| Gearing |
A
company's debts expressed as a percentage of
its equity capital. High gearing means debts
are high in relation to equity capital. |
| General
Bond Funds |
A
fund that invests in bonds without any quality
or maturity restrictions. |
| General
Municipal Bond Fund |
A
fund that invests primarily in bonds issued
by municipalities throughout the country, and
which generate federally tax-exempt income. |
| General
Obligation (GO) Bond |
A
municipal bond whose issuer's ability to pay
back principal and interest is based on its
full taxing power. |
| Generation-
Skipping Transfer Tax |
A
tax imposed on transfers of property that skips
an intermediate generation. For example, a gift
from a grandparent to a grandchild is a generation-skipping
transfer. This 55% tax, which applies in addition
to the federal gift and estate taxes, is designed
to discourage certain generation-skipping transfers.
Due to various exclusions, however, the tax
applies primarily to wealthy taxpayers. |
| Gift |
A
voluntary transfer of money or property for
which the owner is not compensated. |
| Gift
taxes |
Taxes
imposed by the federal government and some state
governments on lifetime gifts. Federal gift
taxes are designed so that lifetime gifts are
taxed in a similar way as gifts at death are
taxed by the federal estate tax. |
| Global
Mutual Fund |
A
mutual fund that invests anywhere in the world,
including within the United States. These can
be either stock or bond funds. |
| Gold
Fund |
A
fund that invests primarily in securities associated
with gold, including gold mining, refining and
production concerns. Gold funds are also sometimes
referred to as precious metals funds. |
| Good
Delivery |
Securities
delivered to the broker from the seller that
are properly endorsed and in proper order to
be delivered to the buyer. |
| Good-Til-Cancelled
(Open) Order (GTC) |
An
order that does not expire at the end of the
day it is entered. Instead, it remains in force
until it is either executed or canceled. Accutrade
cancels all GTC orders at the end of the next
month after the order has been placed. |
| Government
Bond |
Debt
security issued by the U.S. Government. |
| Government
Income Fund |
A
fund that invests primarily in government fixed
income securities, including U.S. Treasury bonds
and notes, and federally guaranteed mortgage-backed
securities. Because of the high quality of their
portfolios, government income funds tend to
be less risky than other income funds, but to
also offer less yield. In general, government
income funds seek to provide current income
over growth of capital. |
| Government
National Mortgage Association (GNMA) |
A
US government corporation that provides primary
mortgages through bond issuances. Its securities
are called Ginnie Maes. |
| Government
Securities |
Debt
(such as bonds, bills or notes) sold by the
federal government or its agencies to raise
money. |
| Grantor |
A
person who transfers property to another person
or into a trust. |
| Gross
Estate |
All
assets--including personal, business and investment
assets, retirement benefits and life insurance--that
are owned by a person at the time of death,
before being reduced by payment of estate-settlement
expenses. |
| Gross
Income |
As
the starting point in calculating income tax
liability, gross income includes all potentially
taxable income received from any source, such
as wages, salary, dividends, interest, profit
from self-employment, retirement plan distributions
and so forth. |
| Growth |
An
investment objective of many stock funds. Current
income, if considered at all, is a secondary
concern for these funds. Capital growth is achieved
when the market value of a fund's holdings increases,
causing the fund's net asset value per share
to increase. |
| Growth
And Income Fund |
A
fund that seeks to provide both growth of capital
and a stream of income. This is done by investing
primarily in the common stock of companies that
have had not only increasing share value, but
also a solid record of paying dividends. |
| Growth
Fund |
A
fund that invests primarily in the stocks of
companies whose long-term earnings are expected
to grow significantly faster than the earnings
of the market in general (as represented by
the S&P 500 Index). In general, growth funds
seek to provide capital gains, rather than dividend
income. |
| Growth
Index Fund |
A
fund that invests primarily in growth stocks
included in one of the major unmanaged stock
indices. Growth index funds generally seek to
match or exceed the investment performance of
the targeted index. |
| Growth
Investing |
An
investment strategy to increase capital by buying
stocks the manager believes will go up in price,
regardless of the stock's current price relative
to its underlying value. Growth investing is
often discussed in contrast to value investing |
| Growth
Stock |
Stock
of a company in a new industry or of a company
participating in an emerging industry. |
| Guaranteed
Renewable |
A
policy provision that prohibits an insurance
company from canceling a policy for any reason
other than failure to pay premiums when they
are due; also prohibits increasing premiums
unless there is a rate increase for all policyholders
in a particular group. |
| Guaranty |
A
promise by a third party to answer for payment
of a debt or performance of an obligation if
the person liable in the first instance fails
to make payment or to perform the obligation. |
| Guardian |
Someone
who manages securities in a minor's account
or someone who handles the affairs of an incompetent
person. |
| Health
And Biotechnology Funds |
A
fund that invests primarily in the stocks of
companies in the medical industry. |
| Hedge |
To
reduce the risk in one security by taking an
offsetting position in a related security. |
| Hedge
Fund |
A
mutual fund that uses futures to offset investment
risk. For example, a fund manager concerned
about declining stock prices might hedge his
or her holdings by buying a put option of some
stocks. Put options, call options and selling
short are widely used hedging tools for stock
fund managers. Hedging is also used extensively
in international funds that attempt to minimize
currency risks. The fund's prospectus discloses
whether or not a fund engages in hedging. |
| HH
Savings Bonds |
A
savings bond that pays semiannual coupon interest,
unlike EE savings bonds. |
| High
Current Yield Fund |
A
fund that seeks to provide a relatively high
current yield. High current yield funds tend
to invest primarily in lower grade fixed income
securities without any quality or maturity restrictions. |
| High-Yield
Bond Fund |
A
fund that invests primarily in high yield bonds,
also referred to as junk bonds. High yield bond
funds generally seek high returns and tend to
be one of the riskier bond fund investments. |
| Historical
Yield |
Yield
provided by a fund (typically a money market
fund) over a specific time period. |
| Home
Equity Loan |
A
loan that uses the equity in one's home as collateral.
In most cases, the interest paid on the loan
is deductible. |
| Home
Health Care |
Health
care services provided at home may include part-time
skilled nursing care, speech therapy, physical
or occupational therapy and homemaking. Home
health care may be covered by Medicare or insurance
under certain circumstances. |
| House
Maintenance Call |
Demand
to the customer for additional funds from the
brokerage firm because the equity in the customer's
margin account has fallen below the minimum
amount allowed by the firm. |
| House
Requirement |
The
minimum amount of equity brokerage firms require
margin clients to maintain in the account. |
| Hypothecation |
A
brokerage firm's pledging of margin securities
at a bank to secure the funds necessary to carry
an account's debit balance. |
| Illiquid
Capital For Income Needs |
For
purposes of the premature death analysis. Refers
to any assets that are not assumed to be liquidated
at the death of a principal client, but are
assumed to be available for future survivor
goal and income needs. |
| Immediate-or-Cancel
(IOC) |
An
instruction on an order that requires execution
of as many lots as can be filled immediately,
and the rest canceled. |
| In-The-Money |
Used
to describe options that the holder would profit
from exercising. Call options are in-the-money
when the underlying security's value is greater
than the option's strike price. Put options
are in-the-money when the underlying security's
value is less than the option's strike price. |
| Inception
Date |
The
date a fund was first made available to investors. |
| Income |
Payments
of dividends, interest, and/or short term capital
gains earned by securities held by a fund. Income
dividends are paid after deducting operating
expenses. |
| Income
Bonds |
Bonds
issued when the ability of the issuing company
to pay interest is questioned. They are speculative
instruments that pay high rates of interest. |
| Income
Fund |
A
fund that invests primarily in fixed income
securities and/or high-yielding stocks. In general,
income funds seek to provide current income
rather than growth of capital. |
| Income
Stream |
A
strategy of arranging bonds so that they produce
a consistent series of payments. |
| Indemnity |
1).
In the case of damages or losses suffered by
a party, an indemnity is the assurance that
the situation will be rectified by another party
by way of repair or monetary payments. That
other party is mostly an insurance company in
which the policyholder who has suffered damages
has indemnity insurance.
2). A guarantee by a client to their bank (usually
in the form of a 'letter of indemnity') that
the bank will not be held liable for continuing
to serve the interests of that client as a result
of the client's loss of documents. |
| Indenture |
The
terms of a corporate bond. Also known as deed
of trust, it appears on the face of the bond
certificate. |
| Independant
Taxation |
A
system of personal taxation introduced in the
UK in 1990-91 where a husband and wife are treated
as completely separate and independent taxpayers
for both income tax and capital-gains tax as
though each was single, but with a new married
person's allowance for when one party has no
income. |
| Index |
Indicators
used to provide a point of reference for evaluating
a fund's performance. The most common indices
for stock funds are the Dow Jones Industrial
Average and the S&P 500 Index. For fixed-income
funds it is the Lehman Brothers Aggregate Bond
Index. |
| Index
Fund |
A
fund that invests in a collection of securities
intended to match that of a broad-based index
(NOTE: It is not possible for investors to actually
invest in the actual index, such as the S&P
500). In general, index funds seek the same
or a slightly better return that the index they
mirror. Index funds tend to charge low administrative
expenses. |
| Individual
Retirement Account (IRA) |
A
personal savings plan that offers tax advantages
to save and invest for retirement. Contributions
are often tax deductible in whole or in part,
depending upon individual circumstances, including
compensation levels and participation in an
employer sponsored qualified retirement plan.
Income derived from investments in a traditional
deductible or nondeductible IRA are tax deferred
until withdrawn. Under certain circumstances,
withdrawals from a Roth IRA are tax free. Tax
penalties may apply to IRA distributions taken
before age 59 1/2. Contributions to an IRA may
not exceed $2,000 per year. Individuals with
earned income may contribute up to $2,000 to
the IRA of a nonemployed spouse. |
| Industrial
Revenue Bond |
(ID
Revenue, ID Revs, or Industrial Rev) A form
of municipal bond whose issuer's ability to
pay interest and principal is based on revenue
earned from an industrial complex. |
| Inflation |
An
increase in the prices of products and services
over time, representing the decreased purchasing
power of money. |
| Inflation
Adjusted |
The
value of income or an asset that is measured
in terms of purchasing power. |
| Inflation
Risk |
The
possibility that the value of assets or income
will be eroded by inflation (the rising cost
of goods and services). Inflation risk is often
mentioned in relation to conservative fixed
income funds. While these types of fixed income
funds may minimize the possibility of losing
principal, they expose an investor to inflation
risk. |
| Insider |
Person
with nonpublic information on a corporation.
Directors, officers and stockholders owning
more than 10% of any one class of stock are
usually considered insiders. |
| Insider
Dealing |
The
purchase or sale of shares by someone who possesses
"inside" information about the company; i.e.,
information on the company's performance and
prospects which has not yet been made available
to the market as a whole and which, if available,
might affect the share price. |
| Insured
Bond |
A
guarantee on a municipal bond that interest
and principal will be paid timely and in full.
Insured bonds tend to carry a high credit rating
but to pay a lower return than comparably rated
uninsured bonds. The largest municipal bond
insurers include: The Municipal Bond Investment
Assurance Corp. (MBIA), Federal Guarantee Insurance
Corp. (FGIC), and AMBAC Indemnity Corp. (AMBAC). |
| Interest |
The
cost of borrowing money. |
| Interest
Rate Risk |
The
risk created by changes in market interest rates.
For example, the value of bonds usually falls
when interest rates rise. See Investment risk. |
| Interim
Dividend |
A
dividend declared part way through a company's
financial year, authorized solely by the directors. |
| Intermediate
Care |
Occasional
nursing care that must be performed by or under
the direct supervision of skilled medical personnel.
This type of care is not as intensive as skilled
nursing care, but is more intensive than custodial
care. |
| Intermediate
Investment Grade Bond Fund |
A
fund that invests primarily in investment grade
fixed income securities with dollar-weighted
average maturities of five to ten years. |
| Intermediate
U.S. Government Fund |
A
fund that invests primarily in government guaranteed
fixed income securities with a dollar-weighted
average maturity of five to ten years. |
| Intermediate
U.S. Treasury Fund |
A
fund that invests primarily in U.S. Treasury
bills, notes and bonds with a dollar-weighted
average maturity of five to ten years. |
| Intermediate-Term
Bonds |
Those
maturing five to ten years after original issue. |
| International
Fund |
A
fund that invests primarily in the securities
of companies located outside of the United States.
In general, international investing not only
offers diversification and the potential for
high returns, but also involves special risks,
such as currency concerns, and rapidly changing
political scenarios. |
| Intestate |
To
die without a valid will. |
| Investment
Assets |
Assets
that are intended to achieve long-term objectives,
such as accumulating money for education or
retirement. Investment assets generally include
stocks, bonds, mutual funds, annuities, certificates
of deposit, real estate, limited partnerships,
business interests and similar long-term investments. |
| Investment
Banker |
See
underwriter. |
| Investment
Company |
An
investment company invests the pooled funds
of investors in securities appropriate for its
stated investment objectives. For a fee, the
investment company provides more diversification,
liquidity, and professional management service
than is normally available to individual investors. |
| Investment
Grade |
High
quality bonds that are rated Baa or higher by
Moody's, or BBB or higher by Standard &
Poor's. Investment grade bonds are considered
safe, because the rating reflects the perceived
financial stability of the issuer. Usually,
however, the higher the bond's rating, the lower
the interest it must pay to attract buyers. |
| Investment
Income |
Income
from investments such as interest and dividends. |
| Investment
Objective |
A
fund's investment goal. For example, a growth
fund typically has an investment objective of
providing long-term growth of capital. |
| Investment
Risk |
The
unpredictability of investment returns. The
chance that the actual return from an investment
will be different from its expected return.
Investment risk is measured statistically using
standard deviation. Investment risks include
economic risk, inflation risk, interest rate
risk, market risk and specific risk. |
| Investment
Style |
A
description of a fund's investment strategy.
For example, a growth fund might have a growth
oriented style, a value-oriented style, or a
blend of the two. Fixed-income funds tend to
be managed with either an interest-rate sensitive
style or a credit-sensitive style. |
| Investment
Trust |
Company
whose sole business consists of buying, selling
and holding shares. |
| Issue |
(1)
The process by which a new security is brought
to market. (2) Any security. |
| Issue
Date |
Month
and day that a security is initially issued. |
| Issued
Stock |
Stock
sold to the public. |
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