arbitrageur may simultaneously purchase XYZ stock here and sell the same amount in London, making a profit of 50 cents a share, less expenses.

ASSET A possession having present or future economic value to its owner.

BALANCE SHEET A financial statement showing a person’s or a company’s assets, liabilities and the difference, called Net Worth.

BEAR Someone who believes the market will decline.

BEAR MARKET A period during which securities prices generally decline, usually over several months or more.

BENEFICIARY The person, company or organization that will receive benefits. Usually the proceeds from a retirement plan, life insurance policy or annuity, or the benefits of a trust.

BETA COEFFICIENT A statistical measure showing to what extent an individual stock or a portfolio has historically moved in price up or down relative to the general investment market.

BID AND ASKED Often referred to as a quotation or quote. The bid is the highest price anyone has offered to pay for a security at a given time; the asked is the lowest price anyone will take at that time.

BLUE CHIP Refers to either a nationally-known company, or the stock of that company that sells at a relatively high price because of the company’s sound reputation and long record of earnings and dividend payments.

BOND A contract of indebtedness (or a loan) extending for more than one year. A bond is an obligation that must be repaid at a certain time. The borrower pays interest to the lender for the use of the funds. Bonds are also called debt or fixed income securities.

BOOK VALUE Determined from a company’s records by adding all assets (generally excluding such intangibles as good will) from which all debts, liabilities and the liquidation price of any preferred issues are subtracted. The remainder is divided by the number of common shares outstanding and the result is book value per common share. Book value may have little or no relationship to market value.

BROKER A person in the business of making transactions in securities for accounts of others. The broker receives a commission for the sale and purchase of securities on your behalf.

BULL One who believes the market will rise and is therefore purchasing shares or mutual funds.

BULL MARKET A period during which securities prices generally increase, usually over several months or more.

CALL A contract giving the holder the option to buy from the seller (or writer) a specified quantity of a specified security (such as a stock) at a specified price within a specified time period.

CAPITAL GAIN The amount of money by which the sales or exchange price of an asset exceeds the cost of the asset, generally determined upon sale or surrender.

CAPITAL STRUCTURE A corporation’s financial framework. It generally includes long-term debt, preferred stock and common stock used to provide funds for a corporation.

CASH FLOW Reported net income of a corporation plus amounts charged off for depreciation, depletion, amortization and extraordinary charges to reserves bookkeeping deductions not paid out in cash.

COMMERCIAL PAPER Short-term, unsecured promissory notes of major corporations, maturing within 270 days or less and sold via dealers to banks and other investors.

COMMON STOCK A security representing ownership in a corporation. Common stockholders generally have the right to vote on certain corporate policies. Liability is limited to the amount of stock they own.

CONGLOMERATE A corporation that operates or controls several business activities in unrelated industries.

CONSOLIDATED STATEMENT A financial statement that combines the affairs of holding companies and subsidiaries as though they were one business.

CONVERTIBLE BOND A junior debt security in which the company will, at the holders option, convert for another security, usually a predetermined number of shares of common stock of the company.

COUPON The interest rate, stated as a percentage of par value (face amount) a bond promises to pay the investor. A coupon may also be the slip attached to a bond which must be detached and submitted for payment on the due date.

COVERING Buying a security previously sold short.

CUSTODIAN The bank or trust company that holds securities and does the bookkeeping for a mutual fund, a trust or an individual.

DAY ORDER An order to buy or sell which, if not executed, expires at the end of the trading day entered.

DEALER An individual or firm in the securities business acting as a principal rather than as an agent. Typically, a dealer buys for its own account and sells to a customer from its own inventory. The dealer’s profit or loss is the difference between the price paid and the price received for the same security.

DEBENTURE A bond secured by the general credit, integrity, and any unpledged assets of the issuer. Debentures have no claim to specific assets.

DELIVERY The certificate representing shares bought "regular way" on the New York Stock Exchange normally is delivered to the purchaser’s broker on the thrid business day after the transaction.

A stock offered "seller’s option" may command a lesser price than if offered "regular way."

DEPLETION Natural resources such as the metals, oils, gas and timber, that conceivably can be reduced to zero over the years. Depletion is an accounting practice consisting of charges against earnings based upon the amount of the asset taken out of the total reserves in the period for which accounting is made. A bookkeeping entry not representing any cash outlay, but resulting in a potential increase in cash as a result of a reduction in incomes taxes.

DEPRECIATION A deduction of a portion of the cost of property used in a trade or business to allow for the wear and tear, or loss of use over a period of time. Depreciation is therefore a bookkeeping entry not representing any cash outlay, but resulting in a potential increase in cash as a result of a reduction in income taxes. Depreciation causes older assets to reflect low current net value.

DISCRETIONARY ACCOUNT An account in which the customer gives the broker or someone else discretion, which may be complete or within specific limits, as to the purchase and sale of securities or commodities including selection, timing and price to be paid or received.

DISCRETIONARY ORDER The customer empowers the broker to act on his or her behalf with respect to the choice of security to be bought or sold, a total amount of any securities to be bought or sold, and/or whether any such transaction shall be one of purchase or sale.

DIVERSIFICATION Making investments in several categories of assets or several different issues with a category, such as stocks, order to spread risks.

DIVIDEND A payment to stockholders, usually in the form of a quarterly check. The dividend may vary in relation to the company’s profit for that quarter.

DOLLAR COST AVERAGING A system of buying securities at regular intervals with a fixed dollar amount. Under this system the investor buys by the dollars’ worth rather than by the number of shares. If each investment is of the same number of dollars, payments buy more when the price is low and fewer when it rises. Thus, temporary downswings in price benefit the investor if he or she continues periodic purchases in both good times and bad, and the price at which the shares are eventually sold is more than their average cost.

EARNINGS PER SHARE (EPS) Corporate earnings for a stated period, after preferred dividends have been paid, divided by the adjusted average number of common shares outstanding during the period.

EMERGENCY FUNDS These are usually liquid assets equivalent to one to six times one’s total monthly budget.

EQUITY The value of your net ownership in stocks or real estate. Also, refers to the ownership interest of shareholders in stock of a corporation.

EURODOLLAR A dollar invested in a bank outside the United States.

EX-DIVIDEND The buyer of a stock, selling ex-dividend, does not receive the recently declared dividend. Ordinarily the stock price is reduced by the value of the dividend.

EX-RIGHTS Corporations raising additional capital may do this by offering their stockholders the right to subscribe to new or additional stock, usually at a discount from the prevailing market price. The buyer of a stock that has been sold without that privilege (ex-rights) is not entitled to the new purchase rights.

FILL OR KILL A market or limited price order is to be executed in its entirety as soon as it is represented in the Trading Crowd. If not so executed, the order is treated as canceled. For purposes of this definition, a stop is considered an execution.

FINANCIAL LEVERAGE Debt used by a corporation to enhance its growth and total return on capital. Shareholders benefit from leverage to the extent that the return on the borrowed money exceeds the interest costs.

FLOWER BOND A United States government bond that can be bought at a discount and redeemed at its face value for payment of federal estate taxes. These pay low rates; frequently purchased just prior to death.

FRANCHISE A permit, or right granted for a period of years or in perpetuity entitling a dealer to sell a manufacturer’s product or a service organization’s service. A franchiser is a company that sells its products or services through such outlets, such as McDonalds or General Motors. Revenue comes from the sale of franchises and the basic product.

GOOD DELIVERY Certain basic qualifications must be met before a security sold on the Exchange may be delivered.

GROWTH STOCK A stock of a company that has shown better than average growth in earnings and is expected to continue to do so.

GUARANTEED BOND A bond whose interest and principal payment are guaranteed by a firm other than the issuer, usually a lessee of the issuer’s property, such as railroad bonds.

HEDGE Strategy used to offset investment risk.

IMMEDIATE OR CANCEL ORDER A market or limited price order that is to be executed in whole or in part as soon as it is represented in the Trading Crowd, and the portion not so executed is to be treated as canceled. For purposes of this definition, a stop is considered an execution.

INCOME BOND A bond on which the interest payment is contingent on sufficient earnings from year to year.

INFLATION An economic condition characterized by a sustained rise in most prices. Classically, it is referred to as "too much money chasing too few goods."

INTEREST Payments a borrower pays a lender over and above the principal for the use of his or her money. A corporation pays interest on its bonds to its bondholders.

INVESTMENT BANKER Also known as an underwriter. The middle person between the corporation issuing new securities and the public. The usual practice is for one or more investment bankers to buy outright from a corporation a new issue of stocks or bonds. The group forms a syndicate to sell the securities to individuals and institutions.

INVESTMENT COUNSEL One whose principal business consists of acting as an investment advisor to individuals or businesses. Many financial planners act as investment counselors.

LEVERAGE The means on enhancing return or value by using borrowed money to increase the level of investment. Leverage increases the risk if a venture declines, but increases the potential reward if it grows.

LIABILITY Anything an individual or company owes to another party. An individual may owe a mortgage company; a company may owe a creditor. The concept of liability is now expanded to include product and professional issues.

LIMIT ORDER A customer’s order to buy or sell security at a stated price "or better."

LIMITED PARTNERSHIP INVESTMENT A form of business in which a General Partner supplies expertise and the ability to operate in a certain business and a group of individual investors called Limited Partners supply the working capital. The partners report their share of the partnership’s profits, losses, and deductions on their individual tax returns.

LIQUIDITY The ability of the market to absorb a reasonable amount of buying or selling at reasonable price changes. Liquidity is one of the most important characteristics of a good market.

LOAD & NO LOAD The portion of the offering price of shares of open-end investment companies that covers sales commissions and all other costs of distribution, is the load. It is usually incurred only on purchases, and in most cases there are no charges when the shares are sold (redeemed). If the shares sell for their Net Asset Value, they are called No Load.

MANIPULATION An illegal operation. Buying or selling a security for the purpose of raising or depressing the price to induce purchase or sale by others.

MARGIN The amount paid by the customer when he or she uses a broker’s credit to buy a security. Under Federal Reserve regulations, the initial margin required in the past 20 years has varied. In recent years, it has been 50%.

MARGIN ACCOUNT A brokerage account allowing the owner to buy securities with cash borrowed from the broker.

MARGIN CALL A demand upon a customer to put up money or securities with the broker. The call is made when a purchase is made; also if a customer’s equity in a margin account declines below a minimum standard set by the Exchange or by the firm.

MARKET ORDER An order to a broker or dealer to buy or sell securities at the best price currently available.

MATURITY The date on which the principal amount of a bond or other debt is due.

MIP Monthly Investment Plan. A pay-as-you-go method of buying New York Stock Exchange listed shares on a regular payment plan. Under MIP the investor buys stock by the dollars’ worth (if the price advances, he or she get fewer shares; if it declines he or she get more shares.) Investments may discontinue at any time without a penalty.

MONEY MARKET FUND A mutual fund specializing in the purchase of very short-term securities in the money market, such as Treasury Bills, Commercial Paper and Bankers Acceptances, all previously unavailable to investors because they only sell in very large denominations of $100,000 or more.

MORTGAGE A lien on property created by pledging that property as security for repayment on a loan.

MORTGAGE BOND Usually a corporate debt obligation that is secured by the equipment or assets of the issuing firm.

MUNICIPAL BOND The debt obligation of states, cities, school districts, and other public authorities. Interest paid on municipal bonds is not subject to federal taxes.

MUTUAL FUND An investment company that pools the money from several investors and invests in a group of securities with a specific objective in mind. The investors gain the benefits of diversification and professional management of their money.

NOT HELD ORDER A market or limited price order marked "not held," "disregard tape," "take time" or that bears any such qualifying notation. An order marked "or better" is not a "not held" order.

ODD LOT A small quantity of shares, less than 100. It must be sold or bought by a special procedure, an exchange. Stocks purchased in odd lots typically cost the investor a higher price than those purchased in even lots (100 lot shares).

ODD-LOT DEALER A member firm of the Exchange that buys and sells odd lots of stocks: 1 to 9 shares in the case of stocks traded in 10 share units and 1 to 99 shares for 100 share units.

OFF-BOARD This term may refer to transactions over-the-counter in unlisted securities or, in a special situation, to a transaction involving listed shares that were not executed on a national securities exchange.

OPEN ORDER An order to buy or sell placed through a securities firm that is good until filled or canceled.

OVER-THE- COUNTER A market for securities made up of securities dealers who may or may not be members of a securities exchange and is mainly a market made over the telephone. The over-the-counter market is the principal market for U.S. Government bonds and municipals.

PAPER PROFIT (LOSS) An unrealized profit or loss on an investment still held. Paper profits and losses become realized only when the investment is sold.

PARTICIPATING PREFERRED STOCK A class of stock that is entitled to its stated dividend and, also, to additional dividends on a specified basis upon payment of dividends on the common stock.

PERCENTAGE ORDER A market or limited price order to buy (or sell) a stated amount of a specified stock after a fixed number of shares of such stock have traded.

PORTFOLIO A group of securities and/or properties owned by an individual or an investment company. Frequently, these are managed or considered as a unit.

PRICE- EARNINGS RATIO (PE) The current market price of a share of stock divided by earnings per share for a 12-month period. For example, a stock selling for $100 a share and earning $5 a share is said to be selling at a price-earnings ratio of 20.

PROSPECTUS The official document that describes a security issue or a mutual fund that must be supplied to each investor prior to purchase.

PUT A right to buy (call) or sell (put) a fixed amount of a given stock at a specified price within a limited time.

REGULAR WAY DELIVERY Unless otherwise specified, securities (other than Governments) sold on the New York Stock Exchange are to be delivered to the buying broker by the selling broker and payment made to the selling broker by the buying broker on the fifth business day after the transaction. Regular way delivery for government bonds is the following business day.

REVENUE BOND A state or local bond whose interest and principal payments generally come from a business project such as a toll road or a water system.

ROUND LOT The standard trading quantity in stock exchange transactions, usually 100 shares or one $1000 bond.

SAVINGS BOND A small or medium-sized federal obligation sold to individuals on a discount basis. The interest is generally tax-deferred until bonds are liquidated, although the taxpayer may elect annual taxation. Referred to as Series EE U.S. Savings Bonds, there are tax provisions if used for education.

SECURITIES EXCHANGE COMMISSION An independent agency of the United States Government that administers the various securities securities laws. Sometimes referred to as the SEC.

SELLING AGAINST THE BOX A method of protecting a paper profit. Let us say you own 100 shares of XYZ that has advanced in price, and you think the price may decline. So you sell 100 shares short, borrowing 100 shares to make delivery. You retain in your security box the 100 shares that you own. If the market price of the shares in XYZ should decline, the profit on your short sale is exactly offset by the loss in the market value of the stock you own. But, if the market price in XYZ advances, the loss on your short sale is exactly offset by the profit in the market value of the stock you have retained. You can close out your short sale by buying 100 shares to return to the person from whom you borrowed, or you can send them the 100 shares that you own.

SERIAL BOND A bond that matures in installments at periodic stated intervals.

SHAREHOLDERS The individuals who own shares of stock in a company or a mutual fund.

SHORT SALE A sale of a security that the seller does not own. The share sold must be borrowed in order to make delivery to the purchaser. For example: You instruct your broker to sell short 100 shares of ABC. Your broker borrows the stock so he or she can deliver the 100 shares to the buyer. The money value of the shares borrowed is deposited by your broker with the lender. Sooner or later, you must cover your short sale by buying the same amount of stock you borrowed for return to the lender. If you are able to buy ABC at a lower price, than you sold it for, your profit is the net between the two prices not counting commissions. But, if you have to pay more for the shares of ABC stock than the price you received, that is the amount of your loss. Stock Exchange and federal regulations govern and limit the conditions under which a short sale may be made on a national securities exchange.

STOCK (COMMON) A security that represents an ownership interest in a corporation. Common stockholders have no preferences on income or assets.

STOCK (DIVIDEND) A distribution to stockholders of additional shares of stock in proportion to their holdings, in lieu of cash. The stock may be of the issuing company, or in shares of another company usually a subsidiary) held by the company.

STOCK (PREFERRED) Ownership shares in a corporation that are entitled to stated priorities as to income or assets ahead of other shares. Usually this includes the right to receive a fixed dividend before the common receives any dividends, and a prior claim against the assets of the company in the event of liquidation.

STOCK SPLIT A process that divides a share of stock without any change in shareholder equity or market value.

STOP ORDER An order to buy at a price above or sell at a price below the current market. Stop buy orders are generally used to limit loss or protect unrealized profits on a short sale. Stop sell orders are generally used to protect unrealized profits or limit loss on a holding. A stop order becomes a market order when a stock sells at or beyond the specified triggering price.

TREASURY BILL A United States government obligation that is sold at a discount and matures at face value. All Treasury bills mature within a year’s time, and are traded in great quantities as a liquid short-term investment.

TREASURY NOTE or BOND A United States government note having a maturity of ten years or less at original issuance while a bond matures from 10 or more years. Notes and bonds pay interest semi-annually.

TREASURY STOCK Stock issued by a company but later reacquired. It may be held in the company’s treasury indefinitely, reissued to the public, or retired. Treasury stock receives no dividends and has no vote while held by the company.

VARIABLE ANNUITY An annuity contract under which the dollar payments received over time fluctuate with the performance of the underlying security. Generally, the insurance company issuing the contract offers several investment accounts having different purposes and risk elements. The owner is usually permitted to switch funds for a small fee, from one account to another managed by the same company.

WARRANT A certificate giving the holder the right to buy an indicated quantity of stock at a stated price within a specified time period or perpetually.

YIELD Also known as return. The dividends or interest paid by a company expressed as a percentage of the current price. A stock with a current market value of $40/share paying dividends at the rate of $2.00 is said to yield 5% ($2.00 dividend by 40). The yield on a bond is calculated the same way. A 9 percent $1,000 selling at $600 offers a current yield of 15% ($90 interest divided by 600).

YIELD TO MATURITY Concept used to determine the rate of return an investor will receive if an interest bearing investment, such as a bond, is held to maturity. It takes into account purchase price, redemption price, time to maturity, coupon (interest rate) and the time between interest payments.

ZERO COUPON BONDS First issued by companies in 1981, they pay no interest and are priced at a discount from their redemption price (face amount).

Securities offered through Sigma Financial Corporation. A registered broker/dealer. Member FINRA & SIPC.

Planning Services offered through Sigma Planning Corporation, a registered investment advisor.

Any information contained on this site does not constitute financial advice. The Website is intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. You are advised to discuss your specific requirements with an independent financial adviser licensed in your state.

We do not offer legal advice. All information provided on this website is for informational purposes only and is not a substitute for proper legal advice. If you have legal questions, we recommend that you seek the advice of legal professionals.

IRS Circular 230 Disclaimer: To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.

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Last modified: 10/30/09