A-B
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F-I
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Abbreviations
This glossary is designed to outline common terms and calculations used throughout our web site. Some calculations may vary from one quote provider to another.
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JAWBONING — See: moral Suasion.JOINT TENANTS (JT) — An account with two owners. (1) "WROS": With Rights of Survivorship. In the event of the death of one party, the survivor receives total ownership. (2) "TIC": Tenants in Common: In the event of the death of one party, the survivor receives one half of the account, the other half goes to the deceased's estate.
KEOGH PLAN (HR 10 PLAN) — Tax advantaged personal retirement program that can be established by a self-employed individual. Currently, annual contributions to a plan can be up to $30,000. Such contributions and reinvestments are not taxed as they accumulate but will be when withdrawn (presumably at retirement when taxable income may be less).
LAST-IN FIRST-OUT (LIFO) — An inventory valuation method which assumes the newest inventory (last-in) is sold first (first-out) (vs. FIFO).
LAST SALE — The last price a stock was traded at (includes all exchanges).
LEGAL LIST — A list of investments selected by various states in which certain institutions and fiduciaries, such as insurance companies and banks, may invest. Legal lists are often restricted to high quality securities meeting certain specifications.
LEGAL OPINION — The written opinion of bond counsel which attests to the fact that the municipal issue was legally authorized and issued and to the tax status of the interest. See: Qualified Legal Opinion.
LEGAL TRANSFER — Transfer of securities registered in the name of decedents, fiduciaries, trusts, bankruptcy, corporation, partnership, clubs, institutions, etc. Transfer of items which are not generally recognized as good delivery items.
LETTER OF CREDIT — Usually issued by a commercial bank or private corporation which provides the primary or secondary security for the bond issue.
LETTER OF INTENT (LOT) — A document signed by an investor when purchasing shares of a mutual fund. It indicates the investor's intention to invest enough during the coming 13 months to reach a breakpoint and thereby receive a reduced sales charge. The letter of intent may be backdated a maximum of 90 days. See: Breakpoint.
LETTER OF NOTIFICATION — Document filed with regional SEC office by issuers utilizing Regulation A. See: Regulation A.
LETTER OF TRANSMITTAL — A form used in transmitting securities to the transfer agent. Generally used for exchanges and tenders.
LETTER STOCK — See: Investment Letter.
LETTERS TESTAMENTARY — A certificate issued by the court evidencing the appointment of the executor of an estate.
LEVEL DEBT SERVICE — Yearly interest and principal payments which remain relatively constant for the life of the bond issue.
LEVE I, II, AND III — See: NASDAQ LEVERAGE — The effect on a company when the company has bonds, preferred stock, or both outstanding. Example: If the earnings of a company with 1,000,000 common shares increase form $1,000,000 to $1,500,000, earnings per share would go from $1 to $1.50, or an increase of 50 per cent. But if earnings of a company which had to pay $500,000 in bond interest increased that much, earnings per common share would jump from 50 cents to $1 a share, or 100 per cent.
LEVERAGED BUYOUT (LBO) — Taking over a company using borrowed funds. In many cases, the loans for a LBO are secured by the assets of the ocmpany being acquired.
LIABILITIES — All the claims by creditors against a corporation. Liabilities include accounts payable, wages and salaries payable, dividends declared payable, accrued taxes payable, and fixed or long-term liabilities such as mortgage bonds, debentures and bank loans.
LIFO — See; Last-in - first-out LIMIT, LIMITED ORDER, OR LIMITED PRICE ORDER — An order to buy or sell a stated amount of a security at a specified price or at a better price.
LIMITED LIABILITY — A situation in which an investor can lose no more than the amount invested.
LIMITED PARTNER — An investor in a limited partnership who has no voice in the management of the partnership. Limited Partners have limited liability and usually have priority over general partners upon liquidation of the partnership. See: Limited Partnership.
LIMITED PARTNERSHIP — A non-taxable business entity used primarily in D.P.P.'s. Each investor is responsible for the taxes on their portion of the business' income or loss. See: Direct Participation Program.
LIMITED TAX BOND — A municipal bond issue which is secured by a pledge of taxes but limited as to the rate or amount.
LINEAR REGRESSION — a statistical tool used for forecasting future price. The concept behind linear regression is to find the best estimate of the trend given a noisy sample of data points.
Chart Keys: |
Period: 10 Standard Deviation: 2 |
LIQUIDITY — The ability of the market in a particular security 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.
LISTED STOCK — The stock of a company which is traded on a securities exchange. The various stock exchanges have different standards for listing.
LOAD — The portion of the offering price of shares of open-end investment companies (mutual funds) in excess of the value of the underlying assets which covers sales commissions and all other costs of distribution. The load is usually incurred only on purchase, there being in most cases, no charge when the shares are sold (redeemed).
LOAN CONSENT — An agreement signed by a margin client which allow the broker/dealer to lend securities to a third party.
LOAN VALUE — The maximum amount of credit a broker/dealer can extend to a client under Reg. T of the FRB.
LOCKED IN — An investor is said to be locked in when he has a profit on a security he owns but does not sell because his profit would immediately become subject to the capital gains tax.
LONG — Signifies ownership of securities: "I am long 100 IBM" means the speaker owns 100 shares of IBM.
LONG COUPON — Refers to the first interest payment (from dated date to first payment date) on a municipal bond. A long coupon represents interest for less than six months.
LONG-TERM EQUITY ANTICIPATION SECURITY (LEAPS) — A long-term (usually more than one year) exchange traded equity option.
LONG-TERM LIABILITIES — A corporation's liabilities which are due in more than one year. These include bonds and long-term loans.
LOOSE CREDIT — See: Easy Money.
M1 — Basic money supply - it includes currency in circulation and demand deposits (checking accounts). NOW accounts and Super-NOW accounts are included in demand deposits.
M2 — Wider money supply - it includes M1 (currency in circulation and demand deposits) plus savings accounts and other time deposits.
MAINTENANCE — Minimum equity required to be kept in a margin account. Current NASD/NYSE maintenance requirements are 25% in a long account and 30% in a short account.
MALONEY ACT OF 1938 — An amendment to the Securities Exchange Act of 1934. It allowed self-regulation by securities firms involved in the over-the-counter market. The NASD was formed as a result of this act.
MANAGEMENT COMPANY — A type of investment company organized as a corporation which actively manages (trades) the portfolio of securities held by the investment company. See: Investment Company.
MANAGEMENT FEE — Expense paid by an investment company to the investment advisor for managing the portfolio.
MANAGER — The syndicate manager. See: Syndicate.
MANAGER'S FEE — A portion of the underwriting spread paid to the syndicate manager.
MANIPULATION — An illegal operation. Buying or selling a security for the purpose of creating false or misleading appearance of active trading or for the purpose of raising or depressing the price to induce purchase or sale by others.
MARGIN — (1) Profit e.g. "Gross Margin". (2) "On Margin": To use credit to finance securities transactions. (3) "Account": An account established by a broker/dealer to extend credit (4) "Dept": The area of brokerage operations supervising the extension of credit.
MARGIN CALL — A demand upon a customer to deposit money or securities with the broker. A Reg. T margin call is sent when a purchase is made an a maintenance margin call is sent when equity falls below specific levels. See: Maintenance Requirements, and Regulation T.
MARK DOWN — Reducing the price of a security. Usually when a dealer buys a security from a customer.
MARKET ORDER — A order to buy or sell a stated amount of a security at the most advantageous price obtainable after the order is entered.
MARKET PRICE — The last reported price at which the stock or bond sold or the current quote.
MARKET RISK — The risk that the value of a security will decline. Relating to fixed income securities, it is closely related to interest rate risk since as interest rates rise, prices will decline.
MARK TO MARKET — To compare (and adjust) contract price to market price.
MARK UP — Increasing the price of a security. Usually when a dealer sells a security to a customer.
MARRIED PUT — The purchase of a put option and the underlying stock on the same day. Special tax rules apply if the put expires.
MATCHED SALE — See: Reverse Repo.
MATURITY — The date on which a loan or bond comes due and is to be paid off.
MEMBER ORDER — An order given to a municipal syndicate in which a single member receives credit for the sale. Typically the last type of order to be filled by the syndicate.
MEMBER ORGANIZATION — A securities brokerage firm having at least one general partner, officer. It employee who is a member of the New York Stock Exchange.
MERGER — Combination of two or more corporations in which greater efficiencies are supposed to be achieved by the elimination of duplicated plant, equipment, and staff, and the reallocation of capital assets to increase sales and profits in the enlarge company.
MILL — Used in computing the property tax which is owed on real estate. A mill equals 0.1% (.001) of assessed value or $1 per $1,000 of assessed value.
MOMENTUM (Rate-Of-Change/ROC) — A relatively straightforward indicator that measures the rate of change in price as opposed to price itself.
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Period: 22 |
NONEY MAKET — The market for short term debt instruments maturing in one year or less. Money market instruments include T-bills, Commercial Paper, Banker's Acceptances, CD's, Repo's, and Federal Funds.
MONEY MARKET FUND — A mutual fund investing in money market instruments.
MONEY SPREAD — See: Price Spread.
MONEY SUPPLY — The amount of money in the economy. It is defined as M1 or M2 measurements. See: M1; M2.
MOODY'S — A company which publishes a variety of resource materials relating to securities. It provides a rating service for both municipal and corporate securities.
MORAL OBLIGATION BOND — A bond secured by revenues which is additionally secured by a moral, but not legal pledge from the state to make up any deficiencies. The state legislature would have to approve any makeup funds.
MORAL SUASION — Influence the Federal Reserve uses to persuade the banking system to comply with Federal objectives. Also known as Jawboning.
MORTGAGE BOND — A bond secured by a mortgage on a property. The value of the property may or may not equal the value of the bonds issued against it.
MOVING AVERAGE (MA) — Shows the average value of a security's price over time. Our charts use exponential moving averages.
Chart Keys: |
Green: 5-day exponential moving average (EMA) Red: 20-day exponential moving average (EMA) |
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Periods: 9 and 15, Signal line period: 5 |
MUNICIPAL BOND — A bond issued by a state or a political subdivision, such as county, city, town or village. The term also designates bonds issued by state agencies and authorities. In general, interest paid on municipal bonds is exempt from federal income taxes and state and local income taxes within the state of issue.
MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION (MBIAC) — See: Insured Bonds.
MUNICIPAL SECURITIES RULEMAKING BOARD (MSRB) — The self-regulatory organization of the municipal securities industry. Created in 1975, it has primary responsibility for development of rules and regulations to govern the activities of municipal securities dealers.
MUNIFACTS — The newswire service for the municipal bond industry. This is a product of the Blue List. Both news items and secondary market offerings are printed throughout the day.
MUTUAL FUND — A type of investment company that offers for sale or has outstanding securities which it has issued and which are redeemable on demand by the fund at current net asset value. All owners in the fund share in the gains or losses of the fund. Also see Investment Company.
NAKED — See: Uncovered.
NASD — The National Association of Securities Dealers - an association of brokers and dealers in the over-the-current securities business. NASD is dedicated to "adopt, administer, and enforce rules of fair practice… and in general to promote just and equitable principles of trade for the protection of investors".
NASDAQ — An automated information network which provides brokers and dealers with price quotations on securities traded over-the-counter. NASDAQ is an acronym for National Association of Securities Dealers Automated Quotations. The system has three levels. Level I shows highest bid and lowest offer in the system. Level II shows individual market maker's quotes. Level III is used by market makers to enter their quotes into the system.
NATIONAL MARKET SYSTEM (NMS) — Part of the NASDAQ system that shows actual transactions, last trade, and volume data. See: NASDAQ.
NEAR-THE-MONEY — Those strikes (puts and call) which are nearest the underlying stock price.
NEGATIVE YIELD CURVE — See: Inverted Yield Curve.
NEGOTIABLE — A security whose title is transferable by delivery; a security which can be sold.
NEGOTIATED ISSUES — A new issue where the issuer appoints an underwriter rather than having a number of underwriters compete for the issue.
NET ASSET VALUE (NAV) — Usually used in connection with investment companies to mean net asset value per share. An investment company computes its assets daily, or even twice daily, by totaling the market value of all securities owned. All liabilities are deducted, and the balance divided by the number of shares outstanding. The resulting figure is the net asset value per share. The net asset value of a mutual fund (open-end investment company) is the bid and redemption price.
NET BONDED DEBT — Total general obligation debt minus self-supporting debt.
NET CHANGE — The change in the price of a security from the closing price of the previous day. The net change is ordinarily the last figure in the newspaper stock price list.
NET INCOME — The net earnings of a corporation after deducting all costs of selling, depreciation, interest expense, and taxes.
NET INTEREST COST (NIC) — Indicates the average weighted coupon rate for a new municipal issue. For a competitive issue the issuer may request that the syndicates submit their bids in the form of an NIC. The lowest NIC bid will be awarded the issue. See: True Interest Cost.
NET YIELD — The after tax adjusted yield o a taxable bond, used for comparison with a tax exempt municipal yield.
NEW HOUSING AUTHORITY (NHA) — See: Public Housing Authority.
NEW ISSUE — A security sold by an issuer for the first time. Proceeds may be used to retire outstanding securities of the issuer, for new plant or equipment, or for additional working capital.
NEW YORK FUTURES EXCHANGE (NYFE) — A subsidiary of the New York Stock Exchange devoted to the trading of financial futures contracts.
NEWYORK STOCK EXCHANGE (NYSE) — The largest organized securities market in the United States, founded I 1792. The Exchange itself does not buy, sell, own, or set the prices of stocks traded there. The prices are determined by public supply and demand. The Exchange is a not-for-profit corporation of 1,366 individual members, governed by a Board of Directors consisting of 10 public representatives, 10 Exchange members or allied member, and a full-time paid chairman and president. Also known as the Big Board.
NO LOAD FUND — A mutual fund which charges no sales charge on the purchase of shares.
NOMINAL OWNER — See: Beneficial Owner, Street Name.
NOMINAL YIELD — The state rate of interest that a bond pays the holder, based on par value. It is also known as the coupon, coupon rate, and interest rate.
NON-ACCREDITED — An investor not considered accredited for a Reg. D offering. See: Accredited.
NON-COMPETITIVE TENDER — A method that a small investor can use to purchase Treasury bills at the original auction. The individual enters a non-competitive tender for a minimum of $10,000 and a maximum of $1,000,000. T-bills will be awarded to the individual at the average yield of the accepted competitive bids.
NON-CUMULATIVE — A type of preferred stock on which unpaid dividends do not accrue. Omitted dividends are, as a rule, gone forever.
NONEXEMPT SECURITIES — Securities which are subject to the filing requirements of the Securities Act of 1933 and the provisions of the other federal securities acts (vs. Exempt).
NON-ISSUER — Refers to securities transactions made for the benefit of someone other than the issuer.
NON-QUALIFIED — A retirement plan (or annuity) in which after-tax dollars are invested and payments form the plan are considered part return of principal (not taxed) and part earnings (taxed). (vs. Qualified Plan).
NON-RECOURSE LOAN — A loan obtained by a limited partnership in which the lender has claim only against the partnership as a whole, not against the individual limited partners. For tax purposes, if the partnership invests in real estate, the limited partner can include its portion of the non-recourse loan in its basis. See: Basis.
NORMAL YIELD CURVE — See: Positive yield Curve.
NOT HELD ORDER — An order which gives the floor broker discretion as to time and price.
NOTICE OF SALE — The advertisement used by a municipal issuer announcing its intention to sell a new issue and inviting municipal underwriters to enter bids for the issue.
NYSE COMMON STOCK INDEX — A composite index covering price movements of all common stocks listed on the New York Stock Exchange. It is based on the close of the market December 31, 1965 as 50.00 and is weighted according to the number of shares listed for each issue. The index is computed continuously and printed on the ticker tape each half hour. Point changes in the index are converted to dollars and cents so as to provide a meaningful measure of changes in the average price of listed stocks. The composite index is supplemented by separate indexes for four industry groups: industrial, transportation, utility, and finance.
ODD LOT — An amount of stock less than the established unit of trading (round lot): from 1 to 99 shares for the great majority of issues, 1 to 9 for certain inactive stocks.
ODD LOT THEORY — An investment strategy which assumes that the small investor is always wrong. Using odd lot buying and selling patterns as indicators of small investor activity, this theory maintains that one should buy as odd lot selling increases and vice versa.
OFF-BOARD — This term may refer to transactions over-the-counter in unlisted securities, or to a transaction of listed shares that is not executed on a national securities exchange.
OFFER — The price at which a person is ready to sell. Opposed to bid, the price at which one is ready to buy.
OFFERING CIRCULAR — See: Prospectus.
OFFICIAL STATEMENT — Prepared for a new municipal issue by or for the issuer. It contains a complete description of the issue and financial details about the issuer. MSRB rules require that a copy of the official statement be given to each purchaser of a new issue, if one has been prepared.
OIL DEPLETION ALLOWANCE — An allowable (by congress) percentage of tax-free income that an investor in an oil and gas limited partnership can receive from the gross revenues generated by the sale of gas and oil from a producing property.
ON BALANCE VOLUME (OBV) — relates price to volume, and tries to capture the buying and selling pressure in the market. It assumes that when a security closes up for the day, the number of shares transacted represent buying power. Conversely, the amount of volume on a down day represents selling power.
OPEN-END INDENTURE — A secured bond indenture which allows the repledging of collateral for additional bonds. Usually subject to certain limitations. See: Additional Bonds Test.
OPEN-END INVESTMENT COMPANY — See: Investment Company.
OPENING TRANSACTION — The purchase or sale of an option transaction to establish or increase a position.
OPEN MARKET COMMITTEE — See: Federal Open Market Committee.
OPEN ORDER — See: Good Till Cancelled Order.
OPERATING INCOME — An entry on a company's income statement. It is the company's net sales minus cost of goods sold, selling and administrative costs, and depreciation. It is an indication of the company's profit directly related to its primary business.
OPERATING PROFIT MARGIN — A ratio used fundamental analysts. It is a company's operating income divided by net sales.
OPTION — A right to buy (call) or sell (put) a fixed amount of a given stock at a specified price within a limited period of time. The purchase hopes that the stock's price will go up (if he bought a call) or down (if he bought a put) by an amount sufficient to provide a profit when he sells the option. If the stock price holds steady or moves in the opposite direction, the price paid for the option is lost entirely. Individuals may write (sell) as well as purchase options.
OPTIONS CLEARING OCRPORATION (OCC) — The OCC is the organization through which the various options exchanges clear their trades. It supervises the listing of options and guarantees performance on option contracts.
ORDER BOOK OFFICIAL (OBO): — Found on the CBOE, the OBO maintains a book of public orders for future execution.
ORDER ROOM — A department in a brokerage firm that receives all orders to buy or sell securities.
ORDER SUPPORT SYSTEM (OSS) — Automated order execution system used on the CBOE. See: Automated Order Execution System.
ORIGINAL ISSUE DISCOUNT (OID) — A new issue bond offered at a discount (below par). The bond's value must be increased (accreted) over its life from the original discounted price up to par. See: Accretion.
OUT-OF-THE-MONEY — Refers to an option that has no intrinsic value. For example, a put option in which the stock is selling above the exercise price or a call option in which the stock is selling below the exercise price.
OUTSTANDING STOCK — The amount of common shares of a corporation which are in the hands of investors. It is equal to the amount of issued shares less treasury stock.
OVERBOUGHT — An opinion as to price levels. May refer to a security which has had a sharp rise or to the market as a whole after a period of vigorous buying, which it may be argued, has left prices "too high" (vs. Oversold). See: Resistance.
OVERLAPPING DEBT — Debt of a political entity such as a county where its tax base overlaps the tax base of another political entity such as a city within the county.
OVERRIDING ROYALTY — An arrangement between the general partner and limited partner of an oil and gas program in which the general partner receives a flat fee per barrel produced.
OVERSOLD — The reverse of overbought. A single security or a market which, it is believed, has declined to an unreasonable level (vs. Overbought). See: Support.
OVER-THE-COUNTER (OTC) — A market for securities made up of securities dealers who may or may not be members of a securities exchange. The over-the-counter market is conducted over the telephone and is a negotiated market rather than at auction market such as the NYSE. Over-the-counter dealers may act either as principals or as brokers for customers. The over-the-counter market is the main market for bonds of all types.
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