A
Account
A collection of investments, either taxable or tax-deferred. Account can be real (contains investments actually owned) or model (hypothetical). Account type can be brokerage, mutual fund, or other (a mutual fund can be an account if the fund is purchased directly from fund company or it can be an investment within an account, if purchased through a broker). Legally, accounts are set up as taxable or tax deferred. The legal owner of an account can be an individual, joint , corporate, custodian, estate, or trust. See Real Taxable Accounts, Joint Accounts, and Real Tax-Deferred Accounts.

Account Description
Information that includes Account Type, Tax-deferred, Tax Method, and Account Note. These items are primarily used to classify accounts for tax purposes.

Account Note
Descriptive text about an account that you can enter for your information, such as "for College."

Account Type
When placing an order through this site, you must be sure to select the proper Account Type for the position you wish to trade. If a particular position resides in your cash account, for example, this site will automatically reject a sell order that specifies your margin account, and vice versa.

Accrual Method
Accounting method where income and expenses are recorded when items are booked or billed. Contrast with a more common method, cash method, where income and expenses are logged from the time cash is actually spent or received.

Accrued Interest
Interest earned but not yet paid. For most taxpayers, tax is due in year accrued interest is paid. When buying a bond, buyer pays seller any interest accrued since the last payment date. When the buyer eventually sells the bond, the new buyer pays any accrued interest. The accrued interest is subject to taxes for the seller, but reduces the tax liability for the buyer. For example, if a bond buyer paid $30 accrued interest to a seller, then received $150 interest for the rest of the year, the buyer needs to pay taxes on $150 - $30 = $120.

ADR/ADS
Stands for American Depository Receipts or Shares. These financial instruments allow stock in a foreign corporation to be traded on a U.S. stock exchange in U.S. currency by representing the actual shares from the native exchange.

Advances/Declines
Advances are the number of issues on the New York Stock Exchange that have risen in price since the previous trading day's closing price. Declines represent those that have fallen in price. Sometimes the advances and declines are expressed as a ratio and plotted as a line graph. A rising A/D line indicates that the market has good breadth (a majority of issues are rising in price) and that a rising trend is more likely to be sustainable.

After Tax Real Rate of Return
The percentage gain on an investment, account, or portfolio after taxes and inflation have been deducted. Note that the after tax real rate of return for money market mutual funds is frequently less than zero, so you should use these accounts only as temporary cash accounts.

All or None Order
In brokerage, order instruction, particularly for large orders, to execute the total quantity or none.

American-Style Option
American-style is an option contract that can be exercised at any time between the date of purchase and the expiration date. Most exchange-traded options are American-style. All stock options are American-style.

Annual Report
Written report to shareholders summarizing the past fiscal year's financial results and news items of importance about products, law suits, board members, etc. Prospective shareholders should also review the annual report because it provides important balance sheet information.

Annualized Return
Projects the year to date return over a full 12 month calendar year. Most useful for projecting return for money market funds, CDs, and bonds. Annualized return for equities can be misleading if YTD return is high and covers a short period of time. See Total Return.

Annuity
An insurance product that pays an income benefit on a specific date, for a specific time, or for the lifetime of the person(s) receiving the annuity (the annuitant). A fixed annuity guarantees fixed payments with a constant rate of return. A variable annuity's value fluctuates with that of the assets that are backing it. There is no guaranteed rate of return for a variable annuity; the annuitant bears the investment risk and receives the return actually earned on invested assets less charges assessed by the insurance company.

Arbitrage
A financial transaction where an arbitrageur (arb) simultaneously purchases in one market and sells in another where there is a slight price differential. Often it is a full hedge, and therefore, a risk-free transaction. Arbs play an important role in keeping markets liquid and efficient.

Assigned on an Option Transaction
When you sell an option you now have the obligation to sell or purchase stock. You have or may not have to fulfill that obligation. You are considered to be "assigned" if you are being required to fulfill that obligation. Typically this occurs when the option is in-the-money.

Ask
The lowest price at which a seller is willing to offer a security at this time.

Asset
Something of value that you own. Appreciating assets, such as stocks, have the potential of increasing in value and/or producing income. Depreciating assets, such as a car, lose value over time. Assets minus liabilities (what you owe) equals net worth.

Asset Allocation
The process of deciding what kinds of assets you want to own, and the percentage of each. Tactical asset allocation is a sophisticated form of market timing in which an investor decides how much to allocate to each asset class based on market indicators, particularly interest rates. As conditions change, the percent allotted to each asset class changes.

Asset Classes
Appreciating assets are put into 7 asset classes: maximum capital gain equity, long-term equity, international equity, U.S. government bond, corporate bond, precious metals, and cash.

At-The-Money Option
When the price of the underlying security is equal to the strike price, an option is at-the-money.

Average Annual Return
The cumulative return divided by the number of years of the life of the investment or account, with the compounding effect factored in. In reverse, the average annual return times a given number of years equals the cumulative return for that time frame. AAR is used to compare returns of two or more investments of unequal track records.

Average Daily Volume
The consolidated trading volume for all exchanges averaged for the last 20 trading days.

Average Cost
The average price plus commission.

Average Price
The total cost less total commission of all lots you own of a particular security divided by the total number of shares owned.

Average Proceed
The sum of net amounts received from all short open lots divided by the total number of shares short for that security. Average proceeds is for short investments what average cost is for long investments.

B
Baby Bond
One sold at face amount less than $1,000 to make it attractive to smaller investors. See Bond.

Balance Sheet
A listing of all assets and liabilities for an individual or a business. The surplus of assets over liabilities is the net worth, or what is owned free of debt.

Balance Sheet Return
A view in the stock database that displays Sales/Price Ratio, Price/Book Ratio, Book/Share, Return on Equity, Profit Margin, and Reporting Date. These items are all measures of company value and profitability.

Balance Sheet - Cash & Debt
A view in the stock database that displays: Fiscal Year End, QuickRatio, Debt/Equity Ratio, Current Ratio, and Cash/Share. These items measure the financial health of a company, particularly its assets and liabilities. Click each item in the Glossary list for definitions of each of these items.

Balanced Equities
A mutual fund whose holdings are split fairly evenly between stocks and bonds. Balanced funds can change their asset allocation according to market conditions. Balanced funds seek a relatively steady return.

Bank Information
Descriptive information about a given bank. A view in the CDs and Money Markets database that displays: Minimum Deposit, City, State, Phone, Out-of-state Indicator.

Basis
An accounting term that refers to the cost of an asset including all adjustments and improvements. For tax purposes, it is the amount you subtract from the net sale price to determine the realized gain or loss. For example, if you paid $150,000 for your home, but added a porch for $25,000, your basis is now $175,000. You have stepped-up the basis.

Basis Point
The smallest measure used in quoting yields and interest rates. One basis point equals .01%, so a 100 basis point move in a U.S. Treasury bond yield is 1%.

Bearer Certificate
A security whose owner is not registered on the books of the issuer and which is, therefore, payable to the person possessing the certificate. A bearer bond has coupons attached, which the bondholder sends in or presents on the interest date for payment. Bearer stock certificates are negotiable without endorsement.

Beta
A measure of risk commonly used to compare the volatility of mutual funds or stocks to the overall market . The S&P 500 Index is the base for calculating beta and carries a value of 1. Securities with betas below 1 are less risky than the market as a whole. Betas above 1 are more risky. A beta of 1.3 is 30% more volatile than the S&P 500. Betas with negative values are inversely related to the S&P 500. Note: The beta of precious metals can be low but these funds have high price volatility. You cannot compare the beta of bond funds against the beta of equity funds, because the bond fund beta is calculated using the Shearson Long Bond Index rather than the S&P 500 Index.

Bid
The highest price a buyer is willing to pay for a security at this time.

Block Trade
Usually, a trade of 10,000 shares or more. For bonds, a $200,000 face amount or more. Block trades are often executed through a special section of a brokerage firm called the Block Desk. Using the Block Desk may result in a better price.

Bond
A debt security that represents the obligation of the issuer to pay interest to the creditor or bond holder and return the principal at maturity. Bonds backed by collateral are termed secured while those that are not secured are called debentures. A sinking fund bond obligates the issuer to set aside some of its earnings to retire bonds periodically. A bond is usually identified by its maturity date and its coupon rate, which is the interest rate stated on the bond. The price of the bond is equal to its face value when issued, which is called the par price. After that, the price fluctuates in the market. Bonds selling above original price are selling at a premium to par while those selling below original price are selling at a discount to par. Prices vary inversely with interest rates, as the prices of old bonds must adjust so that their current yield will stay competitive with those of newly issued bonds. A bond does not represent ownership. See Baby Bond, Callable, Junk Bond, Municipal Bond, US Gov't Issues, Zero Coupon Bond, Convertible Bond, Corporate Bond.

Bond Prices
View in the bond database that displays: Maturity, Outstanding Bond Amount, Latest Price, Current Year High and Low Prices. For latest price, see Price (Trade) Bonds.

Bond Type
The bond pays fixed interest amounts over its term. The bond price, however, can change as prevailing market interest rates change over time. Zero coupon bonds, or zeroes, do not pay interest. They are sold at deep discount to their par value, which is returned at maturity. Interest is internally compounded to produce the stated yield to maturity. With floating rate, the interest rate paid on the bond can change as prevailing market interest rates change.

Book/Share
The current fiscal year book value (or net equity for the corporation) per share of common stock.

Broker/Dealer
In the broadest sense, an agent who facilitates trades between a buyer and a seller and receives a commission for his services. Dealers buy and sell for their own account and keep their own inventory of securities on which they can profit or incur losses. Most stock brokerage firms really act as brokers and dealers. Brokers are also classed as Full Service or Discount, the former using a commission-based sales force and the latter using salaried brokers only.

Broker Call Rate
Interest rate at which brokerage firms borrow from banks to finance their clients' security positions.

Business
Describes the primary product or service offered by a given corporation.

Buy(s)
A transaction type for the purchase of a security. A buy creates an open lot which is part of a holding of a given security that you currently own. Buy(s) is also a filter for displaying only buy transactions.

Buy-to-Cover
A transaction type that is a closing transaction for a short sell and which creates a closed lot. Buys-to-Cover is also a filter for displaying only buy-to-cover transactions.

Buying Power
Value of margin eligible securities that may be purchased in a margin account. Determined by doubling the sum of the cash held in the brokerage account and the loan value of margined securities.

C
Call Option
A call option gives the owner the right, but not the obligation, to buy the underlying stock at a given price (the strike price) by a given time (the expiration date). The owner of the call is speculating that the underlying stock will go up in value, hence, increasing the value of the option. The purpose can be to speculate with the option (hope it goes up and sell for a profit), to invest in the underlying stock at a locked in price if the stock price goes high enough, or to generate income. Each option contract equals 100 shares of stock. For example, an AAA MAR 65 call, would give the owner the right to buy 100 shares of AAA at $65 (strike price) per share between now and the third Friday in March (expiration date).

Callable
A security redeemable by the issuer before the scheduled maturity. The issuer must pay the holder a premium price if the security is retired early. Most Corporate and Municipal Bonds are callable. US Government issues are generally not callable. They are called when interest rates fall so significantly that the bond issuer can save money by floating new bonds at the lower rate. The first call date is the date to or after which a specific call price will be offered by the issuer, usually a premium price to par, as an incentive to the bondholder to redeem the bond.

Canceled Order
A buy or sell order that is canceled before it has been executed. In most cases, a Limit Order can be can be canceled at any time as long as it has not been executed. A Market Order may only be canceled if the order is placed after market hours and is then canceled before the market opens the following day.

Capital Gains
The buying and selling of a security or other appreciating asset that has increased in value during the time you owned it. It is subject to capital gains tax, as listed on IRS Form 1040, Schedule D.

Capital Stock
Amount of money or property contributed by stockholders to be used as the financial foundation for the corporation. It includes all classes of common and preferred stock.

Cash Account
Orders placed in a cash account are settled on a cash basis, meaning that cleared funds must be in the account within three (3) business days to cover purchases.

Cash Available
The amount that may either be withdrawn in cash, or used to purchase additional securities without creating a debit balance. It is a combination of credit balances in all accounts and excess credit balances in margin accounts.

Cash Balance
Whenever a transaction occurs that affects cash, the cash balance is debited or credited. The cash balance is usually invested in a money market mutual fund that pays interest. Money market funds can be taxable or tax-exempt. In brokerage accounts, the balance in cash is swept into the money market daily.

Cash Flow
Net income plus depreciation and other non-cash charges. A strong cash flow is important for covering interest payments, particularly for highly leveraged companies.

Cash/Share
The amount of cash divided by total number of common stock shares outstanding for a given stock. A corporation with a high cash/share amount relative to the current price per share is said to be "cash rich" and may be considered low risk or undervalued.

Cash Market
A market in which security or commodity transactions occur within a few days of the trade date. Also called the spot market. The opposite is the futures market, where transactions are completed at a specified future date, price, and quantity, which is determined in the present. Stock, bond, and mutual funds trade in the cash market.

Cash Percent
The percentage of a given mutual fund's total assets invested in cash and equivalents. A high cash percent is usually good in a declining market but can result in under performance in a rising market.

CD Rate
The current interest rate for a given CD (certificate of deposit).

Certificate of Deposit
Investment created by banks, which pays stated interest at either fixed or variable rates. If sold directly by banks, principal is returned at maturity subject only to penalties for early cashing in. If sold through brokers (called Broker CDs), principal value can vary like with bonds, and early cashing in can fetch a principal lower than amount paid.

Change (in NAV)
The change in the net asset value since the close of the previous trading day. Negative values means the mutual fund has dropped in price; positive values means the mutual fund has appreciated in price. Note: A way to calculate previous day's closing price, is to subtract the Change from the Current Price - add negative values.

Class A/Class B Shares
Shares of stock issued by the same company but having some difference, such as voting rights, or a dividend preference or participation.

Clearinghouse
A computerized facility that compares and reconciles both sides of a brokerage trade.

Closed to New Accounts
The mutual fund is currently closed to new investors. To be sure, call the mutual fund for the latest information.

Closing Commission
The commission deducted from the proceeds before calculating realized gain or loss. It is the fee charged by your broker to execute your trade. It may be a composite of several fees & charges.

Closing Price
The market price you receive when you sell or buy-to-cover your security.

Commercial Paper
Unsecured short-term debt, usually from 2 to 270 days, issued by banks and corporations, which is generally safe and flexible. It is usually a major component of money market fund investment portfolios.

Commission
Fee charged by broker to execute your trade. May be a composite of several fees & charges. Commission is taken into account when calculating realized gain or loss. The buy, or opening commission, is added to the cost basis and the sell, or closing commission, is deducted from the proceeds before calculating realized gain or loss, therefore commissions reduce taxable gains and increase losses. Total commission is the sum of both buy and sell commission. Commission rates take into account the quantity of the purchase, the unit price of the security (low priced stocks may have higher commission rates), and the type of investment (options have higher commissions).

Common Shares
Represents the total number of common shares outstanding, excluding treasury stock (stock issued but re-acquired by the company through buy-backs). This number is expressed in thousands, so add three zeros.

Common Stock
Security representing partial ownership interest in a corporation. Ownership may also be shares with Preferred Stock, which has prior claim on any dividends to be paid and, in the event of liquidation, to the distribution of the corporation's assets. Common stockholders assume the primary risk if business is poor, and realize greater gains in the event of success. They also elect the board of directors that controls the company.

Confirmation
A written notification from a broker to a client specifying the details of a securities' transaction

Contract Size of an Equity Option
The amount of the underlying asset covered by the options contract. This is 100 shares for one option unless adjusted for a special event, such as a stock split or a stock dividend.

Conversion Price
The price at which convertible securities, such as bonds and preferred stock, can be converted into common stock at a set conversion ratio. For example, if the conversion ratio is 25 to 1, and you own a $1000 face value convertible bond, then the conversion price is $40 per share. The conversion value is the value of 25 shares at the current price per share. If you assume $32 per share, then the current value is 25 x $32 = $800. In this example, it is clearly better not to convert.

Convertible Bond
A debt security that is exchangeable for a set number of shares of another type of security, usually common stock, at a predetermined price. See Bond.

Corporate Bond
A debt security investment in obligations of U.S. corporations. Corporate bonds are taxable and have a specific maturity date. They are often traded on major exchanges. See Bond.

Covered Calls
A covered call seller or writer is an investor who owns a stock and sells a call option against it to generate additional income, which comes from the premium received for selling the option. If things work out right for the writer, the stock price will stay below the strike price and the writer will retain both the premium and the stock. However, if the stock price rises enough, the stock will be called away by the call buyer who has exercised the option and now gets the stock and pays the writer the strike price . Whether the writer makes a profit or loss on the stock that is called away depends on the purchase price (the cost basis). See Call Option.

Credit Balance
For cash accounts, it is the uninvested money in your account. In a margin account, it is the money on deposit against a short position.

Cumulative Return (12-Month, 10-Year)
Measures the price change over the period of time indicated, ending at the current date (or the date the price was last updated). This measure includes any dividends paid and reinvested during the period measured. Cumulative return can also be referred to as total return. It is the most useful measure of performance among different asset classes, such as stocks, bonds, cash, and so forth.

Current P/E Ratio
The ratio of current price divided by last two quarters earnings per share (EPS) plus next two estimated quarters EPS. See Price/Earnings Ratio.

Current Year High & Low Prices
The highest and lowest price for a given bond during the current calendar year.

Cumulative Return Through (Year)
Includes the price change over the period of years indicated, ending at the year shown, plus any dividend paid and reinvested over the period shown. The bar graph represents the total value of your portfolio.

Cumulative Return (1-Yr, 3-Yr, 5-Yr, 10-Yr)
The price change over the time period shown, plus any dividend, interest, or capital gains paid and reinvested over the period shown for any given security. Note that for stocks, the periods are complete calendar years, but for mutual funds, periods are rolling up to the current month.

CUSIP Number
An industry code which uniquely identifies nearly all traded stocks and bonds.

Current Ratio
A company's current assets divided by its current liabilities.

Current Yield
For stock, the annual dividend divided by the current price per share. For bond, the annual interest payment divided by [current price divided by 100 times quantity]. A measure in percentage terms of how much income you can derive from the security. Of great importance to fixed income investors and of minimal importance to growth investors. See Yield to Maturity.