Dictionary - Stocks & Commodities
# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

10 Bagger

A 10 bagger is a stock that increases in value by at least 10 times its purchase price, or by at least 900%.  The term 10 bagger was coined by legendary fund manager Peter Lynch in his best-selling book, "One Up on Wall Street." Any stock that appreciates ten-fold from the date an investor initially purchased it can be referred to as a 10 bagger.Although such investments are a rarity on Wall Street, investors often seek out companies with tremendous growth potential in the hopes of finding the next 10 bagger for their individual portfolios. Read more

52-Week High/Low

The 52-week high and low refers to the highest and lowest market prices of a given security over a 52-week (one year) period. If you observe the market prices for a given security during a specific period of time, there will be a price that is higher than all others and a price that is lower than all others. Read more

ABA Bank Index

The ABA Bank Index is a composite market index comprised of small retail and community banks. Traded on the Nasdaq, the ABA Bank Index is made up of 440 small banking institutions nationwide. Read more

ABC Agreement

An ABC agreement is a contractual agreement between an investment house and its broker which allows the firm to purchase a seat (membership) on the New York Stock Exchange (NYSE). So called for its three standard conditions, an ABC agreement is entered into by a stock broker and his employing investment house. Read more

Active Management

Active management is an investment strategy that tries to create excess returns through the recognition, anticipation, and exploitation of short-term investment trends. Active management is the opposite of passive management (also known as buy-and-hold investing). Read more

Affirmative Obligation

An affirmative obligation is a responsibility incumbent upon New York Stock Exchange (NYSE) specialists to ensure that a market for a stock still exists in the absence of sufficient supply or demand. In certain instances, there may be high demand for a stock accompanied by a short supply of shares. Read more

After Hours Trading

After hours trading is the trading that occurs on electronic market exchanges after regular stock market trading hours have ended. In the United States, pre-market trading occurs between 8:00 a.m. Read more

After Market Trading

After market trading occurs on an electronic market exchange after regular trading hours have ended. In the United States, after market trading typically occurs between 4:00 p.m. Read more

After the Bell

After the bell is a phrase referring to the end of an exchange's daily trading session. Let's say that Company XYZ wants to announce the sudden departure of its CEO and the appointment of the CFO to take her place. Read more

Air Pocket Stock

An air pocket stock is one that experiences an abrupt and severe price decline. Named for the dropping action of an aircraft flying through a random low-pressure air pocket, an air pocket stock experiences a sharp price drop when the issuer announces negative news and panic selling ensues. Read more

All or Nothing Order (AON)

All or nothing (AON), also known as an "all or none" order, is a condition used on a buy or sell order which instructs a broker to execute the order in its entirety or to do nothing. For example, if you wanted to purchase 1,000 shares of Company XYZ at $5 per share "all or nothing," the broker would have to find all 1,000 shares at $5 in order to complete the transaction. Read more

Alternative Asset

An alternative asset is an item that has intrinsic value, but is not traditionally considered a financial asset. Alternative assets are best defined by their absence from the capital markets. Read more

Alternative Order

An alternative order is a group of limit orders linked together within a brokerage account.If one order is executed, all other linked orders are automatically canceled. Read more

American Depositary Receipt (ADR)

An American Depositary Receipt (ADR) is a certificate that represents shares of a foreign stock owned and issued by a U.S.bank. Read more

American Income Trust

An American Income Trust is a type of royalty trust. A royalty trust is a type of corporation created to act as the owner of the mineral rights to wells, mines and similar properties.  It exists only to pass income generated from the sale of the property's assets (gold, oil, etc.) to shareholders. Read more

American Stock Exchange (AMEX)

The American Stock Exchange (AMEX), sometimes referred to as the "Little Board," is a stock and options exchange in New York.  Though not as large as the New York Stock Exchange (NYSE), the AMEX is a large exchange that serves as a market for equities, a variety of options and other derivatives, American Depository Receipts (ADRs), exchange-traded funds (ETFs), and other financial instruments.The first ETFs traded on the AMEX in 1993. Read more

AMEX Biotech Index

The AMEX Biotech Index is the benchmark index for the Biotechnology industry.This index was started on October 18, 1991 with a value of 200. Read more

Analyst Expectation

An analyst expectation is typically a prediction of a company's quarterly or annual earnings per share. Securities analysts are tasked with the job of making earnings estimates for the companies they cover. Read more

Annuitization

Annuitization is the act of triggering a series of payments, usually from an annuity. An annuity is a contract whereby an investor makes a lump-sum payment to an insurance company, bank or other financial institution that in return agrees to give the investor either a higher lump-sum payment in the future or a series of guaranteed payments. Read more

Any-and-All Bid

An any-and-all bid is an offer to acquire a company whereby the potential buyer offers to purchase any and all of the shareholders' shares at a specific price by a certain deadline. Let's assume Company XYZ wants to buy Company ABC, which is a public company. Read more

Ask Price

The ask price is the lowest price a prospective seller is willing to accept in exchange for a specific security.  While the ask price is the lowest price a prospective seller is willing to accept, the bid price is the highest price that a prospective buyer is willing to pay for the security.The highest bid and lowest ask are quoted on most major exchanges, and the difference between the two prices is called the bid-ask spread. Read more

Ask Size

Ask size is the number of shares a seller is selling at a quoted ask price.The ask size is the opposite of the bid size, which is the number of shares a buyer is willing to buy at the quoted bid price. Read more

Auction Market

An auction market is a market in which buyers indicate the highest price they are willing to pay and sellers indicate the lowest price they are willing to accept.A trade occurs when the buyer and seller agree on a price. Read more

Average Down

Average down (or averaging down) refers to the purchase of additional units of a stock already held by an investor after the price has dropped.Averaging down results in a decrease of the average price at which the investor purchased the stock. Read more

B-Shares

B-shares are either 1) common stock or 2) preferred stock that generally give fewer benefits to share holders than A-shares. For example, Joe purchases stock in company XYZ.  If Joe buys B-shares, and a single B-share gives him two votes.  However, if Joe buys A-shares, he receives six votes per share.  B-shares also have lower dividend priority than A-shares. Read more

Back Door Listing

A back door listing occurs when a private company acquires a publicly traded company and thus “goes public” without an initial public offering. For example, let’s assume that Company XYZ is a privately held company with 150 shareholders and $25 million in cash. Read more

Back Month Contract

Also called a far month contract, a back month contract is a futures contract that has an expiration date that is the farthest beyond the next approaching expiration date (called the “front month contract). For example, let’s assume that John Doe wants to buy orange juice futures. Read more

Back Months

Back months are the expiration dates of futures contracts that fall furthest from the nearest expiration date.   For example, let’s assume that John Doe wants to buy orange juice futures. Read more

Back-Stop Purchaser

A back-stop purchaser buys leftover shares from the underwriter of an equity or rights offering. Company XYZ is going public. Read more

Backing Away

Backing away occurs when a market maker does not honor a quoted bid or ask price for a minimum quantity of a particular security.   John Doe wants to buy 1,000 shares of Company XYZ. Read more

Backpricing

Backpricing is a method for pricing commodities, whereby the buyer and seller agree to buy/sell a commodity but set the price at a later date. For example, let's assume that John wants to buy some corn. Read more

Backspread

A backspread is a trading strategy whereby the investor buys a set of options with one strike price and sells a similar set of options with a lower strike price. For example, John Doe wants to adopt a backspread strategy for some Company XYZ calls. Read more

Backtesting

Backtesting is the process of applying a trading strategy or analytical method to historical data to see how accurately the strategy or method would have predicted actual results. For example, let's assume you devise a model that you think consistently predicts the future value of the S&P 500. Read more

Backwardation

Backwardation describes a downward sloping forward curve in a commodity market.This means that as the price of a commodity for future delivery is lower than the spot price -- the price of a commodity today.  Backwardation starts when the cost of carry – i.e., storage, financing and convenience fees, exceeds the difference between the forward and spot price.  This situation usually arises when a commodity that normally experiences contango faces a positive demand or negative supply shock. Read more

Bagging the Street

"Bagging the street" refers to the strategy of profiting from price changes created by block trades. For example, let's assume that Pension Fund ABC wants to buy 100,000 shares of Company XYZ. Read more

Bandwagon Effect

The bandwagon effect is when people go along with what everyone else is doing. Let's say Fruit Computers launches a cellphone that is popular with hipsters. Read more

Bank Deposit Agreement

A bank deposit agreement, also called a Bank Investment Contract (BIC), is an agreement between a bank and an investor where the bank provides a guaranteed rate of return in exchange for keeping a deposit for a fixed amount of time (usually several months to several years). Bank deposit agreements are similar to guaranteed investment contracts (GICs) except that they are issued by banks rather than insurance companies. Read more

Bank Investment Contract (BIC)

A bank investment contract (BIC), also sometimes called a Bank Deposit Agreement, is an agreement between a bank and an investor whereby the bank provides a guaranteed rate of return in exchange for keeping a deposit for a fixed period of time (several months to several years). BICs are similar to guaranteed investment contracts (GICs) except that they are issued by banks rather than insurance companies. Read more

Barrel of Oil Equivalent (BOE)

A barrel of oil equivalent (or BOE) is a unit measure of unused energy resources.Expressed frequently in the financial statements of energy companies, BOEs are defined by the U.S. Read more

Bear

A bear has a negative outlook on the market (belief that the value of an asset or market will decrease). Investors generally fall into two mindsets: those with an optimistic outlook who foresee prosperity, called "bulls," and those with a pessimistic outlook who foresee decline, called "bears." A bearish investor will alter their portfolio strategy by liquidating securities they believe are going to lose value in the foreseeable future. Read more

Bear Market

A bear market is a period of several months or years during which securities prices consistently fall.The term is typically used in reference to the stock market, but it can also describe specific sectors such as real estate, bond or foreign exchange. It is the opposite of a bull market, in which asset prices consistently rise. Read more

Behavioral Finance

Behavioral finance combines social and psychological theory with financial theory as a means of understanding how price movements in the securities markets occur independent of any corporate actions. Suppose a lawsuit is brought against a tobacco company. Read more

Bellwether

A bellwether is a security or indicator that signals the market's direction. Let's assume Company XYZ is an auto manufacturer. Read more

Beneficial Owner

The beneficial owner is the individual or entity that enjoys the benefits of owning an asset, regardless of whose name the title of the property or security is in. Beneficial ownership commonly refers to two situations: 1.Under U.S. Read more

Best Ask

The best ask is the lowest price offered by a stock's market makers.For stocks, the best ask is quoted in dollars. Read more

Best Execution

Best execution refers to the imperative that a broker, market maker, or other agent acting on behalf of an investor is obligated to execute the investor's order in a way that is most advantageous to the investor rather than the agent. Let's assume you place an order to buy 100 shares of Company XYZ stock. Read more

Best-Price Rule

The best-price rule refers to Securities and Exchange Commission (SEC) Rule 14d-10.This rule requires an entity making a tender offer for a certain class of shares to make the same offer to all the shareholders in that class. Read more

Bid Price

The bid price is the highest price that a prospective buyer is willing to pay for a specific security.The "ask price," is the lowest price acceptable to a prospective seller of the same security. Read more

Bid Size

Bid size is the number of shares a buyer is willing to purchase at a given price.For bond trading, bid size is measured in dollars. Read more

Bid-Ask Spread

The bid-ask spread (also known simply as "the spread") is the difference between a security's bid price and its ask price. Let's assume you are watching Company XYZ's stock. Read more

Black Friday

In the investing world, Black Friday refers to the gold crisis of September 24, 1869.It sometimes also refers to the New York Stock Exchange crash of September 19, 1873. Read more

Black Monday

Black Monday, also called "The Crash of 1987," refers to the 509-point fall in the Dow Jones Industrial Average on October 19, 1987.It also refers to October 28, 1929, when the DJIA fell 12.8%. Read more

Black Thursday

Black Thursday refers to October 24, 1929, when panicked sellers traded nearly 13 million shares on the New York Stock Exchange (more than three times the normal volume at the time), and investors suffered $5 billion in losses. The years preceding Black Thursday were filled with irrational exuberance. Read more

Black Tuesday

Black Tuesday, also known as the Wall Street Crash of 1929, was the worst stock market crash in US history.Black Tuesday was an abrupt end to the rapid economic expansion of the roaring 20’s, and is widely considered to be one of the causes behind the beginning of The Great Depression. Read more

Blank Check Preferred Stock

Blank check preferred stock refers to the issuance of a class of preferred shares where the board of directors has authority determining voting rights, dividends, and conversion without separate shareholder approval. The most common reason a company will issue blank check preferred stock is to create a "poison pill" whereby the rights associated with the stock make a takeover unattractive. Read more

Blue Sheets

Blue sheets are petitions for information from the Securities and Exchange Commission (SEC) to investment companies whose trading activity has resulted in significant price movements. Blue sheets are requests from the SEC that are sent out to investment companies which have executed a trade that considerably affected the price of a security. Read more

Blue-Chip Stock

A blue-chip stock is a stock of an established company that has consistently shown qualities like generating consistent earnings, paying generous dividends or increasing revenue. Blue-chip stocks are shares of stock issued by companies which have a reputation for financial stability and a record of successfully weathering any economic condition. Read more

Bo Derek

A "Bo Derek" is a so-called perfect investment.The term comes from the 1979 movie "10," starring the actress Bo Derek, who depicted "the perfect woman." The term is less common now than it was in the 10 years after the movie came out, but the search for Bo Derek investments continues. Read more

Boiler Room

A boiler room is a call center in which salespeople call potential investors in an attempt to sell risky, or even falsified, investment opportunities using aggressive and unethical tactics. The term came about as a result of the high pressure sales environment it creates. Read more

Broker-Dealer

A broker-dealer is an individual or company that buys and sells securities for its clients and for itself.Broker-dealers differ from plain-vanilla brokers, which can only buy and sell for their clients. Read more

Brokerage Fee

A brokerage fee compensates a broker for executing a transaction.It is usually, but not always, a percentage of the transaction value. Read more

Brokered Certificate of Deposit

A brokered certificate of deposit (a brokered CD) is a CD sold by a brokerage firm. A CD is a time deposit with a bank or financial institution. Read more

Bulge Bracket

Bulge bracket is a term used to describe the investment company(ies) with the highest volume of sales of an initial public offering (IPO) When a company issues new securities in the market, groups of investment companies called "underwriting syndicates" offer the security to the public for the first time.The company in the underwriting syndicate that issues the highest volume of the new security in the market is called the bulge bracket. Read more

Bull

A bull has a positive outlook on an asset class or an entire market.In investing terminology, bull is the opposite of bear. Read more

Bull Market

A bull market is a period of several months or years during which asset prices consistently rise.The term is usually used in reference to the stock market, but it can describe specific sectors such as real estate, bonds or foreign exchange. It is the opposite of a bear market, in which securities prices consistently fall. Read more

Bull/Bear Ratio

The bull/bear ratio indicates overall investor sentiment in the market by comparing the number of bullish and bearish investors.This market indicator is calculated and published weekly by the Investors Intelligence Sentiment Survey. Read more

Burn Rate

Burn rate is the amount of time it will take a company to exhaust its capital cushion.  Burn rate is usually expressed in terms of cash burned per month, but can be expressed according to any time period the analyst finds useful.Let's assume newly formed Biotech Company ABC has just been granted venture capital (VC) funds to pursue a groundbreaking new drug. Read more

Buy and Hold

Buy and hold is an investment strategy whereby an investor holds securities for the long-term, regardless of short-term market fluctuations. Let's assume you have $100,000 to invest. Read more

Buying on Margin

Buying on margin refers to borrowing from a brokerage firm (through a margin account) to make an investment. You want to buy 1,000 shares of Company XYZ for $5 per share but don't have the necessary $5,000 -- you only have $2,500. Read more

Cage

A cage is a department in a brokerage firm. The cage is a physical location in which people at a brokerage firm handle physical securities and certificates. Read more

Calendar Effect

A calendar effect is a theory that stock prices will perform differently at different times of the year. There are many different calendar effects, including the Monday effect, "Sell in May and Go Away," and the October effect. Read more

Call Market

In a call market, buy and sell orders are grouped together and then executed at specific times, rather than executed one by one continuously. Let's assume that the following buy orders for Company XYZ stock are received: Buy 1,000 shares @ $4.25 Buy 500 shares @ $4.00 Buy 700 shares @ $4.50 Buy 500 shares @ $4.25 Sell 1,000 shares @ $4.25 Sell 500 shares @ $4.00 Sell 700 shares @ $4.50 Sell 500 shares @ $4.25 In a call market, the buy orders are grouped together and executed at a price and time that will clear most of those orders. Read more

Call Rule

The call rule is a rule that requires the official opening price of a cash commodity to be near the previous day's closing price of that commodity. For example, let's assume that on June 1, the price of gold is $1,000 an ounce at the end of the trading day. Read more

Callable Certificate of Deposit (Callable CD)

A callable certificate of deposit (callable CD) is a time deposit with a bank or financial institution.But unlike other CDs, callable CDs can be redeemed by the issuer before the maturity date. Read more

Canadian Income Trust

A Canadian income trust is a type of investment trust that holds stable, income-producing assets and pays out at least 90% of its net cash flows to its unitholders (shareholders are known as unitholders in trust lingo).These trusts usually hold assets such as oil, coal, natural gas, or other natural resources, which generally have a steady demand and therefore steady revenues.  Canadian income trusts usually have no management or employees but are instead run by financial institutions. Read more

Cancel Former Order

Cancel former order is a specific type of trade order a client places with a broker in order to cancel an unfilled buy or sell order. For example, if a client has an outstanding order to buy 100 shares of Company XYZ at $15 per share and decides he wants to buy the shares at the current market price of $17 per share, he must submit a cancel former order for the pending instructions and replace it with a new order to buy at the market price. Read more

Canceled Order

In the finance world, a canceled order is an order that is deleted before it is executed. Let's say Jane Smith calls her broker, John Doe, and tells him to buy 1,000 shares of Company XYZ. Read more

Cancellation

In the finance world, a cancellation is a notice informing a broker that a trade was made incorrectly.In the insurance world, a cancellation occurs when a policyholder stops paying the premium on an insurance policy and/or the insurance policy is no longer effective. Read more

Capitulation

Capitulation occurs when investors attempt to exit an investment or market so quickly that they are willing to surrender any and all gains to do so.Panicked behavior often causes a capitulation, and investors may attempt to liquidate most or all of their holdings in these circumstances. Read more

Cash Cow

A cash cow is a business unit, product line, or investment that has a return on assets (ROA) greater than the market growth rate.The idiom refers to the idea that it produces "milk" (profit) long after the cost of the investment has been recouped. Read more

Cash Dividend

A cash dividend is a cash payment made to the shareholders of a corporation. Generally, cash dividends are reported in dollars per share when discussing common stock. Read more

CD Ladder

A CD ladder is an investing strategy whereby the investor staggers the maturity of ("ladders") the certificates of deposit in his portfolio so that the proceeds can be reinvested at regular intervals. For example, say you have $75,000 to invest. Read more

Certificate of Deposit (CD)

A certificate of deposit (CD) is a relatively low-risk debt instrument purchased directly through a commercial bank or savings and loan institution. The certificate of deposit indicates that the investor has deposited a sum of money for specified period of time and at a specified rate of interest. Read more

Chicago Mercantile Exchange (CME)

The Chicago Mercantile Exchange (CME) is a commodities futures and options exchange.Several dozen types of contracts trade on the CME, and the exchange facilitates hundreds of millions of these trades each year. Read more

Class A Shares

Class A shares are either 1) common stocks or 2) preferred stocks that offer enhanced benefits, such as greater voting rights and a higher dividend priority.  For example, let’s say Joe purchases stock in Company XYZ.  If Joe buys class A shares, a single class A share may give Joe six votes instead of one.  It will also place him at the front of the line when dividends are issued.However, if Joe were to buy class B shares, he may receive only one or two votes per share and would be at a lower priority for dividend payments. Read more

Class B Shares

Class B shares are either 1) common stocks or 2) preferred stocks that generally give fewer benefits to shareholders than class A shares. For example, Joe purchases stock in company XYZ.  If Joe buys class B shares, a single class B share gives him two votes.  However, if Joe buys class A shares he receives six votes per share.  Class B shares also have lower dividend priority than class A shares. Read more

Closing Bell

The closing bell is a term used to describe the time that an exchange's daily trading session ends. Each trading day, the New York Stock Exchange (NYSE) rings its bell at 4 p.m. Read more

Closing Price

A closing price is the trading price of a security at the end of the trading day.In real estate, it is the price at which a piece of property sells. Read more

Closing Quote

A closing quote is the trading price of a security at the end of the trading day. The New York Stock Exchange has the most famous closing bell (so famous that the term has a service mark). Read more

CNN Effect

The CNN effect refers to a major negative impact on consumer spending as a result of breaking news. CNN (which was later joined by MSNBC, BBC World News and Fox News) offers minute-by-minute updates on breaking events at home and abroad. Read more

Commodification

Commodification, also known as "commoditization", refers to a good or service becoming indistinguishable from similar products. To be considered a commodity, an item must satisfy three conditions: 1) it must be standardized and, for agricultural and industrial commodities, in a "raw" state; 2) it must be usable upon delivery; and 3) its price must vary enough to justify creating a market for it. Read more

Commodity

A commodity is any homogenous good traded in bulk on an exchange.  Grain, precious metals, electricity, oil, beef, orange juice, and natural gas are traditional examples of commodities, but foreign currencies, emissions credits, bandwidth, and certain financial instruments are also part of today's commodity markets.According to the New York Mercantile Exchange, "A market will flourish for almost any commodity as long as there is an active pool of buyers and sellers." To be considered a commodity, an item must satisfy three conditions: -- It must be standardized (for agricultural and industrial commodities it must be in a "raw" state). Read more

Commodity Futures Trading Commission (CFTC)

The Commodity Futures Trading Commission (CFTC), was established in 1974 as an independent government agency with the purpose of regulating commodity futures and options markets. The Commodity Futures Trading Commission was established by a government mandate in 1974 to enforce rules stated in the Commodities Exchange Act. Read more

Commodity Index

A commodity index is an index of the prices of items such as wheat, corn, soybeans, coffee, sugar, cocoa, hogs, cotton, cattle, oil, natural gas, aluminum, copper, lead, nickel, zinc, gold and silver. The Goldman Sachs Commodity Index (GSCI) is one of the most popular commodities indexes. Read more

Commodity Market

A commodity market is a place where buyers and sellers can trade any homogenous good in bulk.Grain, precious metals, electricity, oil, beef, orange juice and natural gas are traditional examples of commodities, but foreign currencies, emissions credits, bandwidth, and certain financial instruments are also part of today's commodity markets. Read more

Commodity Parity Price

Commodity parity price refers to the price of a commodity based on a single price or average of prices during a previous span of time. A commodity's parity price is a benchmark price against which its current price may be compared in order to gauge its purchasing power for producers. Read more

Commodity Research Bureau Index (CRB)

The Commodity Research Bureau Index (CRB) tracks the general trend of the commodities markets. The CRB Index gauges the collective price trend of the commodities markets. Read more

Common Stock

Common stock represents ownership interests in corporations. The most prominent characteristics of common stock are that they entitle the shareholder to vote on corporate matters (typically, the shareholder gets one vote for every share he or she owns, though that is not always the case) such as whether the company should acquire another company, who the board members should be and other big decisions. Read more

Composite

A composite is a grouping of securities, indexes or other items. One of the most well-known composites in the finance world is the Dow Jones Composite Average, which is  a price-weighted average of the 65 companies that compose the Dow Jones Industrial Average, the Dow Jones Transportation Average, and the Dow Jones Utility Average. Read more

Composite Index

A composite average is an average of the components of other averages. For example, the Dow Jones Composite Average is a price-weighted index of the companies that compose the Dow Jones Industrial Average (DJIA), the Dow Jones Transportation Average (DJTA) and the Dow Jones Utility Average (DJUA). Read more

Contango

Contango occurs when the current futures price of an asset (as quoted in the futures market) is higher than the current spot price of the underlying asset. There is a relationship between the spot price of an asset (its price right now) and the expected spot price on the date when a derivative contract expires. Read more

Continuous Auction Method

Also called the Zaraba method, the continuous auction method is a method of trading securities.  In the continuous auction method, which many Japanese exchanges use, the exchange fills orders by matching them with other orders according to the order price and age. Read more

Cornering the Market

"Cornering the market" refers to the process of acquiring enough shares of a certain security or asset with the intention of illegally manipulating its price. Let's assume you want to profit from cornering the market on Company XYZ. Read more

Correction

A correction refers to a price decline of at least 10% of any security or market index after a temporary increase in market prices. The stock market's value is always rising and falling. Read more

Countercyclical Stock

A countercyclical stock is a stock whose price tends to move in opposition to the overall business cycle.When the market rises, the stock price falls, and when the market falls, the stock price moves higher. Read more

Cross-Listing

Cross-listing (also known as interlisting or dual listing) is the listing of any security on two or more different exchanges. Let's assume Company XYZ is a Canadian public company that lists its shares on the Toronto Stock Exchange. Read more

Cumulative Dividend

A cumulative dividend is a dividend, usually on preferred shares, that must be paid before any other dividends on any of the issuer's other securities.Preferred stock that does not carry a cumulative dividend is referred to as "straight preferred." Let's assume Company XYZ issues some preferred stock with a $1-per-share cumulative quarterly dividend. Read more

Cyclical Stock

Cyclical stocks are those that tend to move strongly higher and lower along with the overall business cycle.These stocks represent ownership in companies that are very sensitive to economic fluctuations. Read more

Daily Factor

Daily factor is the amount of yield earned in a day. Recall that yield is the percentage interest an investor would earn if he or she purchased a given bond at its current market price. Read more

Daily Trading Limit

A daily trading limit is the maximum gain or loss allowed on a derivative or currency in one trading day. For example, let's say that a forward contract on Company XYZ stock has a trading limit of X. Read more

Dalal Street

Dalal Street is slang for the Bombay Stock Exchange. India's Bombay Stock Exchange is located on Dalal Street, as are many financial institutions. Read more

Dark Pool Liquidity

Dark pool liquidity refers to the amount of trading activity that occurs directly between parties without the use of an exchange, thereby keeping the transaction private. Dark pool liquidity usually is created by institutions. Read more

Dash to Trash

A dash to trash occurs when investors bid up the price of a security to a point well above the security's reasonable value. For example, let's assume that Company XYZ is a restaurant company that hasn't shown a profit in 10 years, has a weak management team and has little working capital. Read more

Dawn Raid

In the finance world, a dawn raid is the purchase of a large number of shares or securities as soon as the market opens, usually in a takeover effort. Let's say that Company XYZ owns 40% of Company ABC but wants to acquire a controlling interest in Company ABC. Read more

Day Order

A day order is an order to buy or sell a security by the end of the day. Let's assume that John Doe wants to buy Company XYZ shares, but he's going to Bermuda for two weeks tomorrow and doesn't want to deal with his broker while he's on vacation. Read more

Day Trader

Day trader is a term applied to a very active securities trader who holds securities for a short period of time.Day traders will often open and close a position within the same day. Read more

Day-Around Order

A day-around order is an order that replaces an order from another day.It is most common in the equities markets. Read more

Dead Cat Bounce

A dead cat bounce refers to a temporary recovery in a stock price or a temporary market rally after a significant downward trend. For example, let's assume the market has been falling over the last ten weeks but there is a broad market rally in week 11. Read more

Death Star IPO

A Death Star IPO is a wildly successful IPO.The term is a reference to the Star Wars movies, in which Darth Vader's Death Star battle station could pulverize other planets with a single laser beam. Read more

Declaration Date

In the income investing world, a declaration date is the date on which a company announces an upcoming dividend payment, usually by issuing a press release a few weeks before the dividend is actually paid. Let's assume you own 100 shares of Company XYZ. Read more

Dedicated Portfolio

A dedicated portfolio is a passively managed portfolio whose cash flows are designed to match the cash flows needed to fulfill a future obligation. A dedicated portfolio is also referred to as a structured portfolio. Read more

Defensive Stock

A defensive stock is a stock that is either stable or a market outperformer during an economic contraction. Defensive stocks are usually found in industries that produce necessary and often relatively cheap products that consumers cannot go without. Read more

Delisting

Delisting refers to the removal of a security from active trading.It generally occurs when a company goes private, is bought out, declares bankruptcy or fails to meet listing requirements. Read more

Depository Trust & Clearing Corporation (DTCC)

The Depository Trust & Clearing Corporation (DTCC) is a subsidiary of the National Securities Clearing Corporation (NSCC).The DTCC, established in 1973, settles transactions between buyers and sellers of securities. Read more

Direct Access Trading (DAT)

Direct access trading (DAT) refers to any computerized trading system which connects traders to markets, thereby eliminating the need for a broker. Direct access trading (DAT) encompasses a variety of electronic trading tools and platforms which connect traders with other traders and with the actual markets (e.g. Read more

Dividend

Dividends are payments from corporate earnings to company shareholders.Dividends are one way for you to receive a return from owned shares. Read more

Dividend Achievers

The term "dividend achievers" is used to describe an elite group of companies that have improved their annual regular dividends for at least 10 consecutive years and meet certain liquidity requirements.  Additional eligibility requirements for dividend achievers include: 1) being listed in the NYSE or Nasdaq and 2) having a minimum average daily cash volume of $500,000 per day for the months of November and December prior to the Index's reconstitution date.  If a company meets these requirements they qualify for the Broad Dividend Achievers Index.They do not have to be on the S&P 500 list to qualify. Read more

Dividend Aristocrats

The term "dividend aristocrats" is used to describe Standard & Poor's (S&P) 500® Index companies that have consistently improved their dividend rates every year for at least 25 consecutive years. Typically, a dividend aristocrat is a large and relatively stable blue-chip company with a healthy balance sheet. Read more

Dividend Capture Strategy

The dividend capture strategy is the act of purchasing a security for its dividend, capturing the dividend, and then selling the security to buy another about to pay a dividend.By doing this, investors can receive a steady stream of dividend income instead of waiting for an individual holding to pay its regular dividend. Read more

Dividend Declaration Date

A dividend declaration date is the date on which a company announces an upcoming dividend payment, usually by issuing a press release a few weeks before the dividend is actually paid. Let's assume you own 100 shares of Company XYZ. Read more

Dividend Payable Date

The dividend payable date is the date on which a company pays a dividend to its shareholders of record. Let's assume you own 100 shares of Company XYZ. Read more

Dividend Record Date

A dividend record date is the date on which the company finalizes the list of investors who qualify as "shareholders of record." Investors listed as shareholders of record will receive the firm's dividend payment. Let's assume you own 100 shares of Company XYZ. Read more

Dividend Reinvestment Plan (DRIP)

A dividend reinvestment plan (DRIP) is an arrangement offered by companies to investors wishing to receive additional shares of company stock in lieu of cash dividend payments. In many cases, optimistic investors prefer to gain additional equity in a company rather than receive the cash dividends related to their holdings. Read more

Dividend Yield

Dividend yield is the annual dividend payment shareholders receive from a particular stock shown as a percentage of the stock's price.(Dividends are corporate earnings distributed to company shareholders typically through the two forms of cash or stock.) The formula for dividend yield is: Dividend Yield = Annual Dividend / Current Stock Price For example, let's assume you own 500 shares of Company XYZ, which pays $1.10 per share in annual dividends. Read more

Dividend-Capture Strategy

The dividend-capture strategy is the act of purchasing a stock before it goes ex-dividend, capturing the dividend and then selling the stock and buying another stock that is about to go ex-dividend. For example, let's assume you purchase 100 shares of Company XYZ before it declares its next dividend. Read more

Dogs of the Dow

"Dogs of the Dow" is a stock-picking strategy whereby an investor buys equal amounts of the 10 highest-yielding stocks within the Dow Jones Industrial Average at the beginning of each year.After every year, the investor updates their holdings to reflect the current highest-yielding stocks in the Dow.  The Dogs of the Dow strategy was popularized in 1991 by renowned money manager, Michael O’Higgins, in his book, "Beating the Dow." The Dogs of the Do" strategy is based on the idea that the 30 stocks within the Dow Jones Average are generally strong companies with profitable operations. Read more

Dow 30

The Dow 30 is slang for the Dow Jones Industrial Average. The Dow 30 is probably the best-known and most widely followed index in the world. Read more

Dow Jones Industrial Average (DJIA)

The Dow Jones Industrial Average (DJIA), sometimes referred to as simply the Dow, is one of several well-known stock market indices.The DJIA was created by Charles Dow, founder of the Wall Street Journal, to measure the daily stock price movements of 30 large, publicly-owned U.S. Read more

Downtick

A downtick occurs when a security sells at a price less than the preceding sale.A downtick is the opposite of an uptick. Read more

Dual-Class Stock

A company has dual-class stock if it has more than one type of stock and the different classes have varying voting rights, dividend payments, or other characteristics. Companies can have several classes of shares. Read more

Dutch Auction

A Dutch auction is a method for pricing shares (often in an initial public offering) whereby the price of the shares offered is lowered until there are enough bids to sell all shares.All the shares are then sold at that price.  The goal of a Dutch auction is the find the optimal price at which to sell a security.  For example, let's assume Company XYZ wants to sell 10 million shares using a Dutch auction. Read more

E-CBOT

The e-CBOT is an automated trading platform for trading futures on the Chicago Board of Trade (CBOT). The CBOT is a commodities futures and commodities options exchange. Read more

Earning Assets

Earning assets are assets that generate income like interest or dividends. Typically, earning assets require very little ongoing work from the owner of the assets. Read more

Earnings Call

An earnings call is a public announcement, usually via conference call, of a company's profits, usually on a quarterly basis. Company XYZ is a public company. Read more

Earnings Season

Earnings season refers to the four times per year when most public companies announce their quarterly and/or annual earnings. Although there are no official dates, earnings seasons usually last about a month and start in mid-January (after the fourth quarter ends in December), mid-April (after the first quarter ends in March), mid-July (after the second quarter ends in June), and mid-October (after the third quarter ends in September). Read more

Earnings Surprise

An earnings surprise in an unexpected difference between a company's actual earnings per share and analysts' expected earnings per share. Let's assume that analysts expect Company XYZ to report $0.05 in earnings per share for the first quarter. Read more

Easy-to-Borrow List

An easy-to-borrow list is a brokerage firm's list of securities that are available for shorting.   Short selling involves a three-step trading strategy that seeks to capitalize on an anticipated decline in the price of a security. Read more

Eating Stock

Eating stock occurs when a broker/dealer or market maker has to purchase stock because there are not enough buyers. Let's say Company XYZ is an investment bank that is underwriting the initial public offering of ABC Company. Read more

Effective Annual Interest Rate

The effective annual interest rate is the rate of interest an investor earns in a year after accounting for the effects of compounding.  The formula for effective annual interest rate is: (1 + i / n)n - 1 Where:  i = the stated annual interest rate n = the number of compounding periods in one year For example, let’s assume you buy a certificate of deposit with a 12% stated annual interest rate.If the bank compounds the interest every month (that is, 12 times per year), then using this information and the formula above, the effective annual interest rate on the CD is: (1 + .12/12)12 - 1 = .12683 or 12.683% Let’s look at it from another angle. Read more

Eighthed

To get eighthed is to be outbid or undercut by one-eighth of a dollar (12.5 cents). Let's say Company XYZ is a big pension fund that wants to buy 500,000 shares of ABC Company from the DEF pension fund. Read more

Either-Or Order

An either-or order is a group of limit orders linked together within a brokerage account.If one order is executed, all other linked orders are automatically canceled. Read more

Electronic Communication Network (ECN)

Commonly known as an ECN, an electronic communication network is a system for trading financial instruments that takes place outside of the markets and is sanctioned by the Securities and Exchange Commission (SEC).An ECN connects buyers and sellers over a network that eliminates the need for an intermediary such as a broker or investment bank. Read more

Enhanced Income Security (EIS)

An enhanced income security (EIS), also known as an income deposit security (IDS), is an exchange-traded security composed of both an issuer's common shares and its subordinated notes. An EIS is a hybrid security that consists of both common stock and a bond rolled into one instrument. Read more

Equity

Put simply, equity is ownership of an asset of value.Ownership is created when the owner contributes to the financing of the asset purchase. Read more

Equity Financing

Equity financing is the method of raising capital by selling company stock to investors.In return for the investment, the shareholders receive ownership interests in the company. Read more

Equity Income Fund

An equity income fund is a mutual fund composed largely of dividend-paying stocks. Equity income funds are made up of a variety of different income investments, but they generally invest in securities from established, creditworthy companies that make consistent dividend payments. Read more

Ex-Dividend Date

Some stocks pay cash (or additional stock) dividends to their investors throughout the year.The ex-dividend date (also referred to as “ex-date”) is important for an investor to know because it determines if you’re entitled to a dividend.  In order to receive a dividend, you need to be the holder on record of a given stock no later than the day before its ex-dividend date. Read more

Extended Trading

Extended trading is the pre-market or after-market trading that occurs on electronic market exchanges either before or after regular stock market trading hours. In the United States, extended trading occurs between 8:00 a.m. Read more

Extra Dividend

An extra dividend, also known as a special dividend, is a one-time distribution of corporate earnings to company shareholders, typically derived from exceptional performance during a given quarter or period. Extra dividends are usually disbursed in cash and tend to be a larger amount than the company’s usual dividend payment. Read more

FAAMG Stocks

FAAMG is an acronym that describes five of the most popular tech stocks whose parent companies have come to influence so many of our purchases and a large part of the market: Facebook, Apple, Amazon, Microsoft, and Google (now called Alphabet).The five stocks all trade on the NASDAQ, which lists more than 3,300 stocks, including many of the more successful tech and growth stocks. Read more

FAANG Stocks

FAANG is an acronym that describes five of the most popular tech stocks whose parent companies have come to influence so many of our purchases and a large part of the market: Facebook, Apple, Amazon, Netflix, and Google (now called Alphabet).The five stocks all trade on the NASDAQ, which lists more than 3,300 stocks, including many of the more successful tech and growth stocks. Read more

FANG Stocks

FANG is an acronym that describes the four most popular tech stocks whose parent companies have come to dominate our lives and the market: Facebook, Amazon, Netflix, and Google (now called Alphabet).The four stocks all trade on the NASDAQ, where more than 3,300 corporations list their shares. Read more

Fill or Kill (FOK)

Fill or kill (FOK) is a client's instruction to his or her broker to either fill the entire order immediately or to cancel the order. Let's assume you want to purchase 1 million shares of Company XYZ at $20 per share. Read more

Financial Market

A financial market is a location where buyers and sellers meet to exchange goods and services at prices determined by the forces of supply and demand. A financial market may be a physical location or a virtual one over a network (for example, the Internet). Read more

Fixed Annuity

A fixed annuity offers a fixed rate of return, and all its future payments are equal amounts. Assume you'd like to invest in a vehicle that will provide you with guaranteed monthly payments of $1,167 every month for as long as you live after you retire. Read more

Fixed Income Security

A fixed income security is an investment that pays regular income in the form of a coupon payment, interest payment or preferred dividend. Fixed income securities provide periodic income payments at an interest or dividend rate known in advance by the holder. Read more

Fixed-Rate Capital Securities

Fixed-rate capital securities are fixed income securities that have features of both corporate bonds and preferred stock. Similar to a hybrid security, fixed-rate capital securities have features of both preferred stock and corporate bonds. Read more

Float

A company's float is an estimate of the number of outstanding shares available for the public to trade. Float, sometimes referred to as free float or "public" float, does not include restricted shares (shares owned by company officers, management, and other various insiders) because it's assumed that those shares are being held on a very long-term basis. Read more

Floor Broker

A floor broker, also known as a pit broker, is a brokerage firm employee who executes orders on the floor of a stock or commodity exchange on behalf of clients. A floor broker receives an order from a client through his or her brokerage firm and trades the security with other brokers on the exchange floor.   Based on interactions with specialists in the specific securities being traded and bidding with other brokers or traders on the floor of the exchange, the floor broker attempts to get the most competitive market rates available for his or her client.  When the floor broker executes a transaction on behalf of the client, he or she notifies the client through the client's registered representative at the floor broker's firm. Read more

Fool's Gold

Fool's gold is a shiny mineral called pyrite which bears great resemblance to, and is often confused with, real gold. Actually an iron-based mineral, pyrite is known for being yellow and shiny and appearing no different from real gold. Read more

Forever Stock

Forever stock is a term used by InvestingAnswers to describe a stock that you can buy and hold for the rest of your life.  InvestingAnswers describes them as "high-quality securities that you can count on for strong, steady returns -- year after year -- all while ensuring you get a good night's sleep."   InvestingAnswers' identifies candidates for "forever" stocks by following Warren Buffett's simple yet successful investing advice: "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." [InvestingAnswers Feature: 50 Warren Buffett Quotes to Inspire Your Investing] These investments typically share three main characteristics: The company enjoys huge (and lasting) advantages over its competitors.   The company pays investors every year by dishing out fat (and growing) dividends or buying back massive amounts of its own stock. Read more

Forward Dividend Yield

A forward dividend yield is a stock's annualized dividend based on its latest declared dividend payment. Forward dividend yields can be calculated in a number of ways, and depending on which way they are calculated, various sources will often list different yields for the exact same security. Read more

Foul Weather Fund

A foul weather fund is a mutual fund that outperforms the market during poor market conditions.The goal of the fund is to minimize or benefit from the effects of a downward move in the market. Read more

Free Cash Flow per Share

Free cash flow per share is a measure of how much cash per share a business generates after accounting for capital expenditures like equipment or buildings.Free cash flow is available to be used for expansion, dividends, debt reduction, or other purposes. Read more

Free Float

A company's free float refers to the number of outstanding shares that are available to the public for trade. Free float is sometimes referred to as float or public float. Read more

Futures Commission Merchant (FCM)

A futures commission merchant (FCM) is a company or individual certified to negotiate the sale and purchase of futures contracts, as well as oversee the delivery of underlying commodities to investors. An FCM has to be certified by the Commodity Futures Trading Commission (CFTC) before being allowed to facilitate the purchase and sale of futures contracts on a futures exchange. Read more

Going Public

Going public refers to a company's first issuance of stock on the open market.In most cases, the offering, called an initial public offering (IPO), makes the company's stock accessible to a large group of public investors for the first time. Read more

Gold Bug

Gold bugs are people who are fans of investing in gold. Gold is generally considered a safe haven against the ravages of inflation and volatile markets. Read more

Gold BUGS Index (HUI)

The AMEX Gold BUGS Index (also known as HUI) is one of two major gold indices that dominate the market.BUGS is an acronym for "Basket of Unhedged Gold Stocks." The index was introduced on March 15, 1996. Read more

Gold Bull

A gold bull is someone who believes the price of gold will go up.  Gold bulls generally consider gold a "safe" hedge against inflation and even against volatile markets.Throughout history, gold has traditionally risen in value when things such as wars, the Great Depression, or high inflation have occurred. Read more

Gold Certificate

A gold certificate is a piece of paper that entitles the bearer to a certain amount of actual gold. From 1863 to 1933, the U.S. Read more

Gold Fix

A gold fix occurs when the The London Gold Market Fixing Ltd.sets the price of gold. Read more

Gold Fund

A gold fund is an exchange-traded fund (ETF) or mutual fund that invests in gold. For example, let's assume that John wants to invest in gold. Read more

Gold Option

A gold option gives the holder the right, but not the obligation, to purchase or sell a specific quantity of gold at a specified strike price on the option's expiration date. Options are derivative instruments, meaning that their prices are derived from the price of another security. Read more

Gold Reserve Act of 1934

The Gold Reserve Act of 1934 nationalized gold and fixed the price of gold in terms of U.S.dollars. Read more

Gold-Silver Ratio

The gold-silver ratio is measure of how many ounces of silver it takes to buy an ounce of gold. The formula for the gold-silver ratio is: Gold-Silver Ratio = Price of Gold per Ounce / Price of Silver per Ounce For example, let's assume that the price of gold is $1,500 an ounce today. Read more

Goldbrick Shares

Goldbrick shares are shares of stock that appear valuable but are actually worthless or worth very little. For example, let's assume that Company XYZ is a tech company with growing revenues but growing losses. Read more

Golden Cross

In the trading world, a golden cross occurs when a stock's short-term moving average rises above its long-term moving average. For example, let's assume that Company XYZ’s 15-day moving average has been about $14 per share. Read more

Goldman Sachs Commodity Index (GSCI)

The Goldman Sachs Commodity Index (GSCI) is a commodities index now owned by Standard & Poor's. S&P acquired the index from Goldman Sachs on February 2, 2007 and renamed it the S&P GSCI. Read more

Good This Month

Good this month refers to a type of trading order is automatically canceled if it is not filled by the end of the month in which the client makes the order. For example, let's assume an investor wants to sell 100 shares of Company XYZ at $25 per share or better. Read more

Good This Week

Good this week is a type of trade order that is automatically canceled if it is not filled by the end of the week in which the client makes the order. For example, let's assume an investor wants to sell 100 shares of Company XYZ at $25 per share or better. Read more

Good Through

A good through order is a trade order with a deadline.Usually, it is a stop loss or limit order.  Let's assume you want to buy 100 shares of Company XYZ, but you don't want to pay more than $5 per share for the stock. Read more

Good Til Cancelled (GTC)

Good til Cancelled, or GTC, is used to refer to an order to buy or sell a stock at a set price that remains in effect until the investor cancels the order or the trade is completed. When an investor places an order for a trade, he can specify that the order should remain in effect until a specific condition is met. For example, if the investor has a stock priced at $10 per share, but he wants to sell if the stock moves to $15, then the Good til Cancelled order will stand until that condition is met, unless the investor intervenes and cancels the instruction. If the stock reaches $15 per share, under the GTC order, the shares will be sold. Read more

Gordon Growth Model

The Gordon Growth Model (GGM) is a version of the dividend discount model (DDM).It is used to calculate the intrinsic value of a stock based on the net present value (NPV) of its future dividends..  The Gordon Growth Model is used by investors to determine the relationship between valuation and return. Read more

Gray Market

In the investing world, a gray market exists when people begin trading shares that have not been issued yet.In the business world, a gray market is the novel but not always illegal process of obtaining goods or services. Read more

Green Shoe Option

A green shoe option is a clause contained in the underwriting agreement of an initial public offering (IPO).Also known as an over-allotment provision, it allows the underwriting syndicate to buy up to an additional 15% of the shares at the offering price if public demand for the shares exceeds expectations and the stock trades above its offering price. Read more

Gross Interest

Gross interest is the amount of interest an account or investment earns before deducting taxes, fees or other charges.It is expressed as a percentage. Read more

Growth At a Reasonable Price (GARP)

Growth at a reasonable price (GARP) is an investment strategy that combines tenets of both growth and value investing by finding companies that show consistent earnings growth but don't sell at overly high valuations.  The term was popularized by legendary investor Peter Lynch. A fundamental formula for finding GARP is the price/earnings growth ratio (PEG). Read more

Growth Company

A growth company is characterized by a rate of growth higher than that of the overall economy. Growth companies generate consistently high levels of earnings, and place greater weight on reinvesting earnings in continued expansion. Read more

Guaranteed Death Benefit

A guaranteed death benefit is a portion of an annuity that allows the investor's beneficiaries to receive a minimum amount of death benefits.  Let's say Jane Doe bought an annuity for $500,000 that has a guaranteed death benefit. Read more

Guaranteed Investment Contract (GIC)

A guaranteed investment contract (GIC) is an agreement between a contract purchaser and an insurance company whereby the insurance company provides a guaranteed rate of return in exchange for keeping a deposit for a fixed period of time.  Let's assume Company XYZ buys a GIC from the ABC Insurance Company on behalf of the employees enrolled in the Company XYZ pension plan.ABC Insurance Company guarantees the return of Company XYZ's original investment and pays either a fixed or variable rate of interest until the end of the contract. Read more

H-Shares

H-shares are shares of Chinese companies that are listed on the Hong Kong Stock Exchange. Hong Kong is a "special administrative region" of China. Read more

Half Stock

A half stock has a par value that is 50% of what is considered normal. Let's assume the par value of a share of preferred stock is usually $100. Read more

Hard Money

Hard money is a broad term used in connection with currency and transfer payments. Hard money has two separate meanings. Read more

Hard-Coded Stock

Hard-coded stock has a unique identifier (a "ticker symbol") assigned to it by a registered exchange. Stocks traded on a registered exchange (for example, the New York Stock Exchange) are represented for easy reference by an alphabetic abbreviation. Read more

Healthcare Sector

The healthcare sector is the sector of the economy made up of companies that specialize in products and services related to health and medical care. The healthcare sector includes publicly-traded companies that power all dimensions of the healthcare industry. Read more

Heavy

In the investing world, heavy refers to a security whose price can't seem to rise. Let's say Company XYZ has been trading between $12 and $15 a share for the last six months despite two quarters of good earnings. Read more

Held at the Opening

There are a lot of reasons a security might be held at the opening: acquisition announcements, order problems or listing violations. Stock exchanges can stop trading at any time, but when they stop a security from trading before the beginning of the trading day, they are holding a security at the opening. Read more

High Flier

A high flier is stock that has risen very quickly. Let's say Company XYZ rises 45% in five days -- well ahead of the market's rise of 10% over that time. Read more

High Frequency Trading (HFT)

High frequency trading (HFT) is a computerized trading strategy used to exploit fleeting market inefficiencies.These ultra-short-term positions can be in a wide range of assets: stocks, options, futures, currencies, exchange-traded funds (ETFs), and virtually any other asset that can be traded electronically. Read more

Hybrid Security

A hybrid security is a security that has characteristics of one or more asset classes. For example, a convertible bond is a hybrid security because it is a bond that allows the holder to exchange the bond for other securities (usually the issuer's stock). Read more

Icahn Lift

An Icahn Lift is a rise in stock price associated with an investment by famed activist shareholder Carl Icahn. Carl Icahn was a corporate "raider" in the 1980s and made millions buying and selling companies. Read more

Iceberg Order

An iceberg order is a large order that has been split into several smaller orders to conceal the "real" size of the order. Let's assume Company XYZ is a $50 billion pension fund. Read more

Illegal Dividend

An illegal dividend is a dividend declared in violation of a company's charter or state laws.   For example, let's say Company XYZ has $20,000,000 of retained earnings. Read more

Immediate Payment Annuity

Immediate payment annuities (also called single-premium immediate annuities or SPIAs) are annuities that begin making payments to the owner immediately (within one year of purchase). An annuity is a contract whereby an investor makes a lump-sum payment to an insurance company, bank or other financial institution that in return agrees to give the investor either a higher lump-sum payment in the future or a series of guaranteed payments. Read more

Impact Day

An impact day is the day on which a company's secondary offering begins trading. Let's say Company XYZ is a public company and would like to sell additional shares in order to raise money to build a new factory. Read more

Income Funds

Income funds are mutual funds, ETFs or any other type of fund that seek to generate an income stream for shareholders by investing in securities that offer dividends or interest payments.The funds can hold bonds, preferred stock, common stock or even real estate investment trusts (REITs). Read more

Income Stock

An income stock is a stock in which a taxable payment is declared by a company's board of directors and is given to the shareholders from the current or retained earnings that occur, usually on a quarterly basis. For example, let's say that Company XYZ generated $40 million of cash this quarter. Read more

Index

An index is a statistical aggregate that measures change.In finance, they usually refer to measures of stock market performance or economic performance. Read more

Index Annuity

An index annuity is an annuity that pays a rate of return corresponding to a particular index, such as the S&P 500 Index. An annuity is a contract whereby an investor makes a lump-sum payment to an insurance company, bank or other financial institution that in return agrees to give the investor either a higher lump-sum payment in the future or a series of guaranteed payments. Read more

Indexed Annuity

An indexed annuity is an annuity that pays a rate of return corresponding to a particular index, such as the S&P 500 Index. An annuity is a contract whereby an investor makes a lump-sum payment to an insurance company, bank or other financial institution that in return agrees to give the investor either a higher lump-sum payment in the future or a series of guaranteed payments. Read more

Indicated Yield

Indicated yield is the dividend yield on a stock if the most recent dividend is annualized. The formula for indicated yield is:  Indicated Yield = (Most Recent Dividend x Number of Dividend Payments Per year) / Stock Price For example, assume a stock's most recent quarterly dividend was $2 and the stock currently trades at $100. Read more

Ingot

The Federal Reserve Bank of New York provides, among other things, gold storage for foreign governments and central banks.This gold is in the form of bars, which allows the bank to weigh it, stack it, and move it easily. Read more

Initial Margin

An initial margin, or initial margin requirement, is the amount an investor must pay in cash for securities before the broker will lend money to that investor to buy more securities.This borrowing gives the investor more purchasing power through leverage, and provides the opportunity to magnify returns (or deepen losses) depending on if the security increases (or decreases) in value. Read more

Initial Public Offering (IPO)

An initial public offering (IPO) refers to the first time a company publicly sells shares of its stock on the open market.It is also known as "going public." The proceeds from the sale of stock shares in an initial public offering provide the issuing company with capital. Read more

Insider Information

Insider information refers to confidential information about a company that has not been publicly disclosed. Given their position, managers and executives within a company are privy to information about a company's operations that is not available to the investing public. Read more

Insider Trading

Insider trading refers to the trading of securities by corporate insiders such as managers or executives.Insider trading can be legal or illegal depending on if the information used to base the trade is public.  Individuals who engage in illegal insider trading attempt to benefit from trades based on information about a company not yet made public. Read more

IPO Lockup

IPO Lockup refers to the period of time after a company initially goes public during which company insiders are not allowed to sell company shares. In an initial public offering (IPO) often receive stock or can exercise options and warrants that have been given during the non-public phase of the company's growth. Read more

IPO Lockup

IPO Lockup refers to the period of time after a company initially goes public during which company insiders are not allowed to sell company shares. In an initial public offering (IPO) often receive stock or can exercise options and warrants that have been given during the non-public phase of the company's growth. Read more

Issue

Issue refers to a legal entity -- i.e., government, corporation, or investment trust -- that develops, registers and sells securities to the investing public in order to finance its own operations. The most commonly issued securities are bonds, notes, commercial paper, common stock and preferred stock. Read more

Issued Shares

Issued shares include all shares that are currently owned by stockholders, company officials, and investors in the public domain.Issued shares do not include shares repurchased by a company. Read more

January Barometer

The January barometer posits that gains in the S&P 500 index for the month of January predict market gains for the entire year. The January barometer is based on the view held by many in the stock market that the performance of the S&P 500 index between the first and 31st of January reliably forecasts the stock market's performance for that year. Read more

January Effect

The January Effect refers to a pattern exhibited by stocks -- particularly small-cap stocks -- in which they've shown a tendency to rise during the last several trading days in December and then continue to rally throughout the first week of January. Several theories have been put forth to explain why the January Effect occurs. Read more

Job Lot

A job lot is a commodities futures contract where the underlying commodity is denominated in smaller amounts than a regular futures contract. Commodity futures contracts are agreements between a buyer and a seller to deliver a specific amount of a commodity (for example, precious metals, oil, corn, etc.) on a future date at a predetermined price. Read more

Jobber

Jobber is a slang term for an agent in business, particularly trading. In the broadest sense of the word, a jobber is an individual who makes a living from commissions he/she earns as an agent for transactions between two parties. Read more

Joint Supply

Joint supply is the simultaneous output of two or more products from a single process or material. Products that are generated in joint supply cannot be produced independently from one another. Read more

Kill

In the trading world, kill refers to half of a fill or kill (FOK) order, which is a client's instruction to his or her broker to either fill an order immediately and completely or cancel the entire order.   Let's assume you want to purchase 1 million shares of Company XYZ at $20 per share. Read more

Laggard

Laggard describes a stock that fails to perform as well as the overall market or a group of peers. In a broad sense, the term laggard connotes resistance to progress and a persistent pattern of falling behind. Read more

Large-Value Stock

A large-value stock is a stock whose intrinsic value is greater than its market value. Let's say John Doe is analyzing Company XYZ. Read more

Last-Sale Reporting

Last-sale reporting refers to the submission of trade details in the Nasdaq market. When a broker executes an order for a stock traded on the Nasdaq exchange, he or she must report it to Nasdaq no more than 90 seconds following its completion. Read more

Lead Underwriter

In the securities industry a lead underwriter is a company, usually an investment bank, that helps companies introduce their new securities into the market by leading a syndicate of investment banks to issue the securities. When a company decides it wants to issue stock, bonds, or other publicly traded securities, it hires an underwriter to manage what is a long and sometimes complicated process. Read more

Left-Hand Side

The left-hand side of a stock quote is the bid. A bid-ask is a quote that reflects the security’s bid price and its ask price. Read more

Level I Quote

A level I quote is the current best bid and offer for a security that trades on the Nasdaq or over-the-counter markets. Level I quotes do not disclose which market makers are bidding for or offering the security, whether there are limit orders on the security, or the size of potential trades at a particular price. Read more

Level II Quote

A level II quote is a set of real-time trading information, including the best bid/ask prices from market makers, for a security that trades on the Nasdaq or over the counter (OTC) markets. A level II quote for Company XYZ stock would include the real-time bid price, ask price, quote size, price of the last trade, size of the last trade, high price for the day, and low price for the day. Read more

Level III Quote

A level III quote is pricing information made available to registered Nasdaq market makers. A level III quote for Company XYZ stock would include the real-time bid price, ask price, quote size, price of the last trade, size of the last trade, high price for the day and low price for the day. Read more

Limit Order

Limit orders allow you to set a price at which you want to buy or sell a stock. Unlike market orders, your purchase or sale will go though only when the price reaches the level that you specify. For example, you want to buy ABC Inc. Read more

Listed Security

A listed security is a stock, bond, derivative, ETF, mutual fund, or other security that trades on a national exchange such as the New York Stock exchange or the Nasdaq. The Nasdaq, which stands for the National Association of Securities Dealers Automated Quotation system, is a computerized system for stock trading that does not have a physical trading floor. Read more

Little Board

The Little Board is a nickname for the American Stock Exchange (AMEX).The AMEX is a stock and options exchange in New York. Read more

Locked Market

A locked market, also called a daily trading limit, is the maximum gain or loss allowed on a derivative or currency in one trading day. Let's say a forward contract on Company XYZ stock has a trading limit of X. Read more

London Spot Fix

The London Spot Fix occurs when the members of the London Gold Pool (five banks) have a conference call and set the price per ounce for several metals (gold, platinum, silver and palladium). To perform a fix, the members essentially determine where supply meets demand for all of the buy and sell orders that the banks have on hand. Read more

Losing Your Shirt

Losing your shirt refers to an investment move resulting in a total loss of all financial assets. Meant to imply a degree of loss serious enough to warrant selling the shirt off your back, "losing your shirt" idiomatically expresses the complete loss of financial assets as a result of an unwise investment. Read more

Lot

A lot is a securities trade for a “standard” number of trading units.In stock trading, a lot is 100 shares (also called a "round lot"). Read more

Main Street

Main Street refers collectively to members of the general population who invest in the capital markets. Individuals and businesses that do not work for financial and investment companies are considered part of Main Street. Read more

Maintenance Margin

A maintenance margin is a limit after which a brokerage firm can make a margin call. A margin account is a loan from a brokerage firm. Read more

Majority Shareholder

A majority shareholder refers to a shareholder who owns over 50% of stock in a company. A single shareholder who maintains ownership of more than 50% of a company's outstanding stock qualifies as a majority shareholder. Read more

Make a Market

Making a market is a process whereby a person or brokerage house that is always prepared to buy and sell securities in order to provide liquidity to the markets. In order to make a market, a brokerage firm must be willing to hold a disproportionately large amount of a given security so that it can satisfy a high volume of market orders in a matter of seconds at competitive prices. Read more

Managed Distribution Policy

A managed distribution policy is an issuer's commitment to make a fixed periodic dividend payment.This means investors can buy shares of a security with the confidence that they will receive a reliable distribution instead of a constantly changing payment. Read more

Management Buyout (MBO)

A management buyout (MBO) occurs when the current management of a company acquires a controlling interest or the entire interest in a company from existing shareholders. For example, Company XYZ is a publicly traded company where management controls 30% the company's stock and the remaining 70% is stock floated to the public. Read more

Market Average

A market average is the general level of prices in a stock market as expressed by a basket of frequently traded stocks. A market average, best exemplified by the Dow Jones Industrial Average (DJIA) and the S&P 500 Index, is based on a basket of stocks, not all the stocks that trade on any given day. Read more

Market Breadth

Market breadth is a ratio that compares the total number of rising stocks to the total number of falling stocks. Market breadth, or stock-market breadth, is used in technical analysis to gauge the general direction of the stock market based on all traded stocks. Read more

Market Capitalization

Market capitalization refers to the value of a company's outstanding shares.  The formula for market capitalization is: Market Capitalization = Current Stock Price x Shares Outstanding It is important to note that market capitalization (sometimes called "market cap") is not the same as equity value, nor is it equal to a company's debt plus its shareholders' equity (although that is sometimes referred to as simply the company's capitalization).Let's assume Company XYZ has 10,000,000 shares outstanding and the current share price is $9. Read more

Market Correction

A market correction refers to a price decline of at least 10% of any security or market index following a temporary upswing in market prices. The stock market's value is always rising and falling. Read more

Market Depth

Market depth refers to a security's ability to tolerate the execution of large market orders without having a large effect on the security's price. Also called depth of market, market depth measures the number of units that must be traded before a stock or bond's price moves. Read more

Market Efficiency

The strong form of market efficiency essentially proclaims that it is impossible to consistently outperform the market, particularly in the short term, because it is impossible to predict stock prices.This may be controversial, but by far the most controversial aspect of maket efficiency is the claim that analysts and professional advisors add little or no value to portfolios, especially mutual fund managers (with the notable exception of those managing funds that take on greater risks), and that professionally managed portfolios do not consistently outperform randomly selected portfolios with equivalent risk characteristics. Read more

Market Identifier Code (MIC)

A market identifier code (MIC) is a four-letter or digit abbreviation that represents a specific stock market. MICs always begins with the letter "X," followed by a combination of three additional letters and/or numbers. Read more

Market If Touched (MIT)

Market if touched (MIT) is an order that will be executed only if a security reaches (touches) a specific price. Investors place an MIT order with a broker if they wish to delay buying or selling a security until its price becomes more advantageous. Read more

Market Maker

A market maker is a person or brokerage house that is always prepared to buy and sell securities in order to provide liquidity to the markets. By holding a disproportionately large number of a given security, a market maker is able to satisfy a high volume of market orders in a matter of seconds at competitive prices. Read more

Market Maker Spread

A market maker spread is the difference between the bid and ask prices offered by a market maker. The market maker spread is calculated by subtracting a market maker's ask price (price at which he/she is willing to sell a security) from the bid price (price at which he/she is willing to purchase a security). Read more

Market Momentum

Market momentum is the perceived strength of a positive or negative change in market prices. Market momentum is the ability of a market to sustain an increase or decrease in prices. Read more

Market On Close (MOC)

Market on close (MOC) is a market order that is executed at the latest possible time during a trading session. When a trader receives an MOC from a client, that trader may enter the order as late as he or she believes possible before the close of trading for that day. Read more

Market Overhang

Market overhang refers to a decline in a stock's price driven by expectations that the price will experience further declines. Market overhang is a phenomenon whereby investors put off buying shares of a particular stock based on a widely held belief that the stock's price will continue to decline. Read more

Market Proxy

A market proxy is a variable that theoretically simulates the behavior of the overall market. Analysts and investors use market proxies as part of statistical analyses and portfolio modeling. Read more

Market Psychology

Market psychology refers to the manner in which the market reflects its participants' collective emotional state. Peoples' perceptions of the market directly impact price movements and trends. Read more

Market Sentiment

Market sentiment is the general feeling about the climate of the market as expressed by the direction of market prices. Market sentiment, as the name suggests, describes the outlook of investors in a market. Read more

Market Swoon

A market swoon is an abrupt fall in the value of a market index. Derived from a term meaning "to faint" or "pass out," market swoon is a vernacular expression that describes a sudden and widespread loss in the value of stocks across an entire market. Read more

Market versus Quote (MVQ)

Market versus quote (MVQ) refers to the most recent market price at which a security was either bought or sold with regard to the latest bid and ask prices. MVQ is the difference between the last market price at which a security was bought or sold and the most recent bid and ask prices. Read more

Master Limited Partnership (MLP)

A master limited partnership (MLP) is a publicly traded limited partnership.shares of ownership are referred to as units. Read more

Mega Cap

Mega cap is a designation for any company with a market capitalization in excess of $200 billion. The largest companies in the world are referred to as mega caps because of their relative market size and value. Read more

Micro Cap

Generally speaking, a micro cap is a company worth between $50 million and $300 million. A company's market capitalization is the market value of all the company's stock. Read more

Mid Cap

A mid cap is generally described as a company with a market capitalization between $2 billion and $10 billion. Market capitalization is a measure of the market value of a company. Read more

Mine and Yours

"Mine" and "yours" are colloquial references to buy and sell transactions. Buy and sell trades are a cornerstone of the capital market. Read more

Minus Tick

Also known as a downtick, a minus tick occurs when a security sells at a price less than the preceding sale.A minus tick is the opposite of an uptick. Read more

Monday Effect

The Monday effect predicts that performance in equity markets will reflect the trends that were influencing the market toward the end of trading the previous Friday. The reasons for the Monday effect are not well understood. Read more

Mortgage-Backed Securities (MBS)

Mortgage-backed securities (MBS) are securities that represent an interest in a pool of mortgage loans. To understand how MBS work, it's important to understand how they're created. Read more

Naked Shorting

Naked shorting refers to the practice of shorting units of a given security in advance of ensuring whether or not they can be borrowed. Traders and investors engage in short selling in order to make a profit by leveraging units of a security borrowed from another investor's portfolio. Read more

Nano Caps

A nano cap is a company with the smallest market capitalizations in the market place, typically below $50 million. Market capitalization is a measure of the market value of the outstanding stock of the company in the market place.  It is calculated according to the following formula: [Number of Share Outstanding] X [Stock Price] = Market Capitalization For example, if a company has a share price of $.75 and ten million shares outstanding, it is in the category of nano-cap stock with a market capitalization of $7.5 million. Read more

Nasdaq

Nasdaq, which stands for the National Association of Securities Dealers Automated Quotation system, is a computerized system for stock trading. The Nasdaq does not have a physical trading floor; it is entirely computerized. Read more

Nasdaq 100 Index

The Nasdaq 100 index is one of the most frequently cited "technology" indexes. The Nasdaq 100 Index is composed of the 100 largest stocks (based on market capitalization) traded on the Nasdaq. Read more

Nasdaq Composite Index

The Nasdaq Composite is a broad market index that encompasses about 4,000 issues traded on the NASDAQ National Market.The index first started in February of 1971 with a base value of 100. Read more

National Best Bid and Offer (NBBO)

The National Best Bid and Offer (NBBO) is the highest bid and lowest offer price quoted on Nasdaq. For example, let's say the following people have buy orders (bids) for Company XYZ (these are the prices people are willing to pay for the stock): 100 shares for $20 per share 50 shares for $20.01 per share 150 shares for $19.79 per share 200 shares for $21 per share The following people have sell orders (offers) for Company XYZ (these are the prices people are willing to accept for their shares): 100 shares for $22 per share 50 shares for $21.50 per share 150 shares for $20.01 per share 200 shares for $21.25 per share The NBBO for Company XYZ is $21.00/$20.01. Read more

National Market System (NMS)

The national market system (NMS) is a system that regulates the disclosure and execution of trades across all exchanges.   Congress established the National Market System in 1975. Read more

Negative Obligation

In the trading world, negative obligation refers to a stock specialist's responsibility to avoid buying or selling shares for their own accounts in order to match orders.The New York Stock Exchange imposes this rule on its specialists. Read more

Net Interest Margin Securities (NIMS)

Net interest margin securities (NIMS) provide investors with cash flows from securitized mortgages.The first NIMS came into the marketplace in the mid-1990s. Read more

Net Liquid Assets

Net liquid assets are cash and securities that can be converted to cash quickly, minus current liabilities. The formula for net liquid assets is: Net Liquid Assets = Cash + Marketable Securities - Current Liabilities note that current liabilities are liabilities due within the next 365 days. Read more

Net Realizable Value (NRV)

The net realizable value (NRV) of an asset is the money a seller expects to receive for the sale of an asset after deducting the costs of selling or disposing of the asset. Let's assume Company XYZ needs to get rid of a widget maker. Read more

Net Short

In finance, net short refers to holding more short positions than long positions in a given security, sector or portfolio.Net short is the opposite of net long. Read more

Net Unrealized Appreciation (NUA)

Net unrealized appreciation (NUA) refers to the difference between the cost of a security or investment and the current market value of that security or investment. Let's assume Jane purchased 100 shares of Company XYZ for $3 per share 20 years ago. Read more

Net Volume

In trading, net volume refers to the difference between a security's uptick volume and its downtick volume. Let's assume that investors bought 4,000,000 shares of Company XYZ today (the uptick volume) and sold 3,000,000 shares today (the downtick volume). Read more

New Issue

A new issue is a never-before-offered security. Let's assume that Company ABC makes a public offering of shares in order to finance its business expansion. Read more

New York Board of Trade (NYBOT)

The New York Board of Trade (NYBOT), founded in 1870, is a physical commodity futures exchange located in New York City.The NYBOT trades options and futures on cotton, sugar, coffee, orange juice, and cocoa, as well as interest rates, market indexes, and currencies. Read more

New York Mercantile Exchange (NYMEX)

The New York Mercantile Exchange (NYMEX), founded in 1872, is the world's largest physical commodity futures exchange, headquartered in lower Manhattan.NYMEX handles trades worth billions of dollars in commodities that are bought and sold on the trading floor, as well as on overnight electronic trading computer systems for future delivery. Read more

New York Stock Exchange (NYSE)

The New York Stock Exchange (NYSE) is the oldest stock exchange in the United States, and it's located on Wall Street in lower Manhattan.It is the world's largest stock exchange by market capitalization of listed companies ($13.39 trillion as of March 2011). Read more

Numismatics

People who enjoy numismatics often have rare coins that can be quite valuable.But not all numismatics fans have to have money to keep collections. Read more

NYSE Holidays

The New York Stock Exchange (NYSE) is open Monday through Friday from 9:30 a.m.to 4:00 p.m. Read more

October Effect

The October Effect is the theory that stock prices will fall in the month of October. In general, investors create a self-fulfilling prophecy regarding the October Effect. Read more

Odd Lot

An odd lot is an order for anything less than 100 shares.This is the opposite of a "round lot," which are orders in multiples of 100 shares. Read more

Odd-Lot Theory

The odd-lot theory states that an increase in odd lot activity is a buy signal in a market. An odd lot is a group of shares that is not a multiple of 100 (100 shares is called a round lot). Read more

Off Board

The New York Stock Exchange is commonly referred to as the Big Board.Accordingly, "off board" refers to trades of stocks that occur outside major exchanges. Read more

Off-Floor Order

An off-floor order is an investor's request to a broker to buy or sell securities. An off-floor order is what many consider a typical order transaction. Read more

Oil Refinery

An oil refinery is a factory that turns crude oil into marketable products such as gasoline, jet fuel, lubricants and heating oils.  Refining oil is complicated, but generally the idea is to heat the crude oil, separate it out, and add things to the separated portions to formulate products. Read more

Oil Sands

Also called tar sands, oil sands are areas of the ground that contain a viscous form of oil called bitumen. Alberta, Canada, is famous for its oil sands, which are important sources of oil but require special extraction methods. Read more

One-Cancels-All (OCA)

A One-Cancels-All (OCA) order is a group of limit orders linked together within a brokerage account.If one order is executed, all other linked orders are automatically canceled. Read more

One-Cancels-the-Other Order (OCO)

In trading, a one-cancels-the-other order is an instruction given when placing two orders simultaneously.If one part of an order on a security is executed, then the other part is canceled. Read more

One-Sided Market

One-sided markets can be volatile and very stressful for market makers.Market makers are obligated to facilitate trading in particular stocks even if doing so is inconvenient or less profitable. Read more

Open

In the stock markets, open refers to the beginning of the trading day or the price of a security at the beginning of the trading day. The New York Stock Exchange has the most famous opening bell. Read more

Open Order

An open order is an instruction to buy or sell securities that has not been executed or cancelled.  Another term used is "backlog order." An order may remain open when an investor places conditions on their transaction, such as a price minimum.   If the condition is not met (e.g.the stock has not yet reached the minimum amount requested by the investor), the order remains "open."   While a market order is executed immediately, an open order may take time to fill or may remain unfilled.  It is important for the investor to monitor market conditions and keep track of their open orders and be sure that each order should remain in effect and be filled over time. Read more

Opening Bell

Opening bell refers to the beginning of the trading day on an exchange.However, in the United States, only the New York Stock Exchange (NYSE) rings an actual bell every day. Read more

Opening Price

The open is the start of a new day, though it is important to note that that doesn't necessarily mean trading hasn't been going on right before the open.After-hours markets remain open as do other exchanges in other countries and time zones, which provides opportunity for the price to change right up until the open in many cases. Read more

Operating Netback

Operating netback is a measure used in the oil and gas industry to reflect the net profit on oil and gas after royalties, production, and transportation expenses.  The formula for operating netback is: Operating Netback = Price - Royalties - Production - Transportation Let's assume that Company XYZ drills for oil in the Gulf of Mexico.For every barrel of oil it sells, it must pay $5 in royalties, $5 in production costs, and $10 in transportation costs. Read more

Opportunity Cost

Opportunity cost is the return on an investment/opportunity you missed out on, compared to the return on the investment that you chose.To determine what was lost (or gained), opportunity cost may be calculated as a number or a ratio. Read more

Ordinary Dividend

An ordinary dividend is a dividend that is not eligible for capital gains tax. For example, let’s assume that John Doe holds 10,000 shares of Company XYZ stock, which pays $0.20 per year in dividends. Read more

Original Cost

Original cost is the total cost attributed to purchasing an asset. For accounting purposes, it is important to identify the original cost of an asset.  The original cost includes all costs associated with the purchase of an asset and putting it to use, including commissions, transportation, appraisals, and installation.  Original cost is used in valuing any type of asset, including real estate, equipment, or even securities (stocks and bonds). Read more

Outstanding Shares

Outstanding shares are common stock authorized by the company, issued, purchased and held by investors. Outstanding shares may also be referred to as shares outstanding, or issued shares. Read more

Over the Counter (OTC)

An over the counter security is traded through a dealer network rather than through a centralized, formal exchange (such as the NYSE, Nasdaq, or London Stock Exchange).Assets traded OTC are usually traded by private securities dealers who negotiate directly with buyers and sellers.  The primary reason a stock is traded "over the counter" is because the company may be too small to meet the formal exchange listing requirements. Read more

Over the Counter Market (OTCBB)

The over-the-counter (OTC) market, also known as the over-the-counter bulletin board (OTCBB), is a quotation service offered by the National Association of Securities Dealers (NASD) that provides quote and volume information for securities traded over the counter (that is, securities not listed on the Nasdaq, NYSE, AMEX or other exchanges).The OTC market began operating in June 1990, after the Penny Stock Reform Act of 1990 required the SEC to establish an electronic quotation system for those stocks. Read more

Overweight

Overweight refers to a given security which has been disproportionately allocated in an investment portfolio relative to a benchmark.It is the opposite of underweight. Read more

Pacific Exchange (PCX)

The Pacific Exchange (PCX) was a stock exchange based in San Francisco and Los Angeles. Founded in 1882, the PCX used to be a trading floor in San Francisco. Read more

Painting the Tape

In the finance world, painting the tape means to trade securities in a manipulative way in order to influence the reported trading data for those securities. Let's say traders A and B want more people to buy the stock of Company XYZ. Read more

Pairing Off

Pairing off occurs when a brokerage firm buys and sells short and long positions that offset one another and then settles those trades in cash. Let's say Brokerage XYZ agrees to sell 100 shares of Company 123 to Brokerage ABC for $15,000. Read more

Pairoff

A pairoff, also known as "pairing off," occurs when a brokerage firm buys and sells short and long positions that offset one another and then settles those trades in cash. Let's say Brokerage XYZ agrees to sell 100 shares of Company 123 to Brokerage ABC for $15,000. Read more

Palladium

Palladium is a metal used in manufacturing electronics and other items. Palladium is a rare metal that is silvery white. Read more

Panic Buying

Panic buying refers to the purchase of a stock immediately after a sudden, substantial price increase. Investors watching the market may jump to buy a stock immediately after a major move in the stock's price, hoping to take advantage of the surge in the price. Read more

Panic Selling

Panic selling is the sudden and widespread selling of a security. Panic selling may occur after a sudden, sharp decline in the price of a security.  Panic selling does not involve an evaluation of the fundamentals of a stock or market conditions.  Rather, it is usually the result of an emotional reaction and fear, causing sellers to want to get out of an investment without regard to the price or cost. Read more

Paper Trading

Paper trading is simulating market trading (buying and selling).  Investors can practice trading by simulating securities purchases and sales without actually executing transactions with money.  Paper trading can be done using real-time online market simulators, allowing investors to practice placing orders, executing transactions, monitoring market and portfolio activities, all without the risk of losing (or gaining) money. Read more

Participating Preferred Stock

Participating preferred stock gives stock holders priority over common stock holders for payment of dividends and proceeds from liquidation of a company. The capital stock structure of a company is typically divided into two main groups: common stock (usually ownership by management, employees, and directors with voting rights), and preferred stock. Read more

Pasternak's Normalized Net Asset Value

Pasternak's normalized net asset value (NNAV) allows investors to compare master limited partnership (MLP) funds with each other and with non-MLP closed-end funds. Pasternak's NNAV was created by Carla Pasternak, an income-investing expert at StreetAuthority.com.  Pasternak's NNAV is calculated according to the following formula: Pasternak's NNAV = Net Asset Value + Deferred Tax Liability Investing in MLPs can be incredibly complicated, especially around tax time. Read more

Penny Stock

Penny stocks are small-cap equity shares that trade in the over-the-counter market for prices between several cents and ten dollars. Penny stocks are usually issued by small or micro-cap companies to raise capital. Read more

Petrocurrency

Petrocurrency, also commonly referred to as "petrodollars," is cash -- usually U.S.dollars -- resulting from the sale of oil and deposited by oil exporters into foreign (usually American) banks. Read more

Philadelphia Gold and Silver Index

The Philadelphia Gold and Silver Index (Nasdaq: XAU) is traded on the Philadelphia Stock Exchange and is made up of 16 precious metal mining companies. The Philadelphia Gold and Silver Index is made up of gold and silver mining company stocks and is not to be confused with physical gold and silver. Read more

Philadelphia Semiconductor Index (SOX)

The Philadelphia Semiconductor Index, or SOX, is an index created by and traded on the Philadelphia Stock Exchange.It was introduced on December 1, 1993 with a split-adjusted value of 100. Read more

Pink Sheets

Pink Sheets is a publication compiled daily by the National Quotation Bureau that shows over-the-counter (OTC) stocks' bid and ask prices and the dealers that exchange them.  The companies listed on the pink sheets generally do not meet meet the standards required to trade on formal exchanges (such as the NYSE, Nasdaq, AMEX)  due to their small size or inability to file with the SEC.With a few exceptions, Pink Sheet stocks are small, thinly-traded issues that often carry a great deal of risk. Read more

Pit Broker

A pit broker, also known as a floor broker, is an employee of a brokerage firm whose job is executing orders on the floor of a stock or commodity exchange on behalf of clients. A pit broker receives an order from a client through the brokerage firm and trades the security with other brokers on the exchange floor.   Based on interactions on the exchange floor with specialists in the specific securities being traded and bidding with other brokers or traders, the pit broker attempts to get the most competitive market rates available for his or her client.  When the pit broker executes a transaction on behalf of the client, he or she notifies the client through the client's registered representative at the brokerage firm. Read more

Political Risk

Political risk is the risk of financial, market or personnel losses because of political decisions or disruptions.Also known as "geopolitical risk." There are many environmental factors facing business. Read more

Ponzi Scheme

A Ponzi scheme is an investment scam that pays existing investors out of money invested by new investors, giving the appearance of earnings and profits where there are none.Ponzi schemes are also known as pyramid schemes. Read more

Pork Bellies

Pork Bellies are a major commodity traded on the Chicago Mercantile Exchange. Pork bellies are a commodity of pork products traded as a futures contract on the Chicago Mercantile Exchange since 1961. Read more

Portfolio Management

Portfolio management refers to the professional management of securities and other assets.Also referred to as "asset management" and "wealth management." Portfolio management includes a range of professional services to manage an individual's and company's securities, such as stocks and bonds, and other assets, such as real estate. Read more

Position Limit

Position limit refers to the ceiling placed on the number of contracts on a single security which may be held by an individual or cooperative group. Determined by the Commodity Futures Trading Commission (CFTC), position limits place an upper limit on the number of contracts which an investor or combined group of investors may hold for a specific security. Read more

Pre-Market Trading

Pre-market trading is the trading that occurs on electronic market exchanges before regular stock market trading hours begin. In the U.S., pre-market trading occurs between 8:00 a.m. Read more

Preferred Shares

Preferred shares represent an ownership stake in a company -- in other words, a claim on its assets and earnings.However, as the term suggests, "preferred" shares carry certain advantages. Read more

Preferred Stock

Like shares of common stock, shares of preferred stock represent an ownership stake in a company -- in other words, a claim on its assets and earnings.However, as the term suggests, "preferred" stock carries certain advantages. Read more

Preservation of Capital

Preservation of capital is an investment strategy that focuses on preventing any losses of an investment's face value. A preservation of capital is a conservative investment philosophy that invests in very safe securities, such as Treasuries (T-Bills), which will not lose any value and only gain enough to counter the effects of inflation. Read more

Previous Close

Previous close shows what the price of a stock or market index was when the market closed on the previous trading day. Over the course of a day as securities are traded, a stock's price will rise and fall based on any number of factors. Read more

Price Band

A price band is a price floor and a cap between which a seller will let buyers place bids on a security, usually during an initial public offering (IPO) For example, let's say Company XYZ is going to go public.As part of the IPO process, Bank ABC (Company XYZ's investment bank) sets a price band on its shares of $45 to $50 per share. Read more

Price Basing

Price basing is a way to use the prices of futures contracts to determine the retail prices of commodities. Price basing happens all the time in the media when it comes to gasoline prices. Read more

Price Change

In the stock market, a price change is the difference in trading prices from one period to the next or the difference between the daily opening and closing prices of a share of stock. For example, let's say Company XYZ shares opened at $25 this morning and closed at $24. Read more

Price Continuity

Price continuity occurs when the number of transactions (volume) does not in and of itself affect a security's price. In trading, buyers offer bid prices and sellers offer asking prices. Read more

Price per Flowing Barrel

Price per flowing barrel is a measure of an oil and gas company's valuation as compared to the number of barrels of oil or gas it produces. The formula used to calculate a company's price per flowing barrel is: Price per Flowing Barrel = (Market Capitalization + Debt - Cash) / Barrels Produced per Day  Let's assume oil company XYZ produces 50,000 barrels per day of oil per day and its market capitalization (shares outstanding x share price) is $45,000,000. Read more

Price Ratchet

A price ratchet is a trigger that changes the price of a security. For example, let's assume that the United States government defaults on interest payments on its Treasury securities. Read more

Price Risk

Price risk is simply the risk that the price of a security will fall. Earnings volatility, unexpected financial performance, pricing changes, and bad management are common factors in price risk. Read more

Price Target

A price target is an analyst's expectation for the future price of a security.  For example, let's assume that the Jones-Smith investment bank provides research reports about Company XYZ stock.The Jones-Smith analyst studies the industry, Company XYZ's competitors, Company XYZ's products and management, etc. Read more

Price Tension

Price tension refers to the presence of a large bid-ask spread. Let's assume you are watching Company XYZ stock. Read more

Price Transparency

Price transparency is the ability to know all of the bid prices, ask prices, and trading quantities for a given stock, good, or service at any point in time. For example, NYSE quotes have limited price transparency. Read more

Price-Weighted Index

A price-weighted index is an index in which the member companies are weighted in proportion to their price per share, rather than by number of shares outstanding, market capitalization or other factors.The Dow Jones Industrial Average (DJIA) is a price-weighted index. Read more

Profit Taking

Profit taking is the act of selling stock to take advantage of a sharp rise in the stock price. Occasionally, investors will sell off their shares in a stock after the stock rises sharply.  It may occur as a result of an event that triggers a rise in the stock or when a stock just follows the broad currents of a bull market.  It may also occur when traders are looking for the opportunity to sell and even a small surge in the market brings new buyers willing to pay sellers' prices. Read more

Program Trading

Program trading refers to automated trading by investors using computer programs.  Program trading is used by institutional investors for large-volume trades through direct connections with the market's computers.Trades are automatically triggered based on reaching a threshold point on a specific market index, for example. Read more

Protective Put

An investor employs a protective put strategy when he purchases a put option of a stock of which he already owns shares. A protective put is usually used by an investor who has unrealized gains on a stock. Read more

Protective Stop

A protective stop is a stop-loss order put in place to guard against losses beyond a specific threshold. Investors often have an idea of how much of their investment they're willing to lose. Read more

Public Limited Company (PLC)

A public limited company is a company which offers equity shares with limited liability to public investors on a registered exchange. More common in the U.K., public limited companies (PLC) offer shares of stock to any interested investor. Read more

Public Offering

A public offering is a process of issuing new securities for sale to the public.   For example, let’s say the founders of Company XYZ want to sell half of their shares. Read more

Public Offering Price (POP)

Public offering price (POP) refers to the price at which shares of a company are issued in an initial public offering (IPO) When a company issues stock for the first time as part of an IPO, the underwriting investment bank is responsible for determining the stock's public offering price (POP).The POP is based on numerous variables including, but not limited to, the stock prices of similarly-valued companies in the same industry, the issuing company's growth potential and the issuing company's current value as expressed by its financial statements. Read more

Pump and Dump

Pump and dump refers to an investment scam wherein optimistic, but untrue, statements are publicized about a specific stock in order to artificially increase the price through higher demand. In a pump and dump scenario, an investor or group of investors holding a long position in a low-price, small-cap stock unfoundedly publicize the stock as a promising opportunity. Read more

Pyramiding

Pyramiding refers to purchasing additional units of a security with unrealized profits on open trades. Investors engage in pyramiding in order to increase their portfolio position using the paper profits from the rising value of open trades in order to purchase additional units of securities. Read more

Q Ratio

The Q ratio is a measure of how overpriced or underpriced the whole stock market is.It is based on Tobin's Q, which measures a firm's assets in relation to its market value. Read more

Quadrix

Quadrix is a system that calculates stock values. The Quadrix system is trademarked by the Horizon Publishing Company. Read more

Quadruple Witching

Quadruple witching refers to the third Friday of every March, June, September and December.On these days, market index futures, market index options, stock options and stock futures expire, usually resulting in increased volatility. Read more

Qualified Dividend

A qualified dividend is a dividend eligible to incur capital gains tax. For example, let's assume that John owns 10,000 shares of Company XYZ stock, which pays $0.20 per year in dividends. Read more

Qualified Pre-Retirement Survivor Annuity (QPSA)

A qualified pre-retirement survivor annuity (QPSA) is a company-sponsored death benefit that provides the employee's surviving spouse with an annuity payment should the employee die before receiving retirement benefits. For example, let's assume that John works at Company XYZ, which has a pension plan. Read more

Qualified Special Representative Agreement (QSR)

A qualified special representative agreement (QSR) is a National Securities Clearing Corporation (NSCC) agreement that allows one broker-dealer to send a trade to a clearinghouse on behalf of another broker-dealer. For example, let's assume that Brokerage XYZ handles trades for high net-worth clients. Read more

Qualified Stock Option (QSO)

A qualified stock option is a type of company share option granted exclusively to employees. It confers an income tax benefit when exercised. Read more

Quantitative Trading

Quantitative trading is an investment strategy based on picking investments solely on mathematical analysis. Let's say John Doe runs the XYZ Fund. Read more

Quarterly Income Preferred Securities (QUIPS)

Quarterly income preferred securities (QUIPS) are hybrid, preferred-stock-like securities issued by Goldman, Sachs & Co. QUIPS are shares of preferred stock issued by a special purpose foreign or domestic LLC. Read more

Quotation

Quotation is the long form of quote, which refers to stock quote.A stock quote is an estimate of price or a price at which one party is willing to buy or sell a certain number of shares of stock from the other. Read more

Quote

A quote is an estimate of price or a price at which one party is willing to buy or sell from the other.In the trading markets, a quote is the bid and ask price for a security. Read more

Quote Stuffing

Quote stuffing occurs when traders place a lot of buy or sell orders on a security and then cancel them immediately afterward, thereby manipulating the market price of the security.Manipulating the price of shares in order to benefit from the distortions in price is illegal. Read more

Quoted Price

Quoted price refers to stock, bond or other security quotes.A stock quote is an estimate of price or a price at which one party is willing to buy or sell a certain number of shares of stock from the other. Read more

Rally

A rally is a period of hours, days, weeks, months, or sometimes years during which securities prices consistently rise.   Identifying and measuring rallies is both art and science. Read more

Random Walk Theory

The random walk theory states that market and securities prices are random and not influenced by past events.The idea is also referred to as the "weak form efficient-market hypothesis."   Princeton economics professor Burton G. Read more

Real-Time Quote

A real-time quote is a stock quote that feeds directly from the exchange and does not have a time delay.   A stock quote is an estimate of price or a price at which one party is willing to buy or sell a certain number of shares of stock from the other. Read more

Rebalancing

Rebalancing is the adjustment to an investment portfolio that realigns the investor's holdings with their targeted allocation of assets. Investors often use an asset allocation method in their investment strategies. Read more

Rebate

In stock trading, a rebate occurs when a short seller has taken a short position in a stock that then pays a dividend before the settlement date.The rebate is the dividend that the short seller is required to pay to the owner of the stock.    In short selling, the trader borrows the stock and then sells it, expecting to buy it back and return it to the lender at the settlement date. Read more

Recession-Proof

A recession-proof investment does well or at least remains stable during economic contractions. Defensive stocks are the most famous kind of recession-proof investments, because they generally are able to weather economic dips. Read more

Record Date

The record date is the date used to determine the holders of a security who are entitled to receive a dividend or distribution. When a company is preparing to distribute dividends to shareholders, it uses a list of shareholders who are holding the security on a particular date. Read more

Record High

A record high is the highest price a security achieves in a given time period. Let's look at this random chart for Cisco Systems (CSCO). Read more

Record Low

A record low is the lowest price a security achieves in a given time period.   For example, let's look at this random chart for Cicso Systems (CSCO). Read more

Reserve Report

A reserve report is filed by companies in the oil and gas industry.It estimates remaining quantities of oil and gas (reserves) expected to be recovered from existing properties. Read more

Restricted Stock

Restricted stock is stock that the owner cannot sell immediately or under certain conditions. People usually come to own restricted stock through an IPO or a merger. Read more

Retracement

A retracement is a temporary reversal in the movement of a stock's price.  Let's say the stock of company XYZ increased 20% over the course of a day.Anyone who has ever looked at a trend line knows that the price is unlikely to rise continuously throughout the course of the day. Read more

Retracement

A retracement is a temporary reversal in the movement of a stock's price.  Let's say the stock of company XYZ increased 20% over the course of a day.Anyone who has ever looked at a trend line knows that the price is unlikely to rise continuously throughout the course of the day. Read more

Reverse Split

A reverse split is a consolidation of a corporation's shares according to a predetermined ratio. Company XYZ wants to conduct a reverse stock split. Read more

Risk-Free Asset

A risk-free asset is an asset that provides a virtually guaranteed return.  Treasury bills are the most common example of risk-free assets.Because the U.S. Read more

Road Show

A road show is a presentation made about an investment opportunity usually given by a representative of a company at the offices of potential investors.  Businesses must travel and meet with potential investors, partners and customers to gain their support.One of their key marketing tools is a powerful, succinct presentation of the business case for the product or investment opportunity. Read more

Round Lot

A round lot is a securities trade for 100 trading units.In stock trading, a round lot is 100 shares. Read more

Royalty Trust

A royalty trust is a type of corporation created to act as the owner of the mineral rights to wells, mines and similar properties.  It exists only to pass income generated from the sale of the property's assets (gold, oil, etc.) to shareholders.No income tax is paid at the corporate level as long as the bulk of income (at least 90%) is passed-through to shareholders in the form of distributions or dividends.  Royalty trusts are most common in the U.S. Read more

Russell 1000 Index

The Russell 1000 Index is designed to track the performance of most major large-cap companies.Though it is not usually cited by individual investors, it is the third most widely used benchmark by money managers (behind the S&P 500 and the Russell 2000). Read more

Russell 2000 Index

The Russell 2000 index measures the performance of the 2,000 smallest companies in the Russell 3000 index.The Frank Russell Company created the index in 1984, and it was one of the first broad benchmarks of the U.S. Read more

S&P 500 Index

The S&P 500 Index is a diverse index that includes 500 American companies that represent over 70% of the total market capitalization of the U.S.stock market.  First developed in 1923, the index initially contained 233 stocks. Read more

S&P 600 Small Cap Index

The S&P Small-Cap 600 Index consists of 600 small-cap stocks.  A small-cap company is generally defined as a stock with a market capitalization between $300 million and $2 billion.The S&P 600 is not to be confused with the S&P 500, which is composed of large-cap stocks. Read more

S&P Europe 350 Index

The S&P Europe 350 index is made up of 350 individual European company stocks drawn from 17 major European markets and represents approximately 70% of the region's market capitalization. The S&P Europe 350 index is comprised of the S&P Euro, the S&P Euro Plus, and the S&P United Kingdom. Read more

S&P Frontier Broad Market Index

The S&P Frontier Broad Market Index (also known as the S&P Frontier BMI) measures the performance of markets in 34 small countries.The individual country indices that make up the S&P Frontier BMI include all publicly-listed equities that make up more than 80% of the market capitalization available in each market. Read more

S&P Global 1200 Index

The S&P Global 1200 index is comprised of seven indices with stocks from 29 representative countries.The index is used as a benchmark for global equity markets. Read more

S&P Global Broad Market Index

The S&P Global Broad Market Index (also known as the S&P Global BMI) is a widely encompassing, rules-based index that measures global stock market performance. The S&P Global BMI covers approximately 11,000 companies from 46 countries and is converted daily into seven different currency amounts: USD, Euro, GBP, JPY, AUD, CAD and LCL. Read more

S&P Global Equity Index Series

The S&P Global Equity Index series is comprised of three indices: The S&P Frontier Broad Market Index, The S&P Global Broad Market Index and the S&P/IFCI. The S&P Global Equity Index series is designed to include the most liquid and investable stocks in emerging, frontier and developed markets. Read more

S&P Mid-Cap 400 Index

The S&P Mid-Cap 400 Index tracks a diverse basket of medium-sized U.S.firms. Read more

S&P/IFCI Composite

The S&P/IFCI Composite is a liquid and investable leading emerging market index.It is a subset of the S&P Emerging Plus Broad Market Index, with the addition of South Korea. Read more

Same-Day Substitution

Same-day substitution is the act of withdrawing money from and adding money to a margin account on the same day.   Let's assume you want to buy 500 shares of Company XYZ for $5 per share and 500 shares of Company ABC for $5 per share but don't have the $5,000 necessary to do so -- you only have $2,500. Read more

Samurai Market

Samurai Market is slang that refers to the Japanese stock market. People in the United States are the most common users of this term. Read more

Santa Claus Rally

A Santa Claus rally is a surge in the stock market that occurs between Christmas and New year's Day.  Over time, the stock markets have rallied between December 25th and January 1st more often than they have not.There is no clear explanation for this phenomenon; however, it may result from the investment of holiday bonuses, investments made in advance of the closing of the fiscal quarter, or in anticipation of the rise in the markets usually experienced during January each year when business resumes and demands are higher. Read more

Saturday Night Special

Saturday night specials are illegal rules that give preferential treatment to some shareholders and pressure others during tender offers. Let's assume Company XYZ wants to purchase the common shares of Company 123. Read more

Scale Order

A scale order is a group of limit orders that have increasing or decreasing prices. Let's say John Doe thinks the price of Company XYZ will fall during the trading day tomorrow, and not all at once. Read more

Scalpers

The term scalpers refers to securities traders who manipulate the market.  Scalpers may also refer to traders who earn relatively small amounts of money from the arbitrage between bid prices and ask prices on securities. In the case of market manipulation, scalpers may buy a security, then recommend the security to investors and take a profit on the difference between their price and the sales price once the market demand raises the price. Read more

Scalping

Scalping is a form of day trading that involves earning small profits on large volumes of securities. A day trader is a very active securities trader who holds securities for a very short time (generally one day or less). Read more

Seasoned Issue

A seasoned issue, also called follow-on offering or secondary offering, is a sale of stock by a company or by an existing shareholder of a company that is already publicly held. Let's say Company XYZ is a public company and would like to sell additional shares in order to raise money to build a new factory. Read more

Seat

A seat is a license to trade on the floor of the New York Stock Exchange, either as an agent for someone else or for his or her own personal accounts (in which case, the person is called a floor trader).   The New York Stock Exchange (NYSE, also known as the Big Board) is the first and most popular stock exchange in the world. Read more

Secondary Offering

A secondary offering refers to a large-scale market sale of a company's shares by a major shareholder. Also called a secondary distribution, a secondary offering is distinguished from an initial public offering (or IPO) in that the proceeds generated by the sale of the shares goes to the shareholder rather than the issuing company. Read more

Sector Rotation

Sector rotation is a strategy based on moving investments across business sectors to take advantage of cyclical trends in the overall economy. The basic idea behind sector rotation is that the economy operates in cycles. Read more

Secular Market

A secular market is a market that is for all intents and purposes captive to broader economic forces or traumas.   Let's say the United States experiences a massive terror attack on its own soil, similar to September 11, 2001. Read more

Sell-Off

A sell-off is the rapid selling of a security leading to a sharp decline in its price.  When a substantial number of shareholders sell a specific stock, it is called a sell-off. Generally speaking, prospective buyers sit on the sidelines until the conditions that caused the sell-off to occur are over. Read more

Settlement Price

Settlement price refers to the market price of a derivatives contract at the close of a trading day. Also called the closing price, the settlement price is the price at which a derivatives contract settles once a given trading day has ended. Read more

Shadow Pricing

Shadow pricing is the practice of allotting a dollar-value to an abstract commodity for the purpose of cost-benefit analysis. Cost-benefit analysis takes into account abstract commodities (also called intangible assets) not normally purchased or sold in a marketplace. Read more

Share Classes

Share classes refers to the division of a company's equity into different classes, which have different rights. Companies generally set forth the distinguishing features of their share classes in their corporate charter and bylaws. Read more

Share Purchase Right

A share purchase right is an instrument that entitles the holder to purchase a specified number of shares at a specified price. Offered by an issuing company, a share purchase right gives current shareholders the opportunity to purchase a specific quantity of shares at a favorable discount without obligation. Read more

Shareholder Value Added (SVA)

Shareholder value added (SVA) represents a company's worth to shareholders in the absence of liabilities and capital costs. Shareholder value added (SVA) is expressed as a company's capital costs from stock and bond issues subtracted from its net operating profit after tax (NOPAT). Read more

Shares Outstanding

Shares outstanding refers to all shares currently owned by stockholders, company officials, and investors in the public domain, but does not include shares repurchased by a company. Shares outstanding is also referred to as outstanding shares, or issued shares. Read more

Shelf Offering

A shelf offering is a sale of stock by a company over time. Let's say Company XYZ is a public company and would like to sell shares in order to raise money to build a new factory. Read more

Short Covering

Short covering refers to the practice of purchasing securities to cover an open short position.To close out a position, a trader purchases the same number and type of shares that he sold short. Read more

Short Interest

Short interest is the number of shares or units of a security that have been sold short and not yet covered or repurchased.It is typically expressed as a percentage of the total securities outstanding. Read more

Small-Cap Stock

Small-cap stock refers to a company with a market capitalization (calculated by taking a firm's current share price and multiplying that figure by the total number of shares outstanding) near the low end of the publicly traded spectrum. The boundaries that separate these classifications are not clearly defined and can vary according to the source.Generally, though, the term "small-cap" is used to describe companies with market values between $300 million and $2 billion. Read more

Socially Responsible Investment (SRI)

Socially responsible investment (SRI) is an investment strategy that seeks both financial return and social good. Investment strategies are usually focused on returns on investment, seeking to maximize the profits for the investor.  In pursuing a profit-driven strategy, investors seek the highest returns, irrespective of what the company does.   Some investors weigh the social costs of their investments along with profits.  issues, such as environment, consumer protection, human rights, fair trade and diversity, are important guides for socially responsible investors. Read more

Sour Crude

Sour crude is a type of unrefined oil that contains sulfur.  It is difficult to refine and usually fetches a lower price. Crude oil is considered sour when it has more than 0.5% sulfur. Read more

Special Dividend

A special dividend, also known as an extra dividend, is a one-time distribution of corporate earnings to company shareholders, which usually stem from exceptional profits during a given quarter or period. Special dividends are typically disbursed in cash and tend to be a greater amount than the company’s standard dividend payment. Read more

Specific Risk

Specific risk is a discrete risk to which only a specific asset or type of asset is exposed.It is the opposite of systematic risk. Read more

Speculation

Speculation is a method of short-term investing whereby traders essentially bet on the direction an asset's price will move. Technically, anyone who buys or shorts a security with the expectation of a favorable price change is a speculator. Read more

Speculator

A speculator is a person or an entity that trades securities essentially as bets that the price will go up or down, and as such, typically has an above-average risk tolerance. Although one can argue that all investment is speculation, an acknowledged speculator will buy or sell a security solely to reap a typically short-term profit from the price movement of that security. Read more

Spot Market

Also called the cash market or the physical market, the spot market is where assets are sold for cash and delivered immediately. Spot markets differ from futures markets in that delivery takes place immediately. Read more

Spot Price

The spot price is the current market price at which an asset is bought or sold for immediate payment and delivery.  It is differentiated from the forward price or the futures price, which are prices at which an asset can be bought or sold for delivery in the future. On November 29, 2010, the spot price of gold was $1,367.40 per ounce on the New York Commodities Exchange (COMEX).  That was the price at which one ounce of gold could be purchased at that particular moment in time.  The spot price for a bushel of wheat was about $648 on the same day. Read more

Spot Secondary

A spot secondary is a secondary stock offering that doesn't require the company to register with the Securities and Exchange Commission (SEC). A spot secondary is generally a transaction with just one type of holder -- usually institutional investors -- and so it is not subject to the typical underwriting protocol associated with issuing stock.  Since spot secondary issues avoid the time and costs associated with the normal SEC filing procedure, they are often more quickly distributed and discounted relative to shares sold to the public at large. Read more

Spot Trade

A spot trade is an asset or commodity transacted and delivered immediately. Also called cash trades, spot trades occur in the spot market and are characterized by the immediate or near-immediate delivery of the commodity in question. Read more

Spread Trade

A spread trade occurs when an investor simultaneously buys and sells two related securities that are bundled as a single unit.Each of the transactions is referred to as a "leg." The purpose of a spread trade is to net a profit from the difference in the two legs -- known as the spread. Read more

Standard & Poor's (S&P)

Standard & Poor's (S&P) is a financial services company and a division of The McGraw-Hill Companies, Inc.S&P does business in six main areas: credit ratings, indices, equity research, risk management, investment advisory services, and data services. Read more

Stock Dividend

Dividends are a distribution of corporate earnings to shareholders and usually take place in one of two forms -- cash or stock.A stock dividend is the latter of these two kinds of dividends. Read more

Stock Market Index

A stock market index measures the change in the stock prices of the index's components. Let's say we want to measure the performance of the U.S. Read more

Stock Quote

A stock quote is an estimate of price or a price at which one party is willing to buy or sell a certain number of shares of stock from the other.A stock quote consists of a bid price and an ask price. Read more

Stock Return Income Debt Securities (STRIDES)

Stock Return Income Debt Securities (STRIDES) are callable debt securities linked to an underlying stock.STRIDES are similar to callable preferred shares in that they take part in the fluctuation of the underlying stock's price but also provide a fixed payment. Read more

Stock Split

A stock split is a procedure that increases or decreases a corporation's total number of shares outstanding without altering the firm's market value or the proportionate ownership interest of existing shareholders.This action, which requires advance approval from the company's board of directors, usually involves the issuance of additional shares to existing stockholders. Read more

Stock Symbol

A stock symbol -- also known as a ticker symbol -- is a string of letters used to identify a stock, bond, mutual fund, ETF or other security traded on an exchange. When a company goes public or issues securities to the public, it selects an exchange on which those securities will trade and a stock symbol that will identify those securities. Read more

Stockbroker

A stockbroker is a person or a company that acts as an intermediary between buyers and sellers of stocks. Stockbrokers are often paid a commission, which is a percentage of the customer's purchase or sale price, though some receive a flat fee per transaction or a mix of the two. Read more

Stop Order

A stop order (also called a stop-loss order or stop market order) is a trade order whereby the investor instructs the broker to automatically sell the stock if it drops to a certain price. For example, let's assume that you own 100 shares of Company XYZ stock, for which you have paid $10 per share. Read more

Stop-Limit Order

A stop limit order is a tool that is used to help traders limit their downside risk when buying or selling stocks.To do this, it combines two other types of orders: a stop order and a limit order. Read more

Stop-Loss Order

A stop-loss order (also called a stop order or stop market order) is an order whereby the investor instructs the broker to automatically sell the stock if it drops to a certain price. For example, let's assume that you own 100 shares of Company XYZ stock, for which you have paid $10 per share. Read more

Strategic Asset Allocation

Strategic asset allocation is the practice of realigning a portfolio's asset composition in order to accommodate changes in market climate. Portfolios are made up of different asset classes, with each asset class comprising a certain percentage of the total portfolio (i.e. Read more

Super Bowl Indicator

The Super Bowl Indicator, also known as the Super Bowl Effect, is a theory that stock prices will fall if the AFC team wins the Super Bowl. The Super Bowl is the final game in the National Football League season. Read more

Surrender Fee

A surrender fee is a fee paid by an annuity investor to withdraw some or all of his or her principal before the annuity's surrender period has expired. An annuity is a contract whereby an investor makes a lump-sum payment to an insurance company, bank or other financial institution that in return agrees to give the investor either a higher lump-sum payment in the future or a series of guaranteed payments. Read more

Surrender Period

The surrender period is the time an investor of annuity must wait until they may take a withdrawal from their annuity without paying a penalty or surrender fee. The surrender period is usually stated in the contractual agreement of the annuity an investor has purchased. Read more

Sweet Crude

Sweet crude is a type of yet-to-be refined oil which contains minimal amounts of impurities. Sweet crude oil meets standards for low levels of contaminants such as sulfur (below one percent). Read more

Tailgating

Tailgating occurs when a broker buys or sells a security after doing the same for a client. Let's say John Doe is a broker for Jane Smith. Read more

Takedown

The takedown is the price that an underwriter pays for a new issue. When a company decides it wants to issue stock, bonds or other publicly traded securities, it hires an underwriter to manage what is a long and sometimes complicated process. Read more

Taking the Street

Taking the Street is slang for buying large amounts of stock from institutions so that those sellers have to buy more stock, which drives the price up.  Let's say John Doe has a Gordon Gekko complex and wants to make some money by manipulating the market for Company XYZ stock. Read more

Tape Is Late

When trading volume is so high that the ticker quotes are lagging behind to keep up with reporting the trades, we say the tape is late. Let's say that trading volume on the NYSE quintuples one day after the government announces a sweeping tax reform and monetary policy change that prove very beneficial for some companies and very detrimental for other companies. Read more

Tape Shredding

Tape shredding occurs when a broker splits a large buy or sell order into a lot of smaller buy or sell orders. Let's say Company XYZ is a huge pension fund with billions of dollars under management. Read more

Telephone Booth

In the trading world, a telephone booth refers to a phone bank on the floor of the New York Stock Exchange. When an investor wishes to buy or sell a security listed on the NYSE, she "places a trade" or an "order" by calling her broker or going to her online trading account. Read more

Tenbagger

A tenbagger is a stock that increases by a factor of ten. Let's say Company XYZ is trading at $5 a share. Read more

Tender Offer

A tender offer is a proposal by an investor to all current shareholders of a publicly traded corporation to tender their shares for sale at a certain price at a certain time.  The prospective acquirer typically offers a higher price per share than the corporation's stock price.This provides shareholders with a greater incentive to unload their shares. Read more

The Big Board

The Big Board, a popular term for the New York Stock Exchange (NYSE), is the oldest stock exchange in the United States.  It's located on Wall Street in lower Manhattan, and is the world's largest stock exchange by market capitalization of listed companies (more than $30 trillion as of 2019). Stocks, bonds, mutual funds, exchange-traded funds (ETFs), and derivatives all trade on the Big Board. Read more

Thin Market

The opposite of a liquid market, a thin market is characterized by a small number of participants and high price volatility.  The small number of buyers and sellers in a thin market results in low transaction volume and relative illiquidity.Though low in volume, transactions tend to be larger. Read more

Thinly Traded

Thinly traded refers to an investor's inability to sell his or her investment at or near its value in a short amount of time. Things that are thinly traded are essentially illiquid. Read more

Third Market

The third market is an over-the-counter (OTC) market in which brokers and large institutional investors trade exchange-listed securities between one another. The third market is an OTC venue in which brokers and institutional investors (e.g., insurance companies and mutual funds) trade securities listed and publicly traded on a registered exchange (e.g., NYSE or AMEX). Read more

Tick

A tick is a minimum change in the price of a security.Also known as a downtick, a minus tick occurs when a security sells at a price less than the preceding sale. Read more

Tick Test Rules

Also called short sale rules, tick test rules are restrictions on when traders can short a stock. Also known as a minus tick, a downtick occurs when a security sells at a price less than the preceding sale. Read more

Ticker Symbol

A ticker symbol -- also known as a stock symbol -- is a string of letters used to identify a stock, bond, mutual fund, ETF or other security traded on an exchange. When a company goes public or issues securities to the public, it selects an exchange on which those securities will trade and a ticker symbol that will identify those securities. Read more

Ticker Tape

Ticker tape was the paper strip used to transmit stock prices before the use of computers. A typical ticker tape quote has five components: the ticker symbol, shares traded, price, change direction, and change in price. Read more

Total Cost of Ownership (TCO)

Total cost of ownership is an asset's cost to the purchaser in addition to the costs associated with using and maintaining it. Total cost of ownership (TCO) can be best exemplified by owning a home. Read more

Toxic Assets

Toxic assets are assets that have experienced a significant drop in value and lack an active market where they can be sold.Toxic assets are also known as troubled assets. Read more

Tracking Stock

A tracking stock is a security that is issued to track the performance of a wholly-owned subsidiary. A large, diversified company may issue a tracking stock based on one of its wholly-owned subsidiaries. Read more

Trailing Stop

A trailing stop (often referred to as a trailing stop-loss) is a special type of trade order where the stop-loss price is not set at a single, absolute dollar amount, but instead is set at a certain percentage or a certain dollar amount below the market price.  When the price goes up, it drags the trailing stop along with it, but when the price stops going up, the stop-loss price remains at the level it was dragged to.A trailing stop is a way to automatically protect yourself from an investment's downside while locking in the upside. Read more

Trailing-Stop Loss

A trailing-stop loss order (or trailing-stop) is a special type of trade stop order that manages risk and offers profit protection.This exit strategy adjusts the stop price of a stock or stocks by a certain percentage below the market price. Read more

Treasury Stock

Treasury stock is stock repurchased by the issuer and intended for retirement or resale to the public.It represents the difference between the number of shares issued and the number of shares outstanding. Read more

Triple Witching Hour

On the third Friday of every March, June, September, and December, contracts for stock index futures, stock index options, and stock options all expire at the end of the day.The triple witching hour is the final trading hour on those days. Read more

Troubled Assets

Troubled assets are assets that have experienced a significant drop in value and lack an active market where they can be sold.Troubled assets are also known as toxic assets.  The most famous examples of troubled assets are subprime mortgages. Read more

Trust Unit Preferred Shares (TruPS)

Trust preferred shares (TruPS) are preferred shares typically issued by banks.And although they're called "preferred shares," there is a big difference between trust preferred stock and traditional preferred stock (issued by companies). Read more

Unchanged

In the stock world, unchanged means that the closing quote at the end of a trading day for a particular stock is the same as the closing price for the stock the day before. For example, let's say that on Monday, Company XYZ closes at $45 a share. Read more

Unconventional Oil

Unconventional oil is crude oil produced by means other than a conventional oil well. Crude, unrefined oil stock is traditionally extracted from underground reservoirs through an oil well. Read more

Underpricing

Underpricing occurs in the finance world when a company prices its shares too low in an initial public offering. When a company decides it wants to issue stock, bonds or other publicly traded securities, it hires an underwriter to manage what is a long and sometimes complicated process. Read more

Undersubscribed

In the securities industry, undersubscribed means that an offering does not have enough buyers. When a company decides it wants to issue stock, bonds or other publicly traded securities, it hires an underwriter to manage what is a long and sometimes complicated process. Read more

Unitholder

A unitholder is an investor who owns the securities of a trust, like a real estate investment trust (REIT) or a master limited partnership (MLP).The securities issued by trusts and MLPs are called units, and investors in units are called unitholders. Read more

Unsponsored American Depository Receipt (ADR)

An Unsponsored American Depository Receipt (ADR), though backed by the common stock of an offshore company, is not directly sanctioned by that company and renders the holder un-entitled to the shareholder benefits that come with a sponsored ADR. An ADR is a financial instrument denominated in U.S. Read more

Unsubscribed

The term unsubscribed describes the portion of the shares in an IPO that are not sold prior to the IPO. Let’s assume Company XYZ is going public. Read more

Upthrusts

Upthrusts are false breakouts that can trap the unsuspecting trader.Upthrust patterns quickly reverse, with the stock or index then often testing the opposite end of the trading range. Read more

Uptick

Uptick refers to the increase in the market price of a security over the preceding transaction. If a new trading price for a security is higher than the preceding one (even by one cent), the security is on an uptick. Read more

Uptick Rule

Known as Rule 10(a)(1) of the Securities Exchange Act of 1934, the uptick rule allows investors to short a security only at a price higher than the security's last trade. Essentially, a short seller is trying to do the same thing a regular investor is: buy low and sell high. Read more

Uptick Volume

Uptick volume is the number of shares of a particular stock that trades when the price is increasing. Let's assume that in the last hour, Company XYZ stock increased from $15 to $17 per share for 30 minutes. Read more

Value Stock

A value stock is a security that is trading at a lower price than expected given the performance of the company and key performance indicators of the stock itself. A value stock may have a high dividend yield (i.e. Read more

Variable Annuity

A variable annuity is a contract sold by an insurance company.The contract provides the holder with future payments based on the performance of the contract's underlying securities. Read more

Variable-Rate Certificate of Deposit

A variable-rate certificate of deposit (CD) is a CD with an interest rate that can change. A CD is an investment whereby the investor deposits a certain amount of money with a bank or credit union, which agrees to pay interest on that deposit for the duration of the deposit. Read more

Vault Receipt

A vault receipt is a document that proves ownership of gold, silver or other precious metals stored elsewhere. Let's say John Doe purchases gold through a futures contract. Read more

Volatility Index (VIX)

The Volatility Index (VIX) is a contrarian sentiment indicator that helps to determine when there is too much optimism or fear in the market.When sentiment reaches one extreme or the other, the market typically reverses course.  The VIX is based on data collected by the Chicago Board Options Exchange (CBOE). Read more

Volume

Volume represents the total number of securities traded during a certain period of time. Volume records the number of transactions taking place during a period of time. Read more

Wall of Worry

In the finance world, a wall of worry is an increasing amount of negative information about a security or about the market. For example, a wall of worry might be information that the economy's GDP is flat, followed by reports of higher unemployment, followed by increases in foreclosure rates, followed by bankruptcies at several major companies. Read more

Wallflower

Wallflower is slang for a stock that analysts and investors tend to neglect. Usually used to describe individuals who are relegated to the sidelines in social events, in investing, wallflowers are stocks that investors and analysts tend to ignore. Read more

Wash

A wash occurs when two actions cancel each other out (such as a gain and an equal loss), effectively creating a break-even situation. Let's assume XYZ Company sells $1,000 worth of products. Read more

Wash Sale

A wash sale occurs when an investor sells a security at a loss but then purchases the same or a substantially similar security within 30 days of the sale. Let's assume an investor owns 100 shares of XYZ Company and sells these shares on May 1 for a $1,000 loss. Read more

Wash Trading

Wash trading occurs when an investor sells a security at a loss, then purchases the same or a substantially similar security within 30 days of the sale. Let's assume an investor owns 100 shares of XYZ Company and sells these shares on May 1 for a $1,000 loss. Read more

Wasting Asset

A wasting asset is a property or security that has a limited life and loses value over its life.  Assets have a useful life, usually based on the period of time that they have productive capacity.As the asset is used, it depreciates, eventually having little or no residual value. Read more

Watered Stock

Watered stock is stock that is issued at a price far higher than the value of the issuer's assets. In technical terms, watered stock exists when the following is true: Stock price x Shares outstanding > Net assets (or in some cases, capital invested) For example, if the founders of Company XYZ invested $10 million in the company and then decided to take the company public by selling 50 million shares priced at $3 (a $150 million market capitalization), analysts might say that Company XYZ is issuing watered stock. Read more

Weekend Effect

The weekend effect is a theory that stock prices rise on Monday and fall on Friday. The idea behind the weekend effect is that companies tend to release bad news on Fridays, when the market has the weekend to digest the news and not react as negatively on Monday. Read more

Weighted Average Market Capitalization

Weighted Average Market Capitalization refers to a stock market index in which larger companies (i.e.with higher market capitalization) have more influence on the index's performance. Read more

Whipsaw

A trader is said to be "whipsawed" when the price of a security suddenly moves in the opposite direction of a trade that he just placed.  For instance, if a trader buys shares of Apple at $250/share, and over the course of the day the price drops to $230, the trader has been whipsawed.  This usually occurs in a volatile market when traders are subjected to high risk.Short-term traders can be whipsawed often, but long term traders are likely to see better results over a longer time horizon. Read more

Whisper Number

A whisper number is an unofficial, unpublished earnings per share (EPS) forecast for a public company.It is not the same as a consensus estimate. Read more

Widow and Orphan Stock

Widow and orphan stocks are low-risk securities that pay high dividends.  Widow and orphan stocks typically maintain their dividend payments to shareholders even through difficult financial times, especially in bear market conditions. Such stocks do not grow substantially in value, but they offer a reliable, low risk investment opportunity. Read more

Wildcat Drilling

Wildcat drilling is the process of looking for oil and natural gas wells in non-typical areas. Drilling oil and gas wells can be a good opportunity for risk-tolerant investors, particularly if the field where the new well is to be drilled has consistently produced oil or gas or both in the past and is expected to continue. Read more

Wilshire 5000 Index

The Wilshire 5000 Index is considered the "total market index." Designed to track the value of the entire stock market, the index was started in 1974 by Wilshire Associates soon after computers made the daily computation of such a large index possible.The index includes a majority of the common stocks, REITs, and limited partnership shares, traded primarily through NASDAQ OMX or NYSE Euronext or the American Stock Exchange. Read more

X

X is an extension to a ticker symbol.It denotes that the security is a mutual fund. Read more

XD

XD is a symbol to indicate that a security is trading ex-dividend. The ex-dividend date is the day on which all shares bought and sold no longer come attached with the right to receive the most recently declared dividend. Read more

XDIS

XDIS is a symbol to indicate that a security is trading ex-dividend (or ex-distribution, as the abbreviation suggests). The ex-dividend date is the day on which all shares bought and sold no longer come attached with the right to receive the most recently declared dividend. Read more

XRT

XRT is an extension to a ticker symbol.It denotes that the security is trading without rights. Read more

XW

XW is a ticker-symbol extension that signifies that a stock is trading ex-warrant. Warrants are securities that give the holder the right, but not the obligation, to buy a certain number of securities (usually the issuer's common stock) at a certain price before a certain time. Read more

Y

Y is a ticker-symbol extension that signifies that a stock is an American Depository Receipt. Issued by U.S. Read more

Yankee Market

Yankee Market is slang for the U.S.stock market. Read more

Yield on Cost (YOC)

Yield on cost (YOC) is an investment's annual dividend divided by the original purchase price of the investment. To calculate yield on cost, divide the annual dividend by the per-share price you initially paid. Read more

Yo-Yo

Yo-yo is slang describing volatility in the market. In a mathematical sense, standard deviation is a measure of how much an investment's returns can vary from its average return. Read more

Z

Z is an extension to a ticker symbol.It denotes that the security is either a special class of preferred stock, a stub security, represents a limited partnership interest or is a special class of warrants. Read more

Zaraba Method

Also called the continuous auction method, the Zaraba method is a method of trading securities. In the Zaraba method, which many Japanese exchanges use, the exchange fills orders by matching them with other orders according to the order price and age. Read more

Zero Beta Portfolio

A zero-beta portfolio is a portfolio built with zero systematic risk. The investments comprised in a zero-beta portfolio are chosen in such a way that the portfolio's value does not fluctuate as a result of market movements. Read more

Zero Downtick

Also called a zero minus tick, a zero downtick is a trade that occurs at the same price as the trade preceding it but lower than the last trade at a different price.A zero downtick is the opposite of a zero plus tick. Read more

Zero Minus Tick

Also called a zero downtick, a zero minus tick is a trade that occurs at the same price as the trade preceding it but lower than the last trade at a different price.A zero minus tick is the opposite of a zero plus tick. Read more

Zero Plus Tick

Also called a zero uptick, a zero plus tick is a trade that occurs at the same price as the trade preceding it but higher than the last trade at a different price.A zero plus tick is the opposite of a zero minus tick. Read more

Zero Uptick

Also called a zero plus tick, a zero uptick is a trade that occurs at the same price as the trade preceding it but higher than the last trade at a different price.A zero uptick is the opposite of a zero minus tick. Read more