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The highest price a security reaches over the most recent 52-week (one-year)
period.
52-week Low
The lowest price a security reaches over the most recent 52-week (one-year)
period.
Annual Report
Bear Market
Blue Chips
Bond
Broker
A person who buys, sells and gives advice on stocks, bonds, mutual funds and
other securities.
Bull Market
Base Rate
Base Rate is quoted off a short-term fluctuating rate such as LIBOR or Prime Rate.
LIBOR denotes the London InterBank Offered Rate. Prime is an administered rate
announced by large banks. Hence a base rate may be quoted as LIBOR plus say
1%.
Close
Commission
The fee paid to a broker for buying or selling securities on a customer's behalf.
Compounding
The effect that interest has on a sum of money when the interest rate is applied to
both the initial sum invested as well as the interest that has already been received
on that sum. For example, if $100 is invested for two years at a 5% interest rate, the
investor will receive $5 the first year and $5.25 the second year. This is because
during the second year the interest rate is applied to the initial investment ($100) as
well as the interest received from the first year ($5). Because of compounding, each
interest payment is greater than the one prior to it; therefore the rate at which an
investment grows increases over time (assuming compounding of interest and a
fixed interest rate).
D
Day High
The highest price a security reaches in its trading market for that day.
Day Low
The lowest price a security reaches in its trading market for that day.
Debt
Diversification
Dividend
E
Earnings Per Share (EPS)
Equity
The Fed is a system of 12 U.S. banks. The duties of The Fed consist of controlling
the amount of money circulating in the economy.
Fixed Income
Foreign Exchange
The exchange of one country's currency for another. All foreign exchange is
determined by a rate of exchange, or a ratio valuing one currency against another.
IPO
Abbreviation for "initial public offering." An IPO is a company's first sale of stock to
the public, also referred to as "going public."
Inflation
The gradual rise in prices of products and services. With a rise in inflation, a dollar
invested or saved today is worth less than the same dollar yesterday. This is why it
is especially troublesome for investors and people living on their fixed savings.
Interest
Interest is an amount charged as a "fee" for lending money. For example, if you
lend $100 to someone at an interest rate of 6%, you would expect $6 to be paid in
"interest" on a regular basis for as long as the loan is in effect.
Interest Rates
The amount of money charged as a fee for lending money or the price of borrowing
money.
Investment
The placement of money in a security, with the hope of receiving back the amount
plus additional value over time.
Liquidity
The ease with which an asset can be sold and turned into cash. A house cannot be
easily redeemed for cash. A blue chip stock is very liquid because there are many
investors who want to buy or sell them.
Market Value
The number of shares outstanding of a particular stock in the stock market
multiplied by the price per share of that stock as of that day's closing price.
Maturity Date
Municipal Bond
Bonds issued by state and local governments in order to fund the building of
schools, bridges, highways and other public projects. Like other bonds, municipal
bonds pay interest until their maturity or redemption date.
Mutual Fund
A company that pools money to invest in stocks, bonds or other securities on behalf
of a group of investors. The fund is managed by a professional investment
manager. Mutual funds offer investors greater diversification because their portfolios
consist of many different securities.
NASDAQ
NYSE
Abbreviation for the New York Stock Exchange. The NYSE is the oldest and largest
auction market for stocks in the United States. It is located on Wall Street in New
York City.
O
Over-the-Counter (OTC)
Stocks not traded on a securities exchange. OTC stocks are traded by brokers for
their own accounts. Many OTC stocks are traded in a market called "NASDAQ,"
which is set up by the National Association of Securities Dealers (NASD).
Portfolio
A ratio used to gauge the relative value of a security in light of current market
conditions. The ratio is the market price of a particular security divided by its
earnings per share.
Publicly Held
Publicly held companies issue stock to the general public, therefore the public
owns, or holds, a certain percentage of that company.
Recession
When demand in the economy decreases, prices of goods and services also
decrease, resulting in a slowdown of the economy. When this slowdown becomes a
long-term decline, this is known as a depression.
Redemption
Any of the following: repayment of a bond at or before its maturity date; repayment
of a preferred stock; sale of mutual shares to the fund.
Return
The amount of money that you receive as a percentage of an initial investment. For
example, if you initially invested $100 in a one-year investment, and in a year your
investment had grown to $110, the return would be $10, or 10%.
Risk
The chance you take on an investment without knowing its precise outcome.
Usually the investment with the greatest potential return involves the greatest
amount of risk.
Savings
Secondary Market
The trading market that exists after a security has been sold to the public by an
issuer. The NYSE and NASDAQ are examples of secondary markets. Individual
investors deal primarily in the secondary market.
The regulatory body that oversees the activity of U.S. securities markets and many
of the participants in these markets. The SEC makes rules governing the markets
and these participants, and also enforces the securities laws when they are broken.
Securities
Instruments of investment. Examples of the most widely known securities are stocks
and bonds.
Shareholder
Shares Outstanding
The number of shares of a particular stock that are currently being traded in the
stock market.
Stock Exchanges
The auction markets where stocks are bought and sold by broker/dealers for other
people's accounts. A well-known stock exchange, the New York Stock Exchange
(NYSE), provides a market for the buying and selling of stocks. NASDAQ, on the
other hand, is not a stock exchange because it is not an auction market. NASDAQ
stocks are dealt "Over-the-Counter" by brokers.
Stock Index
Stock Quote
The price of a stock at which a broker is willing to buy or sell a specific number of
shares.
Stocks
Volatility
The up-and-down movement of a security's price over time. The greater the
volatility, the greater the chance of a profit or risk of a loss in a short period of time.
Volume
The amount of each security traded in a given period of time. For example, if the
volume of XYZ stock was 10,000 yesterday, that means that 10,000 shares of XYZ
stock were traded. Broader volumes, such as the volume of all the stocks traded on
the New York Stock Exchange, can be used to indicate overall market activity.
Yield