Dictionary - Stocks & Commodities

#### 10 Bagger

A 10 bagger is a term used to describe an investment (such as stock) that increases in value by 10 times its initial purchase price.More simply, 10 bagger stocks are investments that have a 1000% return on investment (ROI).  This term was coined by the legendary fund manager, Peter Lynch in his best-selling book, "One Up on Wall Street." This popular stock term was inspired by Lynch’s love of baseball. Read more

#### 52-Week High

The 52-week high refers to the highest market price 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 the highest price over that time period. 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

#### A Priori Probability

A priori probability is a method to determine the likelihood an asset's price will behave a certain way based on odds, not history. A priori is Latin for "deductive" or "presumptive." An a priori probability is deduced rather than based on past behavior. 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

#### Abnormal Earnings Valuation

Also called the residual income model, the abnormal earnings valuation model is a method for predicting stock prices. In this theory, every stock is worth the company's book value per share if investors expect the company to earn a "normal" rate of return in the future. Read more

#### Above the Market

Above the market describes the price at which a person wants to buy or sell a security. Let's say John Doe owns 100 shares of Company XYZ stock that he bought at \$10 a share. 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 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 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

#### 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 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

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

#### Anti-Dilution Provision

An anti-dilution provision is a clause in an option, security, or merger agreement that gives the investor the right to maintain his or her percentage ownership of a company by buying a proportionate number of shares of any future issue of the security. Anti-dilution provisions are sometimes called "subscription rights," "preemptive rights," or "subscription privileges." Anti-dilution provisions are particularly relevant for convertible preferred stock. 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

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

The ask size is the number of shares that a seller is willing to sell at a given price.For instance, a seller is willing to part with 3,000 of their shares at a specific asking price.  People who offer to buy and sell securities are the market makers. 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

#### 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

#### 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

#### Baidu

Baidu is a large search engine in China.The word translates to "hundreds of times." Its ticker symbol is BIDU. 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

#### 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

#### Basis

Basis refers to the original price of an asset.It is sometimes called cost basis or tax basis. 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

#### Bearish Harami

A bearish harami refers to a stock market trend indicating that the value of a stock is likely to experience a downwards, or bearish, momentum following a period of upward, bullish movement. In technical analysis, stock market trends are calculated using a number of different methods. 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

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 Bid

The best bid is the highest price offered by a stock's market makers to buy a security.For stocks, the best bid is quoted in dollars. Read more

#### Best Efforts

Best efforts is a legal agreement between a securities underwriter (usually an investment bank) and a securities issuer, whereby the underwriter agrees to do the best it can to sell as many of the issuer’s securities as possible to the public.  A best efforts agreement does not guarantee that all of the securities in the issue must be sold.An issuer and underwriter agree upon a minimum level of sales and once the minimum has been reached, the underwriter is not responsible for any unsold securities.  Let’s assume Company XYZ plans to go public and it hires an investment bank to become their underwriter and arrange the offering. 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

#### Beta

Beta is a measure of a stock's volatility relative to the overall market.It is most often calculated using a stock's movements relative to the S&P 500 Index over the trailing 12-month period. 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

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

Also known as the Wall Street Crash of 1929, Black Tuesday 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. 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

#### Book-Entry Securities

Book-entry securities are securities issued in electronic form rather than in paper form. The commercial book-entry system is a system whereby the investor's ownership of the security is reflected only in the investor's account records at his or her financial institution, brokerage firm or dealer. Read more

#### Bovespa Index

The Bovespa Index tracks around 50 stocks traded on the São Paulo Stock, Mercantile & Futures Exchange.The term Bovespa is derived from BOlsa de Valores do Estado de São Paulo, the Portugese name for the exchange. 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

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

A buy limit order is an order to purchase a security at or below a given price. 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

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

#### Cabinet Security

A cabinet security is an inactive security (often a bond) that is listed on an exchange. Before the advent of computers, it was necessary to move physical evidence of securities and orders. Read more

#### CAC 40 Index

The CAC 40 Index is the benchmark tracking index for the Paris Bourse. Started in December of 1987 with a value of 1000, the CAC 40 is comprised of the 40 largest and most liquid stocks trading on the exchange. 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

#### Caisse Populaire

A caisse populaire is a Canadian financial institution that is owned and controlled by its members rather than shareholders.It is essentially a credit union. 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 Common Stock

Callable common stock is an equity stake in a company where either the issuer or a third party has the right, but not the obligation, to repurchase the stock at a specific price after a certain date. Let's assume you own 100 shares of Company XYZ callable common stock. Read more

#### Callable Preferred Stock

Issuers of callable preferred stock have the right (but not the obligation) to repurchase the stock at a specific price after a certain date. For example, consider Company XYZ preferred stock issued in 2000, paying a 10% rate, maturing in 2020, and callable in 2010 at 102% of par. Read more

#### Callable Security

A callable security gives the issuer or a third party the right but not the obligation to repurchase the security at a specific price after a certain time. Let's assume you own 100 shares of Company XYZ callable common stock. Read more

#### CAN SLIM

CAN SLIM is an investing system that uses seven fundamental and technical traits to pick stocks. The system, developed in the 1950s by Investor's Business Daily founder William J. Read more

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

#### Capital Dividend Account (CDA)

A capital dividend account is a special account that companies use to pay tax-free dividends to shareholders. Let's say five people pool their capital to form a company. Read more

#### Capital Flight

Capital flight is the movement of capital from one country to another, or sometimes from one investment sector to another, to capitalize on returns or mitigate risk. Let's say the Venezuelan government is overthrown. Read more

#### Capital Stock

Capital stock is the number of shares that a company's charter authorizes for issuance. A corporate charter is a legal document that sets forth a corporation's basic information, such as its location, profit/nonprofit status, board composition, and ownership structure. Read more

#### Capitalization

In the business world, capitalization has two meanings.The first meaning, also called market capitalization, refers to the value of a company's outstanding shares. 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

#### Cash Flow Per Share

Cash flow per share represents the portion of a company's cash flow allocated to each share of common stock. Cash flow per share can be calculated by dividing cash flow earned in a given reporting period (usually quarterly or annually) by the total number of shares outstanding during the same term. Read more

#### Cash Price

Also called the spot price or the current price, a cash price is the current price of a commodity if it were to be sold or purchased today. For example, if you purchase a cup of coffee in a restaurant, you pay the cash price -- the price of the good for immediate delivery. Read more

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 Board of Trade (CBOT)

The Chicago Board of Trade (CBOT) is a commodity futures and options exchange.Several dozen types of contracts trade on the CBOT, and the exchange facilitates hundreds of millions of these trades each year. 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

#### Commercial Mortgage-Backed Security (CMBS)

A commercial mortgage-backed security (CMBS) is a fixed-income security, typically in the form of a bond, which uses commercial real estate loans as collateral. A CMBS is comprised of numerous commercial mortgages of varying terms and values, such as multi-family dwellings, commercial real estate, etc. 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 a raw material that is interchangeable with other materials of the same type. Investors can participate in the commodities market on the NYMEX. 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

#### Consumer Cyclical

Consumer cyclical refers to a stock or group of stocks that are affected by changes in the economic cycle. Consumer cyclicals perform well when the economy grows and suffer when the economy stagnates or shrinks. 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

#### Convertible Preferred Stock

Convertible preferred stock is preferred stock that holders can exchange for common stock at a set price after a certain date. Let's assume you purchase 100 shares of XYZ Company convertible preferred stock on June 1, 2006. 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

#### Correlation

Correlation, as used in investing, is a measure of the return performance of two (or more) securities or asset classes relative to each other. Portfolio managers, traders, brokers, and stock analysts use correlation to estimate the effectiveness of diversification to decrease risk and optimize portfolio performance in different market conditions. Correlation is reflected by a statistic known as the correlation coefficient. Read more

#### Cost Basis

Cost basis refers to the original price of an asset.Cost basis is sometimes called tax basis. 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

#### 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

#### DAX Index

The DAX Index is the most commonly cited benchmark for measuring the returns posted by stocks on the Frankfurt Stock Exchange. Started in 1984, the DAX index is comprised of the 30 largest and most liquid issues traded on the exchange. 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 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

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

#### Detachable Warrant

A detachable warrant is a warrant that can be sold separately from the security to which it was originally attached. 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

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

#### Distressed Securities

Distressed securities are financial instruments of a company that are under price pressure due to bankruptcy (Chapter 7), reorganization (Chapter 11), financial turmoil, or other economic trauma. Distressed securities can take the form of stocks, bonds, debt, or other financial instruments. Read more

#### Dividend

Dividends are payments from corporate earnings to company shareholders, and they're one way to receive a return from owned shares.A simpler definition for dividends is that they’re a reward for investing your money with a company.  Dividend payments typically take one of two forms:  Cash paid to you (more common)  Additional stocks issued to you (less common, but you can sell and convert to cash) Companies may also offer dividend reinvestment programs (DRIPs). 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 increased their dividend payouts each and 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 Discount Model (DDM)

The dividend discount model (DDM) is a method for assessing the present value of a stock based on the growth rate of dividends. The dividend discount model (DDM) seeks to estimate the current value of a given stock on the basis of the spread between projected dividend growth and the associated discount rate. 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

#### 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

#### Dual Listing

A dual listing occurs when a security (or shares of a company) is listed on more than one stock exchange.It may also be referred to as cross-listing or interlisting. Read more

#### Dual-Class Ownership

Dual-class ownership is a type of stock structure in which a company issues different classes of stock, each with different privileges. Let's say Company XYZ issues Class A and Class B shares. 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

#### E-Mini

An E-mini is a stock index futures contract that is electronically traded on the Chicago Mercantile Exchange (CME) and is 1/5 the size of a standard stock index futures contract. An E-mini S&P 500 futures contract is valued using the following formula: E-mini S&P 500 contract value = (\$50) x (S&P 500 stock index) As the price of the S&P 500 fluctuates, the price of the S&P 500 E-mini futures contract fluctuates as well. Read more

#### EAFE Index

EAFE stands for Europe, Australasia, and the Far East -- a region that is considered the most developed outside of North America.The Morgan Stanley Capital International (MSCI) EAFE index is the most common way to track the performance of stocks in the EAFE markets. 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 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

#### ECN Broker

An ECN broker is a person who uses electronic communications networks to give clients access to buyers and sellers in the currency markets. An ECN broker is sort of like a market maker for currency markets. 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

#### 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 occurs when a company aims to raise capital by offering investors partial ownership interest in the company.This type of financing allows the company to raise enough funds without taking out loans or incurring any debt. 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

#### Equity Underwriter

Equity underwriters are usually investment banks with a team of IPO specialists. They help to market, distribute and administer the public issuance of securities. Read more

As the name implies, equity-linked securities (ELKS) are hybrid debt securities whose return is connected to an underlying equity (usually a stock).ELKS pay a higher yield than the underlying security and generally mature in one year. Read more

#### Euro Interbank Offered Rate (EURIBOR)

Euro Interbank Offered Rate (EURIBOR), is the rate at which European banks offer to lend unsecured funds to each other in the euro market. EURIBOR is sponsored by the European Banking Federation which represents some 5,000 banks and by the Financial Markets Association. Read more

#### European Credit Research Institute (ECRI)

The European Credit Research Institute (ECRI) provides analyses of retail financial services markets within the member states of the European Union. The ECRI is an independent, non-profit research institute founded in 1999 by a group of European banking and financial institutions. Read more

#### Ex-Dividend Date

Some stocks pay cash (or additional stock) dividends to their investors throughout the year.Also referred to as “ex-date”, the ex-dividend date is important for investors because it determines whether they’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 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

#### 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

#### Face Value

Face value, also referred to as par value or nominal value, is the value shown on the face of a security certificate, including currency.The concept most commonly applies to stocks and bonds, so it is particularly important to bond and preferred stock investors. Read more

#### Falling Knife

A falling knife describes a stock which has experienced a rapid decline in value in a short amount of time.Just like a falling knife, you don't want to catch these companies on their way down. 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 Times 100 Index (FTSE)

The Financial Times 100 Index (FTSE), also known as the "footsie," is the most widely used benchmark for the performance of equities traded on the London Stock Exchange.Started in January 1984 with an initial value of 1,000, the index contains the 100 largest U.K.-domiciled companies traded on the London Stock Exchange (based on market capitalization). 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

#### Follow-On Offering

A follow-on offering, also called a 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

#### Forever Stock

Forever stock is a term used to describe a stock that you can buy and hold for the rest of your life.  Forever Stocks are 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.You can identify "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. 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

Forward trading, also called front running, occurs when stockbrokers personally purchase shares of a particular stock while knowing that their firm plans to purchase numerous shares of the same stock.Forward trading is considered unethical and is often illegal. 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

#### Front Running

Front running, also called forward trading, occurs when stockbrokers know their firm plans to purchase numerous shares of a particular stock, so they purchase shares of the same stock for themselves.Front running is considered unethical and, many times, is illegal. Read more

#### Futures

Futures are financial contracts giving the buyer an obligation to purchase an asset (and the seller an obligation to sell an asset) at a set price at a future point in time. Futures are also called futures contracts. 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

#### Futures Market

Futures markets are places (exchanges) to buy and sell futures contracts.There are several futures exchanges. Read more

#### Going Private

The term going private refers to a company's departure from listing shares on any exchange.It is the opposite of going public. 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

#### Goodwill Impairment

Generally, a goodwill impairment occurs when a company A) pays more than book value for a set of assets (the difference is the goodwill), and B) must later adjust the book value of that goodwill. Goodwill is an asset, but it does not amortize or depreciate like other assets. 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. Read more

#### Grant

In the business world, a grant usually refers to a stock option grant.However, the term can also refer to federal funding for research, business ventures or partnerships. 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

#### Greenmail

Greenmail is an acquisition tactic whereby the acquirer attempts to obtain a controlling interest in a target by buying shares at a premium from the target's shareholders. Let's assume an entity that Company XYZ considers unsavory (we'll call it Party X) is attempting to acquire control of Company XYZ by offering to buy shares at a premium from Company XYZ's shareholders. 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

#### Growth Stock

Growth stocks are fast-growing, higher-risk companies.They tend to be young. 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

#### Hang Seng Index (HSI)

The Hang Seng Index is the leading index for shares traded on the Hong Kong Stock Exchange.  Started in 1969, the Hang Seng Index consists of the 45 largest companies that trade on the Hong Kong Stock Exchange, representing about 67% of its total market capitalization.  The index is maintained by a subsidiary of Hang Seng Bank.To qualify for selection to the index, a company must be among those that comprise the top 90% of the total market value of all ordinary shares, as well as those that comprise the top 90% of the total turnover on the Stock Exchange of Hong Kong Limited (SEHK). Read more

#### Hard Stop

A hard stop is a standing instruction from a brokerage client to sell units of a security if the market price declines to a specific level.It is a generic term that can refer to both a stop-loss order or a stop order. 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

#### Hardening

Hardening refers to stabilization or steady increases in a price level. Financial instruments and derivatives frequently experience volatile market-price fluctuations. Read more

Headline risk is the risk that media coverage of an event will have an adverse effect on a company's stock price. Let's say Company XYZ makes a line of sweets and snacks that are sweetened with the "Sweetums" sugar substitute. 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

#### Held-to-Maturity Securities

Held-to-maturity securities refer to debt securities which an investor holds until maturity. When investors purchase debt securities such as bonds, they have two choices: to hold the security until maturity or to sell it at a premium following a relative decline in interest rates. 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) 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

#### High-Income Trigger Securities (HITS)

High-income trigger securities (HITS) are senior unsecured debt securities that pay an annual coupon rate and repay their original principal either in cash or shares, depending on the issuer's stock performance. Let's assume Morgan Stanley issues HITS on Company XYZ that have \$10 face values, pay a 10% annual coupon, and mature one year from today. Read more

#### Holder of Record

A holder of record is the registered owner of a stock, bond or other security. Let's say John Doe buys 100 shares of Company XYZ. 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

The Ifo Business Climate Survey is a monthly measure of German business activity. The Ifo Business Climate Survey incorporates over 5,000 monthly survey responses from a variety of companies. 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

#### 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

#### In Play

A stock is in play when it is widely believed to be a takeover target. Let's say Company XYZ has a ton of cash on its balance sheet, and activist investors have been pressuring it for nine months to sell. Read more

#### In Street Name

Securities are held in street name when the name of the broker, not the individual owner, is listed on the certificate.Almost all securities held in brokerage accounts are held in street name. Read more

#### Income Deposit Security (IDS)

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

#### 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 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

#### Interest Only Strips (IO Strips)

Interest Only Strips (IO Strips) are securities with cash flows based entirely on the monthly payments received from a mortgage pool. Mortgages are paid in two parts, principal and interest. Read more

Intraday refers to price movements of a given security over the course of one day of trading.  It is generally used to describe the high and low price of a stock or option during a given trading day or session. The price of any given security fluctuates over the course of a day. 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

#### 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

#### JAJO

JAJO stands for January, April, July, and October -- the four months in which companies are likely to declare dividends.A dividend declaration is an announcement of an upcoming dividend payment, usually via press release a few weeks before the dividend is paid. 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 Stock Company

A joint stock company is a company whose stockholders have the same privileges and responsibilities as an unlimited partnership.  A joint stock company issues shares similar to a public company that trades on a registered exchange.Joint stock holders may buy or sell these shares freely in the market. 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

#### Junior Issue

A junior issue is an issuance of securities that are subordinate to other securities issued by a company.Junior issues can be debt or equity. Read more

#### Kangaroos

Kangaroos are slang for Australian stocks. For example, if Company XYZ is an Australian company whose stock trades on the Sydney exchange, it is a kangaroo. Read more

#### Kiddie Tax

Kiddie tax is the colloquial term for certain taxes owed on interest, dividends or other investment income earned by children under 17 years old. Let's say John Doe has a son, Jake Doe, who is 16 years old. 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

#### Korean Composite Stock Price Index (KOSPI)

The Korean Composite Stock Price Index (KOSPI) is the main tracking index in South Korea. The KOSPI Index is comprised of 200 of the largest and most liquid issues traded on the Korean Stock Exchange. 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

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

#### 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

#### 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

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

#### Margin Debt

Margin debt is debt obtained from buying on margin. Buying on margin refers to borrowing from a brokerage firm (through a margin account) to make an investment. Read more

#### Margin of Safety

Margin of safety is the amount by which a company's shares are trading below their intrinsic value. The formula for margin of safety is: Margin of Safety = 1 - Stock's Current Price / Stock's Intrinsic Value Let's look at an example. 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 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 Conversion Price

The market conversion price is the price at which a convertible security is exchanged for common stock. Convertible securities (for example, convertible bonds and convertible preferred stocks) allow holders to exchange them for shares of the issuing company's common stock. 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

Market efficiency is the degree to which stock prices reflect all available information. In general, there are two kinds of market efficiency. Read more

#### Market Exposure

Market exposure is the degree to which a portfolio invests in a particular stock or market sector. An investment portfolio is made up of several types of assets (for example, stocks, bonds, real estate, commodities, etc.) consistent with the financial goals of the account holder. 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 Index Target-Term Security (MITTS)

A market index target-term security (MITTS) is a debt security that offers potential upside based on gains in a market index while limiting downside losses by guaranteeing the initial investment will be returned if the index declines. First conceived by Merrill Lynch, a MITTS is a debt obligation that exposes an investor to upside fluctuations in a stock market index such as the Dow Jones Industrial Average (DJIA) or S&P 500 Index. 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

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

#### Mini-Tender

A mini-tender is an offer from an outside buyer for up to 5% of a company's stock. In a traditional tender offer, a company offers to repurchase shares of stock from its investors at a certain price per share. Read more

#### Minimum Price Contract

A minimum price contract is a futures contract with a price floor. A minimum price contract has a provision that places a lower limit on the price of a futures contract's underlying asset. 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

#### Mrs. Watanabe

Mrs.Watanabe, also referred to as "Japanese Housewives," is a slang term for small, retail investors in Japan. 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

#### 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 Long

An investor is net long when he or she has more long positions than short positions for a particular asset, market sector or portfolio.The concept also applies to commodities trading. 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

#### Nominal Value

Also referred to as face value or par value, nominal value is the value shown on the face of a security certificate or instrument, including currency.The concept most commonly applies to stocks and bonds but is especially important to bond and preferred stock investors. Read more

#### Nonqualified Option (NQO)

A nonqualified option (NQO) is the right but not the obligation to purchase shares of a company, usually the option holder's employer, for a fixed price by a certain date. Option grants are incentive compensation that encourages employees to focus on doing work that increases the stock price and thus shareholder value, which is the primary objective of all businesses. 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

#### Odd-Lotter

An odd-lotter buys securities in odd lots.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

#### Offering

An offering is the 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

#### Offering Price

An offering price is the price at which a company lists its shares, bonds, or other securities on an exchange. For example, let's say the founders of Company XYZ want to sell half of their shares. Read more

#### Offset

An offset is a transaction that cancels out the effects of another transaction. Offsetting transactions are common in options and futures markets. 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

In the banking world, Old Lady is a nickname for the Bank of England.The full nickname is "Old Lady of Threadneedle Street." The Bank of England is the United Kingdom's central bank, meaning that it is a bank for banks and works closely with the government's treasury. 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

In the stock markets, opening price refers to 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

#### 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

#### Options Backdating

Options backdating occurs when a company grants an option that is dated prior to the date the company granted the option. For example, let's assume Jane Smith is the CEO of Company XYZ. 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

#### 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

#### 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

A pairs trade occurs when an investor buys two stocks in the same industry. Let's say John Doe buys shares of Ford and General Motors. Read more

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

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 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

#### Passive Management

Passive management is an investment strategy whereby an investor or financial advisor makes long-term investments in certain securities and is not influenced by short-term market fluctuations.The management style is the opposite of active management. Read more

#### Payout Ratio

The payout ratio, also known as the dividend payout ratio, is the percentage of a company's earnings paid out to investors as cash dividends. At the end of a specified period, companies will sometimes pay out dividends for every share owned. 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

#### Per Share Basis

Per share basis is a carefully scrutinized metric that is often used as a barometer to gauge a company's profitability per unit of shareholder ownership.In many cases, cash flow per share is one of the most important measures. 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

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

#### PIIGS

The Eurozone nations of Portugal, Ireland, Italy, Greece and Spain make up a group of financially weak countries often referred to in the financial media by the acronym PIIGS. The Eurozone is made up of 16 different countries that all use a single currency, the Euro. 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

#### Political Risk

Political risk is the potential for financial, market, or personnel losses that occur due to political decisions or disruptions.Political risk is also known as "geopolitical risk." Who Is Affected by Political Risk?  Political risks are faced equally by investors in international businesses and investment fund portfolios. 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

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

#### Premium to Net Asset Value (NAV)

Premium to net asset value (NAV) refers to a situation where shares of a closed-end stock fund are trading at a price higher than the fund's net asset value per share.For example, a fund could be described as "trading 5% premium to NAV." Premium to NAV (and "discount to NAV") is most often used to describe the price per share of closed-end stock funds. 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 Efficiency

Price efficiency simply refers to whether the price of a security incorporates all the available information about the security. For example, assume that Company XYZ is a public company trading at \$15 per share. Read more

#### Price Improvement

Price improvement is the often unexpected event of obtaining a better bid or ask price than the price quoted at the time the buy or sell order is made. For example, assume you own 1,000 shares of Company XYZ. 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 Talk

Price talk refers to discussions about the price of a pending initial public offering (IPO) or upcoming bond issue.  Price talk is usually debate and discussion about what a fair price is for certain new securities.During the process, the issuer's investment bank often "sets" the price talk, meaning that it essentially strongly suggests a price range for the issue. 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

The price-to-innovation-adjusted earnings ratio is used to evaluate the price of a company's stock as compared to its earnings when adjusted for the amount the company spends on R&D. The formula for price-to-innovation-adjusted earnings is: Price-to-Innovation-Adjusted Earnings = Price per share / (EPS + R&D per share) For example, let's assume that Company XYZ, a company that designs and manufactures medical devices, earned \$10,000,000 in profits last year. Read more

#### Price-to-Research Ratio

The price-to-research ratio is used to evaluate the price of a company's stock as compared to its ability to generate future profits from new products. The formula for the price-to-research ratio is: Price-to-Research Ratio = Market Capitalization / R&D Expense For example, let's assume that Company XYZ spent \$5,000,000 on R&D last year. 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 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

#### Prospectus

A prospectus is a legal document filed with the Securities Exchange Commission (SEC) to accompany securities or investment offerings for sale.Containing key facts and information about the offering, a prospectus makes investors more aware of the risks of an investment.  A prospectus also protects the company from claims that it didn’t disclose enough information about itself or the securities in question. 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 Company

A public company is a company that is permitted to sell its registered securities to the general public.Also referred to as a "publicly-traded company." A public company is a company with securities (equity and debt) owned and traded by the general public through the public capital markets. 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

Quadruple witching (also called "quad witching") refers to the third Friday of every March, June, September and December.On these days, derivatives (e.g. 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 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

#### Qualifying Transaction

A qualifying transaction occurs when a private company issues publicly traded stock in Canada. For example, let's assume Company XYZ is a Canadian company that is privately held. Read more

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

#### 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

#### 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

#### Russell 3000 Index

Started in 1984, the Russell 3000 Index attempts to capture the return of the overall market.The index can be subdivided into two segments: the Russell 1000 (consisting of the 1000 largest market-cap companies) and Russell 2000 (consisting of 2000 small-cap companies). 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 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

#### Shanghai Composite Index (SHCOMP)

The Shanghai Composite Index tracks the biggest and most important public companies in China. The Shanghai Composite Index is similar to the Dow Jones Industrial Average (DJIA) in the U.S. 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) 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 (or outstanding shares) are the total number of shares currently owned by a company’s shareholders.This number includes the number of shares that the public can buy and sell, as well as restricted shares that require special permission before being traded. 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

#### Short Interest Theory

Short interest theory suggests that a high level of short interest indicates an imminent rise in the price of a stock. Short interest theory posits that a high number of outstanding short positions on a stock predicts that a rise in the stock's price is likely to occur in the near future. Read more

#### Short Squeeze

A short squeeze is a situation in which a stock's price increase triggers a rush of buying activity among short sellers.  Short sellers must buy stock to close out their short positions and cut their losses, which results in a further increase in stock prices, which compel still more short sellers to cover their positions.  A short sale reverses the normal buy first/sell second sequence as a way to profit from an anticipated future fall in price. Read more

#### Short-Term Gain

Short-term gain usually refers to the profit on the sale of an investment that has been held less than a certain IRS-defined period of time. Let’s assume you purchase 100 shares of Company XYZ for \$1 per share. 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 where traders essentially bet on the direction that an asset's price will move.Who Is a Speculator?  Technically, a speculator is anyone who buys or shorts securities with the expectation of a favorable price change.    A speculator believes that XYZ Company stock is overpriced, so they may short the stock, wait for the price to fall, and make a tidy profit.  It's possible to speculate on virtually every security, though speculation is especially concentrated in the commodities, futures, and derivatives markets. 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

#### Spinning Top Candle

Spinning tops have small real bodies, and they portray a stock or index plagued by uncertainty.The spinning top has small upper and lower shadows. 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

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

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

#### SSE Composite Index

The SSE Composite Index tracks the largest and most important public companies in China.  The SSE Composite Index is similar to the Dow Jones Industrial Average (DJIA) in the U.S. The SSE Composite Index is one of the most closely-watched global benchmarks. 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

#### Stochastic Oscillator

The stochastic oscillator is a momentum indicator that shows the location of the current closing price of a security (or index) relative to the high/low range over a set number of periods.The idea behind stochastics is that as the price of a security increases, the closing price will fall closer to the highest point over a given period. Read more

#### Stock

A stock, also known as equity, is a type of security representing ownership in a corporation. 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 Exchange Daily Official List (SEDOL)

The Stock Exchange Daily Official List code is a unique identifier generated by the London Stock Exchange for securities issued in the U.K. Each U.K.-issued security traded on the London Stock Exchange is assigned a distinct code which identifies it on the Stock Exchange Daily Official List (SEDOL). 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 Limit Order

Stop limit orders can be difficult to understand, but our experts provide the simplest financial definition anywhere.  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-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

#### Straits Times Index (STI)

The Straits Times Index is Singapore's premier equity index and the most widely used benchmark for the performance of equities traded on the Singapore Stock Exchange. The index is comprised of 55 of the exchange's most valuable firms. 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

#### 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

#### Synthetic Collateralized Debt Obligation (Synthetic CDO)

A synthetic collateralized debt obligation is a collateralized security which is backed by derivatives such as swaps and options contracts. A synthetic collateralized debt obligation, commonly called a synthetic CDO, seeks to generate income from swap contracts, options, and other non-cash derivatives rather than straightforward debt instruments such as bonds, student loans, or mortgages. Read more

#### T+1, T+2, T+3

T+1, T+2 and T+3, as well as other "T+" numbers, refers to the number of days it takes to settle a financial transaction. Funds settlement refers to the transfer of funds from buyer to seller and the transfer of title to an asset from seller to buyer. 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 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

#### Tax Lot Accounting

Tax lot accounting is a method of record keeping that tracks the cost, purchase date, and sale date for every unit of every security in a portfolio. For example, let's assume that you purchase 50 shares of Company XYZ at \$5 a share on January 1. Read more

#### Tax Selling

Tax selling is a strategy used to reduce tax liability. Let's assume that John sold two different stocks that he originally bought five years ago: 1) He sold 1,000 shares of Company XYZ at \$25 a share. Read more

#### Taxable Preferred Securities

Taxable preferred securities are typically preferred stocks whose dividends are not tax-exempt. Preferred securities (usually called "preferred stocks") have characteristics of both stocks and bonds.  Like shares of common stock, shares of preferred stock represent an ownership stake in a company. Read more

The TED spread was originally calculated as the difference between interest rates on 3-month T-bills and 3-month Eurodollar contracts with identical expiration months.The acronym is derived from the word "Treasuries" and the ticker symbol for Eurodollars, which is ED. 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

#### The Wealth Effect

The wealth effect is an increase in consumer spending directly proportional to strong stock portfolio performance. The wealth effect is a behavioral economic theory which posits that consumer spending increases significantly when overall portfolio performance is high. 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 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

#### Torpedo Stock

A torpedo stock is a stock that rapidly loses market value and follows a downward trend without any sign of recovery. Torpedo stocks are named for the manner in which a ship descends, sinking into the sea following a torpedo attack on its hull. 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 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

#### Trend Analysis

Trend analysis is a technical analysis of the movement of a stock based on past performance. A trend analysis is a method of analysis that allows traders to predict what will happen with a stock in the future. 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

#### Underlying Security

An underlying security is an asset that a derivative instrument (e.g.futures, options) derives its value from. 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

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

#### 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

#### Walrasian Market

In a Walrasian 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 Walrasian market, the buy orders are grouped together and executed at a price and time that will clear most of those orders. Read more

#### Warehousing

Warehousing is the process of accumulating shares in a company for the purpose of eventually acquiring the firm. Let's say the John Doe Hedge Fund is thinking about acquiring a controlling interest in Company XYZ next year. Read more

#### 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.Warrants are not the same as call options or stock purchase rights. 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 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

#### Wave

In investing, a wave is a pattern found in stock prices, technology, consumer trends or other areas.In technical analysis, the term often refers to Elliot Wave Theory. 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

#### Wholly Owned Subsidiary

A wholly owned subsidiary is a subsidiary company whose parent company owns 100% of the company's outstanding common stock.  In a wholly owned subsidiary, the parent company owns all of the shares of the company and there are no minority shareholders. The subsidiary continues to operate with the permission of the parent company. 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

#### 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 advantage is the difference between yields on two different securities issued by the same company.It is the additional amount an investor can expect to earn if he or she chooses one security over another. 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

#### Yield-Based Option

A yield-based option is a financial instrument that gives the owner the right but not the obligation to purchase a debt security.The value of the yield-based option depends on the difference between the strike price, expressed as a percentage, and the yield on the debt security. 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

#### 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 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