| Joint
Account |
An
account with two or more individuals acting
as co-owners. |
| Joint
Tenant |
Type
of ownership of property by two or more persons
in which each owns an undivided interest in
the whole. Upon the death of a joint tenant,
the deceased owner's interest passes outside
of probate directly to the remaining joint tenant(s). |
| Joint
Tenants with Rights of Survivorship (JTWROS) |
A
joint account which allows the remaining tenant(s)
to retain the deceased tenant's interest in
the account. |
| Junk
Bond |
Bonds
rated BB or below by Standard & Poor's Corporation
and Ba or below by Moody's Investor Service.
Junk bonds tend to be more volatile and higher
yielding than bonds with higher quality ratings. |
| Junk
Bond Fund |
A
fund that invests primarily in lower rated bonds
(BB or below by Standard & Poor's Corporation
and Ba or below by Moody's Investor Service),
also referred to as junk bonds. Junk bond funds
generally seek high returns and tend to be one
of the riskier bond fund investments. |
| Keogh
Plan |
Tax-deferred
retirement plan for a self-employed and unincorporated
person or a person who has earned extra income
aside from regular employment through personal
services.<br></div> |
| Ladder |
A
fixed income investment strategy that seeks
to reduce interest rate risk by investing in
fixed income securities with a wide variety
of maturities. Though this strategy assures
continuous cash flow, there may be some sacrifice
of total return, since shorter-term bonds tend
to have lower yields than longer-term bonds. |
| Large-Caps |
Stocks
of companies with market capitalizations of
more than $1 billion. Large-caps tend to be
well established companies, so that their stocks
entail less risk than smaller-caps, but which
also offer less potential for dramatic growth. |
| Latin
American Fund |
A
fund that invests primarily in the securities
of companies in Latin American countries. |
| Legal
Transfer |
A
type of transfer that requires legal documentation
in addition to the normal forms. Usually in
the name of a deceased person, a trust, or other
third party. |
| Letter
Of Intent |
An
agreement calling for an investor to invest
a specific amount in a fund over a defined period
in order to qualify for reduced sales charges.
The reduced sales charge may apply to an individual
fund or to all the funds operated by a single
investment management firm. |
| Letter
Of Renunciation |
This
applies to a rights issue and is the form attached
to an Allotment Letter which is completed should
the original holder wish to pass his entitlement
to someone else or to renounce his rights absolutely. |
| Liabilities |
Debts
or anything owed to another person or party.
Liabilities include credit card balances, loans
secured by investment or personal assets, such
as an automobile, or loans secured by a home. |
| Limit
Order |
An
order that sets the highest price the customer
is willing to be paid or the lowest price acceptable.
Buy orders may be executed at or below the limit
price, but never higher. Sell orders may be
executed at or above the limit price, but never
lower. |
| Limited
Tax Bond |
A
municipal bond whose ability to pay back principal
and interest is based on special tax. |
| Limited
Trading Authorization |
An
account in which the customer gives the power
to buy and sell only in his account to another
person. |
| Liquid
Assets |
Cash
or cash equivalents, such as money market funds
or certificates of deposit. |
| Liquid
Capital Available |
For
purposes of the premature death analysis, refers
to any assets that are assumed to be liquidated
at the death of a principal client and made
available for immediate survivor capital needs. |
| Liquidation |
(1)
Closing out a position. (2) An action taken
by the margin department when a client hasn't
paid for a purchase. |
| Liquidity |
(1)
The ease with which an investment can be converted
into cash. Shares in a fund are generally considered
highly liquid investments because they can be
sold on any business day for their then current
value (which may be more or less than an investor's
original cost). (2)The characteristic of a market
that enables investors to buy and sell securities
easily. |
| Listed
Options |
An
option that trades on a national option exchange. |
| Listed
Securities |
Securities
that trade on a national exchange. |
| Listed
Stock |
Stock
that has qualified for trading on an exchange. |
| Load |
A
sales charge assessed by certain mutual funds
(load funds) to cover selling costs. A front-end
load is charged at the time of purchase. A back-end
load is charged at the time of sale. |
| Loan
Consent Agreement |
An
agreement whereby the customer gives the brokerage
firm permission to lend his securities. |
| Loan
Market Value |
Value
of securities in customer's account. |
| Loan
Stock |
Stock
bearing a fixed rate of interest. Unlike a Debenture,
loan stocks may be unsecured. |
| Loan
Value |
The
amount of money, expressed as a percentage of
market value, that the customer may borrow from
the firm. |
| Long
Position |
(1)
In a customer's account, securities that are
either fully paid for (a cash account) or partially
paid for (a margin account). (2) Any position
on the firm's security records that has a debit
balance. |
| Long-Term
Bonds |
Bonds
that mature in more than ten years. |
| Long-Term
Care |
Continuous
care that provides help with daily activities,
such as bathing, eating and walking. May include
health care provided by skilled or semi-skilled
health professionals. |
| Long-Term
Funds |
All
funds other than short-term funds (i.e., money
market funds). |
| Make
a Market |
Refers
to brokerage firms that buy and sell a particular
over-the-counter stock for their own accounts
at their own risk. |
| Management
Company |
The
group of individuals responsible for managing
a mutual fund's portfolio. |
| Management
Fee |
The
amount a fund pays to its investment adviser
for its services. The average annual fee industry
wide is about one half of one percent of fund
assets. A fund's management fee must be listed
in its prospectus. |
| Manager |
The
Firm that provides the fund with investment
research and portfolio management services. |
| Manager
Tenure |
How
long the portfolio manager has been responsible
for a fund's management. |
| Margin
Account |
An
account in which the firm lends the customer
money on purchases or securities on short sales.
Customers must have enough equity in the account
to pay for purchases by the third business day
after trade or meet obligations that may be
incurred immediately. |
| Margin
Call |
A
demand upon a customer to deposit money or securities
with the broker when the value of the securities
purchased on margin falls. |
| Margin
Department |
The
department of a brokerage firm that computes
the balance their clients need to keep in order
to avoid maintenance and margin calls. |
| Margin
Requirement |
The
percentage of investment that may be financed
using borrowed capital. |
| Marginal
Tax Bracket |
The
range of taxable income that is taxed at a certain
marginal tax rate. |
| Marginal
Tax Rate |
The
tax rate that applies to the next dollar of
taxable income. If another dollar of taxable
income is received in the same tax year, the
number of cents that must be paid in additional
income taxes is the same as the percentage of
additional income that will be paid in taxes. |
| Marital
Deduction |
A
tax rule that allows assets to pass between
spouses free from federal estate and gift taxes.
If either spouse is not a U.S. citizen, however,
different rules apply. |
| Mark-To-Market |
Process
by which security position values are brought
up to their current value. The customer may
request the excess equity, or the firm may call
for the deposit of additional funds. Either
request is a "mark" to the market. |
| Market
Capitalization |
Also
referred to as "market cap." Market capitalization
is a measure of a corporation's value, calculated
by multiplying the number of outstanding shares
of common stock by the current market price
per share. Market capitalization is usually
grouped into four main categories: large-cap,
mid-cap, small-cap, and micro-cap. |
| Market
Maker |
Another
term for dealer or specialist. In the interest
of maintaining orderly trading, a market maker
stands ready to trade against the public and
therefore to make a market in an issue. |
| Market
Not Held |
Type
of market order usually for a sizable amount
of stock that gives the floor broker discretion
with respect to price and/or timing on execution. |
| Market
Order |
An
order to be executed at the current market price.
Buy market orders accept the current offer,
and sell market orders accept the current bid. |
| Market
Risk |
The
risk created by market conditions that affect
all investments of a similar class. For example,
the value of a particular common stock may fall
based on a decrease in the values of a large
group of common stocks. See Investment risk. |
| Market
Timing |
Attempting
to time the purchase and sale of securities
to coincide with ideal market conditions. Mutual
fund investors may switch from stock funds to
bond funds to money market funds as the strength
of the economy and interest rate directions
change. |
| Marry
a Put |
Form
of hedging done by buying the stock and buying
a put on the same day. |
| Maturity |
The
date on which a loan becomes due and payable
when bonds and other debt instruments must be
repaid. |
| Maturity
Date |
The
date on which the principal amount of a bond
is to be paid in full. |
| Maximum
Front-End Load |
The
fee an investor pays when purchasing shares
of a fund. A fund has different load breakpoints
depending on the purchase total. For example,
a fund may charge:4.5% to $100,0004.0% to $250,0003.0%
to $500,0002.0% to $1 Million0.0% thereafter |
| Merger |
The
combination of two or more companies into one
through the exchange of stock. |
| Micro-Caps |
A
subset of small-caps. Stocks of companies with
a market capitalization of less that $50 million
are "micro caps." Micro-caps tend to be new,
relatively untested corporations that can offer
greater growth potential than larger caps, but
also entail greater risk. |
| Mid-Cap
Fund |
A
fund that invests primarily in the stocks of
companies with a medium market capitalization
(mid caps). |
| Mid-Caps |
Stocks
of companies with a medium market capitalization,
usually defined as between $500 million and
$3-5 billion. Mid-caps are often considered
to offer more growth potential than larger-caps
(but less than small caps) and less risk than
small-caps (but more than large-caps). |
| Mini-Refunding |
Auctions
of Treasury securities occurring in March, June,
September, and December. |
| Minimum
Maintenance |
Established
by the exchanges' margin rules, the level to
which the equity in an account may fall before
the client must deposit additional equity. It
is expressed as a percentage relationship between
debit balance and equity or between market value
and equity. |
| Minimum
Purchase |
The
smallest investment amount a fund will accept
to establish a new account. Most fund groups
also impose a minimum for additional purchases
to an existing account. |
| Minus
Tick |
An
execution price below the previous sale. |
| Moderate
Risk Tolerance |
The
capacity to reduce assurances regarding the
expected rate of return and assurances of maintaining
a stable principal in exchange for the possibility
of earning a higher return. See Risk tolerance. |
| Money
Market Fund |
Money
market funds seek to maintain a stable net asset
value by investing in the short-term, high-grade
securities sold in the money market. These are
generally the safest, most stable securities
available, including Treasury bills, certificates
of deposit, and commercial paper. Money market
funds limit the average maturity of their portfolio
to 90 days or less. They seek to generate monthly
income, and to maintain a stable $1.00 per share
net asset value. Some money market funds offer
check-writing privileges. No fees are generally
charged to purchase or redeem shares in a money
market fund. Several different portfolio types
are available: Taxable, taxable government securities,
and national or state tax-free. |
| Money
Market Instruments |
Short-term
debt instruments (such as U.S. Treasury bills,
commercial paper, and banker's acceptances)
that reflect current interest rates and that,
because of their short life, do not respond
to interest rate changes as longer-term instruments
do. |
| Money
Market Securities |
Short-term
debt, usually issued for 90 days or less. |
| Money
Purchase Pension Plan |
A
defined-contribution retirement plan into which
an employer contributes a specified percentage
of each employee's compensation each year. |
| Mortgage
and Other Debt Expenses |
Certain
living expenses that remain at a fixed level
rather than being subject to an assumed inflation
factor. |
| Mortgage
Bond |
A
debt instrument issued by a corporation and
secured by real estate owned by the corporation
(such as factories or office buildings). |
| Mortgage-Backed
Securities |
A
collection of mortgages bundled into a single
security and retailed to private or institutional
investors as a single security. |
| Municipal
Bond |
Also
known as Muni. A long-term debt instrument issued
by a state or local government. It usually carries
a fixed rate of interest, which is paid semiannually. |
| Municipal
Bond Fund |
A
mutual fund that invests in municipal bonds.
An investor in a municipal bond fund receives
dividends, representing municipal bond interest
payments, that generally are exempt from federal
income taxes. |
| Municipal
Note |
A
short-term debt instrument of a state or local
government. Most popular are revenue, bond,
and tax anticipation notes. |
| Municipal
Securities |
Bonds
issued by state or local government units. |
| Mutual
Fund |
An
open-end investment company that combines the
money of thousands of people and invests it
in a variety of securities in an effort to achieve
a specific objective over time. Mutual funds
offer the benefits of portfolio diversification
(which provides greater safety and reduced volatility),
professional management, and stand ready to
buy back its shares at the current net asset
value. Every fund's prospectus details information
on the fund's objectives, fees, the management
company, and moreMutual funds, known as open-end
investment companies, have portfolios that can
grow or be reduced, based upon market conditions
and investor investment/redemption patterns.
Hence the name: they have limitless numbers
of shares outstanding. Closed-end funds, also
called unit investment trusts, have a fixed
portfolio, and a pre-set number of shares outstanding. |
| Naked
Call |
Occurs
when an investor sells a call(s) without owning
the underlying securities and is not selling
to close out a position. |
| NASDAQ |
Acronynm
for the National Association of Securities Dealers
Automated Quote System. A communication network
used to store and access quotations for qualified
over-the-counter securities in the US. |
| National
Association of Security Dealers (NASD) |
A
self-regulating authority whose jurisdiction
includes the over-the-counter market. |
| National
Securities Clearing Corporation (NSCC) |
A
major clearing corporation offering many services
to the brokerage community, including comparison
of NYSE, AMEX, and over-the-counter transactions. |
| Natural
Resources Fund |
A
fund that invests primarily in securities of
companies that own, process, transport, or market
natural resources, which can include metals,
minerals, and forest products. |
| Negotiable |
A
feature of a security that enables the owner
to transfer ownership or title. A non-negotiable
instrument has no value. |
| Net
Asset Value (OFS) |
The
current market worth of a mutual fund's share.
A fund's net asset value is calculated daily
by taking the funds total assets, securities,
cash and any accrued earnings, deducting liabilities,
and dividing the remainder by the number of
shares outstanding. In an open-end fund quote,
the OFS is the bid side; the offer side is the
OFS plus the sales charge. |
| Net
Worth |
The
difference between the total value of assets
and the total amount of liabilities. |
| New
Issue |
A
company coming to the market for the first time
or issuing additional shares. |
| New
Shares |
Shares
newly issued by a company; these shares can
usually be transferred on Renounceable Documents. |
| New
York Stock Exchange (NYSE) |
Located
at 11 Wall Street, New York, New York, a primary
market for buying and selling the securities
of major corporations. |
| Nil
Paid |
A
new issue of shares, usually as the result of
a rights issue on which no payment has yet been
made. |
| No
Load Fund |
A
fund that sells its shares directly to investors
without a sales charge. |
| Nominal
Yield |
The
interest rate stated on the face of the bond. |
| Nominee
Name |
Name
in which a security is registered and held in
trust on behalf of the beneficial owner. |
| Non-Qualified
Assets |
Assets
that are not invested in a qualified retirement
plan or an IRA. |
| Non-qualified
Tax-deferred Annuity |
An
annuity that is not purchased within a qualified
retirement plan or IRA. See Deferred annuity. |
| Noncallable |
A
note or bond that cannot be called prior to
maturity. Many Treasury and most agency securities
are noncallable. |
| Noncompetitive
Tender |
A
method of purchasing Treasury bills, notes,
and bonds directly from the Federal Reserve
at the average price during an auction of new
securities. |
| Noncumulative
Preferred Stock |
A
type of preferred stock that does not pay back
dividends to its holders. |
| Not
Held (NH) |
An
indication on an order that the execution does
not depend on time; the broker or trader should
take whatever time is necessary to ensure a
good execution. |
| Note |
The
general name for a Treasury or agency security
with an initial maturity of fewer than 10 years. |
| Maintenance
Requirement |
On
the NYSE. This is the minimum amount of equity
that the margin customer must have in his account.
However, since the house requirements are usually
higher, it is the house maintenance that is
used. |
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