| The ever increasing number of investment
| |
| | securities or property as an
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| products and financial services in the
| |
| | agent.Commission Broker - An agent who
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| marketplace today can be confusing. We
| |
| | executes the public's orders for the
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| have put together this glossary of
| |
| | purchase or sale of securities or
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| financial definitions designed to help
| |
| | commodities.Common Stock - Securities
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| you understand some of the more common
| |
| | that represent an ownership interest in a
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| investment and financial terms you may
| |
| | corporation. If the company has also
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| encounter. Your financial advisor can
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| | issued preferred stock, both common and
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| explain these terms more completely and
| |
| | preferred have ownership rights. Common
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| discuss with you those which are relevant
| |
| | stockholders assume the greater risk, but
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| to your situation.Accrued Interest - The
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| | generally exercise the greater control
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| interest due on a bond since the last
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| | and may gain the greater award in the
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| interest payment was made. The buyer of
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| | form of dividends and capital
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| the bond pays the market price plus
| |
| | appreciation. The terms common stock and
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| accrued interest.Acquisition - The
| |
| | capital stock are often used
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| acquiring of control of one corporation
| |
| | interchangeably when the company has no
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| by another. In "unfriendly" take-over
| |
| | preferred stock.Competitive Trader - A
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| attempts, the potential buying company
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| | member of the Exchange who trades in
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| may offer a price well above current
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| | stocks on the Floor for an account in
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| market values, new securities and other
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| | which there is an interest. Also known as
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| inducements to stockholders. The
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| | a Registered Trader.Conglomerate - A
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| management of the subject company might
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| | corporation that has diversified its
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| ask for a better price or try to join up
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| | operations usually by acquiring
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| with a third company.ADR - American
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| | enterprises in widely varied
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| Depositary Receipt - a security issued by
| |
| | industries.Consolidated Balance Sheet - A
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| a U.S. bank in place of the foreign
| |
| | balance sheet showing the financial
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| shares held in trust by that bank,
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| | condition of a corporation and its
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| thereby facilitating the trading of
| |
| | subsidiaries.Consolidated Tape - The
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| foreign shares in U.S. markets.American
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| | ticker tape reporting transactions in
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| Stock Exchange (AMEX) - The second
| |
| | NYSE listed securities that take place on
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| largest stock exchange in the United
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| | the NYSE or any of the participating
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| States, located in the financial district
| |
| | regional stock exchanges and other
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| of New York City. (Formerly known as the
| |
| | markets. Similarly, transactions in AMEX
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| Curb Exchange from its origin on a
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| | listed securities, and certain other
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| Manhattan street.)Amortization -
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| | securities listed on regional stock
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| Accounting for expenses or charges as
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| | exchanges, are reported on a separate
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| applicable rather than as paid. Includes
| |
| | tape.Convertible - A bond, debenture or
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| such practices as depreciation,
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| | preferred share that may be exchanged by
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| depletion, write-off of intangibles,
| |
| | the owner for common stock or another
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| prepaid expenses and deferred
| |
| | security, usually of the same company, in
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| charges.Annual Report - The formal
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| | accordance with the terms of the
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| financial statement issued yearly by a
| |
| | issue.Correspondent - A securities firm,
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| corporation. The annual report shows
| |
| | bank or other financial organization that
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| assets, liabilities, revenues, expenses,
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| | regularly performs services for another
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| earnings - how the company stood at the
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| | in a place or market to which the other
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| close of the business year, how it fared
| |
| | does not have direct access. Securities
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| profit-wise during the year and other
| |
| | firms may have correspondents in foreign
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| information of interest to
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| | countries or on exchanges of which they
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| shareowners.Arbitrage - A technique
| |
| | are not members. Correspondents are
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| employed to take advantage of differences
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| | frequently linked by private wires.
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| in price. If, for example, ABC stock can
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| | Member organizations of the NYSE with
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| be bought in New York for $10 a share and
| |
| | offices in New York City may also act as
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| sold in London at $10.50, an arbitrageur
| |
| | correspondents for out-of-town member
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| may simultaneously purchase ABC stock
| |
| | organizations that do not maintain New
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| here and sell the same amount in London,
| |
| | York City offices.Coupon Bond - Bond with
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| making a profit of 50 cents a share, less
| |
| | interest coupons attached. The coupons
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| expenses. Arbitrage may also involve the
| |
| | are clipped as they come due and
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| purchase of rights to subscribe to a
| |
| | presented by the holder for payment of
|
| security, or the purchase of a
| |
| | interest.Covered Option - An option
|
| convertible security - and the sale at or
| |
| | position that is offset by an equal and
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| about the same time of the security
| |
| | opposite position in the underlying
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| obtainable through exercise of the rights
| |
| | security.Crown Financial Ministries - A
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| or of the security obtainable through
| |
| | Christian ministry started by Larry
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| conversion.Assets - Everything a
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| | Burkett and Howard Dayton to help equip
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| corporation owns or due to it: cash,
| |
| | Christians become better financial
|
| investments, money due it, materials and
| |
| | stewards. They offer help in Biblical
|
| inventories, which are called current
| |
| | financial management such as: budgeting,
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| assets; buildings and machinery, which
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| | debt elimination, saving, investing and
|
| are known as fixed assets; and patents
| |
| | inheritance.Cumulative Preferred - A
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| and goodwill, called intangible
| |
| | stock having a provision that if one or
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| assets.Assignment - Notice to an option
| |
| | more dividends are omitted, the omitted
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| writer that an option holder has
| |
| | dividends must be paid before dividends
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| exercised the option and that the writer
| |
| | may be paid on the company's common
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| will now be required to deliver (receive)
| |
| | stock.Cumulative Voting - A method of
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| under the terms of the contract.Auction
| |
| | voting for corporate directors that
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| Market - The system of trading securities
| |
| | enables the shareholders to multiply the
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| through brokers or agents on an exchange
| |
| | number of their shares by the number of
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| such as the New York Stock Exchange.
| |
| | directorships being voted on and to cast
|
| Buyers compete with other buyers while
| |
| | the total for one director or a selected
|
| sellers compete with other sellers for
| |
| | group of directors. A 10-share holder
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| the most advantageous price.Averages -
| |
| | normally casts 10 votes for each of, say
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| Various ways of measuring the trend of
| |
| | 12 nominees to the board of directors.
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| securities prices, one of the most
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| | One thus has 120 votes. Under the
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| popular of which is the Dow Jones average
| |
| | cumulative voting principle, one may do
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| of 30 industrial stocks listed on the New
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| | that or may cast 120 (10 x 12) votes for
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| York Stock Exchange. The prices of the 30
| |
| | only one nominee, 60 for two, 40 for
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| stocks are totaled and then divided by a
| |
| | three, or any other distribution one
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| divisor that is intended to compensate
| |
| | chooses. Cumulative voting is required
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| for past stock splits and stock dividends
| |
| | under the corporate laws of some states
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| and that is changed from time to time. As
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| | and is permitted in most others.Current
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| a result, point changes in the average
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| | Assets - Those assets of a company that
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| have only the vaguest relationship to
| |
| | are reasonably expected to be realized in
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| dollar price changes in stocks included
| |
| | cash, sold or consumed during one year.
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| in the average.Balance Sheet - A
| |
| | These include cash, U.S. Government
|
| condensed financial statement showing the
| |
| | bonds, receivables and money due usually
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| nature and amount of a company's assets,
| |
| | within one year, and inventories.Current
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| liabilities and capital on a given date.
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| | Liabilities - Money owed and payable by a
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| In dollar amounts the balance sheet shows
| |
| | company, usually within one year.Day
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| what the company owned, what it owed, and
| |
| | Order - An order to buy or sell which, if
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| the ownership interest in the company of
| |
| | not executed, expires at the end of
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| its stockholders.Basis Point - One
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| | trading day on which it was
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| gradation on a 100-point scale
| |
| | entered.Dealer - An individual or firm in
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| representing one percent; used especially
| |
| | the securities business who buys and
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| in expressing variations in the yields of
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| | sells stocks and bonds as a principal
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| bonds. Fixed income yields vary often and
| |
| | rather than as an agent. The dealer's
|
| slightly within one percent and the basis
| |
| | profit or loss is the difference between
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| point scale easily expresses these
| |
| | the price paid and the price received for
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| changes in hundredths of one percent. For
| |
| | the same security. The dealer's
|
| example, the difference between 12.83%
| |
| | confirmation must disclose to the
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| and 12.88% is 5 basis points.Bear -
| |
| | customer that the principal has been
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| Someone who believes the market will
| |
| | acted upon. The same individual or firm
|
| decline.Bear Market - A declining
| |
| | may function, at different times, either
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| market.Bearer Bond - A bond that does not
| |
| | as a broker or dealer.Debenture - A
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| have the owner's name registered on the
| |
| | promissory note backed by the general
|
| books of the issuer. Interest and
| |
| | credit of a company and usually not
|
| principal, when due, are payable to the
| |
| | secured by a mortgage or lien on any
|
| holder.Bid and Asked - Often referred to
| |
| | specific property.Debit Balance - In a
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| as a quotation or quote. The bid is the
| |
| | customer's margin account, that portion
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| highest price anyone wants to pay for a
| |
| | of the purchase price of stock, bonds or
|
| security at a given time, the asked is
| |
| | commodities that is covered by credit
|
| the lowest price anyone will take at the
| |
| | extended by the broker to the margin
|
| same time.Block - A large holding or
| |
| | customer.Delayed Opening - The
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| transaction of stock - popularly
| |
| | postponement of trading of an issue on a
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| considered to be 10,000 shares or
| |
| | stock exchange beyond the normal opening
|
| more.Blue Chip - A company known
| |
| | of a day's trading because of market
|
| nationally for the quality and wide
| |
| | conditions that have been judged by
|
| acceptance of its products or services,
| |
| | exchange officials to warrant such a
|
| and for its ability to make money and pay
| |
| | delay. Reasons for the delay might be an
|
| dividends.Blue Sky Laws - A popular name
| |
| | influx of either buy or sell orders, an
|
| for laws various states have enacted to
| |
| | imbalance of buyers and sellers, or
|
| protect the public against securities
| |
| | pending corporate news that requires time
|
| frauds. The term is believed to have
| |
| | for dissemination.Depository Trust
|
| originated when a judge ruled that a
| |
| | Company (DTC) - A central securities
|
| particular stock had about the same value
| |
| | certificate depository through which
|
| as a patch of blue sky.Bond - Basically
| |
| | members effect security deliveries
|
| an IOU or promissory note of a
| |
| | between each other via computerized
|
| corporation, usually issued in multiples
| |
| | bookkeeping entries thereby reducing the
|
| of $1,000 or $5,000, although $100 and
| |
| | physical movement of stock
|
| $500 denominations are not unknown. A
| |
| | certificates.Depreciation - Normally,
|
| bond is evidence of a debt on which the
| |
| | charges against earnings to write off the
|
| issuing company usually promises to pay
| |
| | cost, less salvage value, of an asset
|
| the bondholders a specified amount of
| |
| | over its estimated useful life. It is a
|
| interest for a specified length of time,
| |
| | bookkeeping entry and does not represent
|
| and to repay the loan on the expiration
| |
| | any cash outlay nor are any funds
|
| date. In every case a bond represents
| |
| | earmarked for the purpose.Director -
|
| debt - its holder is a creditor of the
| |
| | Person elected by shareholders to serve
|
| corporation and not a part owner as is
| |
| | on the Board of Directors. The directors
|
| the shareholder.Book Value - An
| |
| | appoint the president, vice presidents,
|
| accounting term. Book value of a stock is
| |
| | and all other operating officers.
|
| determined from a company's records, by
| |
| | Directors decide, among other matters, if
|
| adding all assets then deducting all
| |
| | and when dividends shall be paid.Discount
|
| debts and other liabilities, plus the
| |
| | - The amount by which a preferred stock
|
| liquidation price of any preferred
| |
| | or bond may sell below its par value.
|
| issues. The sum arrived at is divided by
| |
| | Also used as a verb to mean "takes into
|
| the number of common shares outstanding
| |
| | account" as the price of the stock has
|
| and the result is book value per common
| |
| | discounted the expected dividend
|
| share. Book value of the assets of a
| |
| | cut.Discretionary Account - An account in
|
| company or a security may have little
| |
| | which the customer gives the broker or
|
| relationship to market value.Broker - An
| |
| | someone else discretion to buy and sell
|
| agent who handles the public's orders to
| |
| | securities or commodities, including
|
| buy and sell securities, commodities or
| |
| | selection, timing, amount, and price to
|
| other property. For this service a
| |
| | be paid or received.Diversification -
|
| commission is charged.Brokers' Loans -
| |
| | Spreading investments among different
|
| Money borrowed by brokers from banks or
| |
| | types of securities and various companies
|
| other brokers for a variety of uses. It
| |
| | in different fields.Dividend - The
|
| may be used by specialists to help
| |
| | payment designated by the Board of
|
| finance inventories of stock they deal
| |
| | Directors to be distributed pro rata
|
| in; by brokerage firms to finance the
| |
| | among the shares outstanding. On
|
| underwriting of new issues of corporate
| |
| | preferred shares, it is generally a fixed
|
| and municipal securities; to help finance
| |
| | amount. On common shares, the dividend
|
| a firm's own investments; and to help
| |
| | varies with the fortunes of the company
|
| finance the purchase of securities for
| |
| | and the amount of cash on hand, and may
|
| customers who prefer to use the broker's
| |
| | be omitted if business is poor or the
|
| credit when they buy securities.Bull -
| |
| | directors determine to withhold earnings
|
| One who believes the market will
| |
| | to invest in plant and equipment.
|
| rise.Bull Market - An advancing
| |
| | Sometimes a company will pay a dividend
|
| market.Callable - A bond issue, all or
| |
| | out of past earnings even if it is not
|
| part of which may be redeemed by the
| |
| | currently operating at a profit.Dollar
|
| issuing corporation under specified
| |
| | Cost Averaging - A system of buying
|
| conditions before maturity. The term also
| |
| | securities at regular intervals with a
|
| applies to preferred shares that may be
| |
| | fixed dollar amount. Under this system
|
| redeemed by the issuing
| |
| | investors buy by the dollars' worth
|
| corporation.Capital Gain or Capital Loss
| |
| | rather than by the number of shares. If
|
| - Profit or loss from the sale of a
| |
| | each investment is of the same number of
|
| capital asset. The capital gains
| |
| | dollars, payments buy more shares when
|
| provisions of the tax law are
| |
| | the price is low and fewer when it rises.
|
| complicated. You should consult your tax
| |
| | Thus temporary downswings in price
|
| advisor for specific information.Capital
| |
| | benefit investors if they continue
|
| Stock - All shares representing ownership
| |
| | periodic purchases in both good times and
|
| of a business, including preferred and
| |
| | bad and the price at which the shares are
|
| common.Capitalization - Total amount of
| |
| | sold is more than their average cost.Dow
|
| the various securities issued by a
| |
| | Theory - A theory of market analysis
|
| corporation. Capitalization may include
| |
| | based upon the performance of the Dow
|
| bonds, debentures, preferred and common
| |
| | Jones industrial and transportation stock
|
| stock and surplus. Bonds and debentures
| |
| | price averages. The theory says that the
|
| are usually carried on the books of the
| |
| | market is in a basic upward trend if one
|
| issuing company in terms of their par or
| |
| | of these averages advances above a
|
| face value. Preferred and common shares
| |
| | previous important high, accompanied or
|
| may be carried in terms of par or stated
| |
| | followed by a similar advance in the
|
| value. Stated value may be an arbitrary
| |
| | other. When the averages both dip below
|
| figure decided upon by the director or
| |
| | previous important lows, this is regarded
|
| may represent the amount received by the
| |
| | as confirmation of a downward trend. The
|
| company from the sale of the securities
| |
| | Dow Jones is one type of market index.
|
| at the time of issuance.Cash Flow -
| |
| | (See: NYSE Composite Index)Earnings
|
| Reported net income of a corporation plus
| |
| | Report - A statement - also called an
|
| amounts charged off for depreciation,
| |
| | income statement - issued by a company
|
| depletion, amortization, and
| |
| | showing its earnings or losses over a
|
| extra-ordinary charges to reserves, which
| |
| | given period. The earnings report lists
|
| are bookkeeping deductions and not paid
| |
| | the income earned, expenses and the net
|
| out in actual dollars and cents.Cash Sale
| |
| | result. (See: Balance Sheet)Equipment
|
| - A transaction on the floor of the Stock
| |
| | Trust Certificate - A type of security,
|
| Exchange that calls for delivery of the
| |
| | generally issued by a railroad, to pay
|
| securities the same day. In "regular way"
| |
| | for new equipment. Title to the
|
| trade, the seller is to deliver on the
| |
| | equipment, such as a locomotive, is held
|
| third business day, except for bonds,
| |
| | by a trustee until the notes are paid
|
| which are the next day.Certificate - The
| |
| | off. An equipment trust certificate is
|
| actual piece of paper that is evidence of
| |
| | usually secured by a first claim on the
|
| ownership of stock in a corporation.
| |
| | equipment.Equity - The ownership interest
|
| Watermarked paper is finely engraved with
| |
| | of common and preferred stockholders in a
|
| delicate etchings to discourage
| |
| | company. Also refers to excess of value
|
| forgery.Certificate of Deposit (CD) - A
| |
| | of securities over the debit balance in a
|
| money market instrument issued by banks.
| |
| | margin account.Ex-Dividend - A synonym
|
| The time CD is characterized by its set
| |
| | for "without dividend." The buyer of a
|
| date of maturity and interest rate and
| |
| | stock selling ex-dividend does not
|
| its wide acceptance among investors,
| |
| | receive the recently declared dividend.
|
| companies and institutions as a highly
| |
| | When stocks go ex-dividend, the stock
|
| negotiable short-term investment
| |
| | tables include the symbol "x" following
|
| vehicle.Certified Funds Specialist (CFS)-
| |
| | the name. (See: Cash Sale, Net Change,
|
| This designation is for financial
| |
| | Transfer)Exercise - Action taken by an
|
| planners and investment advisors who
| |
| | option holder that requires the writer to
|
| focus more on investments using mutual
| |
| | perform the terms of the
|
| funds. The CFS designation indicates
| |
| | contract.Exercise Prices - The prices at
|
| advisors who are qualified to consult
| |
| | which an option may be exercised. Also
|
| with clients on the advisability and
| |
| | called strike prices.Expiration Date -
|
| costs of acquiring or retaining mutual
| |
| | The date the option contract
|
| funds in their investment
| |
| | expires.Ex-Rights - Without the rights.
|
| portfolio.Christian Financial Planner - A
| |
| | Corporations raising additional money may
|
| financial planner that follows financial
| |
| | do so by offering their stockholders the
|
| wisdom in the Bible for their clients.
| |
| | right to subscribe to new or additional
|
| The Bible has over 2000 verses that deal
| |
| | stock, usually at a discount from the
|
| with finances on subjects such as:
| |
| | prevailing market price. The buyer of a
|
| budgeting, planning, saving, eliminating
| |
| | stock selling ex-rights is not entitled
|
| debt, investing and inheritance.CFTC -
| |
| | to the rights.Extra - The short form of
|
| The Commodity Futures Trading Commission,
| |
| | "extra dividend." A dividend in the form
|
| created by Congress in 1974 to regulate
| |
| | of stock or cash in addition to the
|
| exchange trading in futures.Collateral -
| |
| | regular or usual dividend the company has
|
| Securities or other property pledged by a
| |
| | been paying.More financial definitions
|
| borrower to secure repayment of a
| |
| | can be found by visiting
|
| loan.Commercial Paper - Debt instruments
| |
| | SorensenAmerica's Financial Guide can be
|
| issued by companies to meet short-term
| |
| | found at ==> Subscribe to Money Basics
|
| financing needs.Commission - The broker's
| |
| | via - Are you ready for financial
|
| basic fee for purchasing or selling
| |
| | freedom?
|
