| 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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