BUSI 223 Test 4
Annual stockholder's report
A report made available to stockholders and other interested parties that includes a
variety of financial and descriptive information about a firm's operations in the
recent past.
Arbitration
A procedure used to settle disputes between a brokerage firm and its clients; both
sides present their positions to a board of arbitration, which makes a final and often
binding decision on the matter.
Ask price
The price at which one can purchase a security.
Asset allocation
A plan for dividing a portfolio among different classes of securities in order to
preserve capital by protecting the portfolio against negative market developments.
Bear market
A condition of the market typically associated with investor pessimism and
economic slowdown; characterized by generally falling securities prices.
Bid price
The price at which one can sell a security.
Bull market
A market condition normally associated with investor optimism, economic recovery,
and expansion; characterized by generally rising securities prices.
Day trader
An investor who buys and sells stocks (and other securities) rapidly throughout the
trading day in hopes of making quick profits.
Discount broker
A broker with low overhead who charges low commissions and offers little or no
services to investors.
Diversification
The process of choosing securities with dissimilar risk-return characteristics in order
to create a portfolio that provides an acceptable level of return and an acceptable
exposure to risk.
Dow Jones Industrial Average (DJIA)
The most widely followed measure of stock market performance; consists of 30
blue-chip stocks listed mostly on NYSE.
Dow Jones Wilshire 5000 index
An index of the total market value of the approximately 6,000-7,000 most actively
traded stocks in the United States.
Full-service broker
A broker who, in addition to executing clients' transactions, offers a full array of
brokerage services.
Investing
The process of placing money in some medium such as stocks or bonds in the
expectation of receiving some future benefit.
Investment plan
A statement—preferably written—that specifies how investment capital will be
invested to achieve a specified goal.
Limit order
An order to either buy a security at a specified or lower price or to sell a security at
or above a specified price.
Market order
An order to buy or sell a security at the best price available at the time it is placed.
National Association of Securities Dealers (NASD)
An agency made up of brokers and dealers in over-the-counter securities that
regulates OTC market operations.
NYSE index
An index of the performance of all stocks listed on the New York Stock Exchange.
Odd lot
A quantity of fewer than 100 shares of a stock.
Online broker
Typically a discount broker through whom investors can execute trades
electronically/online through a commercial service or on the Internet; also called
Internet brokeror electronic broker.
Portfolio
A collection of securities assembled for the purpose of meeting common investment
goals.
Prospectus
A document made available to prospective security buyers that describes the firm
and a new security issue.
Rate of return
The increase or decrease in the price of an investment as well as any income
received over the investment period, both stated as a percentage of the initial
investment.
Risk averse
The average investor's attitude toward risk is such that, when presented with two
investments having the same expected return, the one with the lowest risk will be
chosen.
Round lot
A quantity of 100 shares of stock, or multiples thereof.
Securities and Exchange Commission (SEC)
An agency of the federal government that regulates the disclosure of information
about securities and generally oversees the operation of securities exchanges and
markets.
Securities Investor Protection Corporation (SIPC)
A nonprofit corporation, created by Congress and subject to SEC and congressional
oversight, that insures customer accounts against the financial failure of a
brokerage firm.
Securities markets
The marketplace in which stocks, bonds, and other financial instruments are traded.
Short sale
A transaction that involves selling borrowed securities with the expectation that
they can be replaced at a lower price at some future date; made in anticipation of a
decline in the security's price.
Speculating
A form of investing in which future value and expected returns are highly uncertain.
Standard & Poor's (S&P) indexes
Indexes compiled by Standard & Poor's that are similar to the DJIA but employ
different computational methods and consist of far more stocks.
stockbroker (account executive, financial consultant)
A person who buys and sells securities on behalf of clients and gives them
investment advice and information.
stop-loss (stop order)
An order to sell a stock when the market price reaches or drops below a specified
level.
accrued interest
The amount of interest that's been earned since the last coupon payment date by
the bond holder/seller, but which will be received by the new owner/buyer of the
bond at the next regularly scheduled coupon payment date.
agency bond
An obligation of a political subdivision of the U.S. government.
Beta
An index of the price volatility for a share of common stock; a reflection of how the
stock price responds to overall market forces.
Blue-chip stock
A stock generally issued by companies expected to provide an uninterrupted stream
of dividends and good long-term growth prospects.
Book value
The amount of stockholders' equity in a firm; determined by subtracting the
company's liabilities and preferred stock from its assets.
Business risk
The variability associated with a firm's cash flows and with its subsequent ability to
meet its operating expenses on time.
Call feature
Bond feature that allows the issuer to retire the security prior to maturity.
Clean price
The quoted price of a bond, which understates the true price of a bond by any
accrued interest.
Conversion premium
The difference between a convertible security's market price and its conversion
value.
Conversion privilege
The provision in a convertible issue that stipulates the conditions of the conversion
feature, such as the conversion period and conversion ratio.
Conversion ratio
A ratio specifying the number of shares of common stock into which a convertible
bond can be converted.
Conversion value
A measure of what a convertible issue would trade for if it were priced to sell based
on its stock value.
Corporate bond
A bond issued by a corporation.
Coupon
Bond feature that defines the annual interest income the issuer will pay the
bondholder.
Current yield
The amount of current income a bond provides relative to its market price.
Cyclical stock
Stock whose price movements tend to parallel the various stages of the business
cycle.
Debenture
An unsecured bond issued on the general credit of the firm.
Defensive stock
Stock whose price movements are usually contrary to movements in the business
cycle.
Powered by TCPDF (www.tcpdf.org)
