Term
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Definition
| investments that represent evidence of debt or ownership of the legal right to aquire or sell an ownership interest. |
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Term
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Definition
| investments in real property or in tangible personal property. |
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Term
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Definition
| Investment in which and investor directly aquires a claim on a security or property. |
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Term
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Definition
| An investment made ina portfolio or collection of securities or properties typically constructed to meet one or more investment goals. (Mutual Fund) |
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Term
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Definition
| Funds lent in exchange for interest income and the promised repayment of the loan at a given future date. |
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Term
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Definition
| Ongoing ownership in a business or property. |
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Term
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Definition
| securities that are structured to exhibit characteristics similar to those of an underlying security or asset and that derive their value from the underlying security or asset. |
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Term
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Definition
| Investments that typically mature within one year. |
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Term
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Definition
| Investments with maturities of longer than a year or with no maturity at all. |
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Term
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Definition
| debt, equity, and derivative securities of foreign-based companies. |
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Term
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Definition
| Forums in which suppliers and demanders of funds make financial transactions. |
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Term
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Definition
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Term
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Definition
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Term
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Definition
| Individuals who manage their own funds |
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Term
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Definition
| Investment professionals paid to manage other people's money. |
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Term
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Definition
| incude savings instruments that usually have lives of 1 year or less (Deposit accounts, Series EE Savings Bonds, US T-Bills, CD's, Commercial paper, Banker's acceptances, Money market mutual funds. |
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Term
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Definition
| equity investment that represents ownership in a corperation; each share represents a fractional ownership interest in the firm. |
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Term
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Definition
| Investment vehicles that offer a fixed periodic return. (Bonds) |
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Term
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Definition
| Companies that raise money from sale of shares and invest in and professionally manage a diversified portfolio of securities. |
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Term
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Definition
| Periodic payments made by firms to their shareholders. |
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Term
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Definition
| the amount by which teh sale price of an asset exceeds its original purchase price. (not taxed until realized) |
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Term
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Definition
| ownership interest in a corporation; has stated dividend rate, payment of which is given preference over common stock dividends of the same firm. |
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Term
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Definition
| A fixed-income obligation (bond or preffered stock) with a feature permitting conversion into a specified number of shares of common stock. |
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Term
| MONEY MARKET MUTUAL FUNDS |
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Definition
| Mutual funds that invest soley in short-term investment vehicles. |
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Term
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Definition
| securities that give the investor an opportunity to sell or buy another security at a specified price over a given period of time. (Most often options are purchased in order to take advantage of an anticipated change in the price of common stock) |
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Term
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Definition
| legally binding obligations stipulating that the sellers of such contracts will make delivery and the buyers of the contracts will take delivery of a specified commodity or fiancial instrument at some specific date, at a price agreed on at the time the contract is sold. |
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Term
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Definition
| Entities such as residential homes, raw land, and income property. )the appeal is the potential returns in teh form of rental income, tax write-offs, and capital gains) |
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Term
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Definition
| invesment assets, other than real estate, that can be seen or touched. (gold, medals, collectibles, etc) |
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Term
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Definition
| 15% if asset is held for more than 12 months. (If you are above the 15% tax bracket which makes it 5%) If held for less than 12 months amount is added to other income and taxed at the rate appropriate for your total income (including the gains) |
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Term
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Definition
| the amount by which capital losses exceed capital gains, up to $3000 of net losses can be applied against ordinary income in any year. |
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Term
| INTEREST ON DISCOUNT BASIS |
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Definition
| The security is puchased at a price below its redemption value and the difference is the interest earned. (T-Bills are an example) |
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Term
| INTEREST ON DISCOUNT BASIS |
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Definition
| The security is puchased at a price below its redemption value and the difference is the interest earned. (T-Bills are an example) |
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Term
| INTEREST ON DISCOUNT BASIS |
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Definition
| The security is puchased at a price below its redemption value and the difference is the interest earned. (T-Bills are an example) |
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Term
| LOSS OF POTENTIAL PURCHASING POWER |
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Definition
| occurs when the rate of return on investments fall short of inflation rate. (Short term investments) |
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Term
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Definition
| Risk of non-payment. (non-existent in short term vehicles) |
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Term
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Definition
| savings account offered by banks that generally pays a low rate of interest and has no minimum balance. (normal savings account) |
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Term
| NEGOTIATED ORDER OF WITHDRAWAL (NOW) |
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Definition
| a bank checking account that pays interest, has no legal minimum balance, bumany banks impose their own. |
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Term
| MONEY MARKET DEPOSIT ACCOUNTS |
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Definition
| a bank deposit account with limited check writing privledges, has no legal minimum balance but many banks impose their own |
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Term
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Definition
| a comprehensive deposit account that combines, checking, investing, and borrowing activities,. It automatically sweeps excess balances into short term investments and borrows to meet shortages. |
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Term
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Definition
| savings bonds issued by the US Treasury and sold at banks and through payroll deduction plans, in varying denominations at 50% of face value, pay a variable rate of interest tied to US treasury security market yields and calculated every six months in May and November. |
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Term
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Definition
| securities for which interest is paid when the bond is cashed, on or before the maturity, rather than periodically over the life of the bond. |
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Term
| US TREASURY BILLS (T-BILLS) |
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Definition
| obligations of the US Treasury, sold on a discount basis, and having carying short term maturities, regarded as the safest of all investments. (CAn be purchased directly or indirectly) (3 and 6 month maturities and in $1000 dollar denominations.) |
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Term
| CERTIFICATE OF DEPOSIT (CDs) |
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Definition
| savings instruments in which funds must remain on depisot for a specified period, withdrawals prior to maturity incur interest penalties. (7 days to a year or more) |
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Term
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Definition
| Short-term, unsecured promissory notes(IOU's) issued by a corporations with very high credit standings. (sold in multiples of $100,000s, a few days up to 270 to avoid SEC registration) |
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Term
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Definition
| short-term, low-risk investment vehicles arising from bank guarentees of business transactions, are sold at a discount from tehir face value and generally provide yields slightly below those of CD's and commercial paper. (Domestic banks agree to pay for imports and are reimbursed by foreign exporter's bank) |
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Term
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Definition
| Focuses on the purchase and sale of short-term securities |
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Term
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Definition
| transactions involving long-term securities such as stocks and bonds |
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Term
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Definition
| The Market in which new issues of securities are sold to the public |
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Term
| INITIAL PUBLIC OFFERING (IPO) |
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Definition
| the first public sale of a company's new stock. (Also sells new securities for companies that already exist *seasoned new issue) |
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Term
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Definition
| the sale of a firm's securities to the general public. |
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Term
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Definition
| an offer of new shares of stock to existing stockholders on a pro rata basis. |
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Term
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Definition
| the sale of new securities directly to the selected group of investors, without SEC regulation. |
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Term
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Definition
| A preliminary prospectus made available to prospective investors during the waiting period beween the registration statement's filing with the SEC and its approval. |
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Term
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Definition
| Financial intermmediary that specializes in selling new security issues and advising firms with regard to major financial transactions. |
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Term
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Definition
| the role of the investment banker in bearing the risk of reselling, at a profit,the securities purchased from an issuing company at an agreed on price. |
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Term
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Definition
| a group formed by an investment banker to share the financial risk associated with underwriting new securities. |
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Term
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Definition
| a large number of brokerage firms that join the originating investment banker(s), each accepts respsonsibility for selling a certain portion of a new security. |
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Term
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Definition
| an illegal and unethical practice engaged in by a broker to increase commissions by causing excessive trading of clients' accounts. |
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Term
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Definition
| The brokerage account of a minor, requires a parent or guardian to be part of all transactions. |
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Term
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Definition
| a brokerage account in which a customer can make only cash transactions. |
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Term
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Definition
| brokerage account in which the customer has been extended borrowing priveledges by the brokerage firm. |
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Term
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Definition
| a brokerage account in which the customers with large portfolios pay a flat annual fee that covers the cost of a money manager's services and the commissions on all trades. |
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Term
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Definition
| less than 100 shares of stock |
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Term
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Definition
| 100-share units of stock or multiples thereof. |
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Term
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Definition
| An order to buy or sell stock at the best price available when the order is placed. |
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Term
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Definition
| an order to buy at or below a specified price or to sell at or above a specified price. |
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Term
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Definition
| an order to sell a stock when its market price reaches or drops below a specified level, can also be used to buy stock when its market price reaches or rises above a specified level. |
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Term
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Definition
| an investor who buys and sells stocks quickly throughout the day in hopes of making quick profits. |
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Term
| FIXED-COMISSION SCHEDULES |
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Definition
| fixed brokerage commissions that typically apply to the small transactions usually made by individual investors. |
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Term
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Definition
| Brokerage commissions agreed to by tyhe client and the broker as a result of their negotiations typically apply on large insitutional transactions and to individual investors who maintain large accounts. |
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Term
| SECURITIES INVESTOR PROTECTION CORPORATION |
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Definition
| a nonprofit memebership corporation authorized by the federal government, that insures each brokerage customer's acccount for up to $500,000 with claims for cash limited to $100,000 per customer. |
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Term
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Definition
| an informal, voluntary dispute resolution process in which a customer and a broker agree to a mediator, who facilitates negotiations between them to resolve the case. |
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Term
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Definition
| a formal dispute resolution process in which a customer and a broker present their agument before a panel, which then decides the case. |
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Term
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Definition
| Consists of over-the-counter transactions made in securities listed on teh NYSE or AMEX, or one of the other organized exchanges. It allows large institutional investros to make large transactions at a reduced clost. These transactions are typically handled by firms or dealers that are not members of an organized securities exchange. |
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Term
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Definition
| The market in which securities are traded after they have been issued. They include various organized securities exchanges and over-the-counter market. |
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Term
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Definition
| consists of transactions made directly between large institutional buyers and sellecrs of securities. Transactions bypass the dealer. |
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Term
| INVESTMENT COMPANY ACT of 1940 |
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Definition
| Protects purchasers of investment company shares. Establisehd rules and regulations for investment companies and formally authorized the SEC to regulate tehir practices and procedures. It required investment companies to register with the SEC and fullfill certain discolure. Investment company (Mutual fund) |
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Term
| SECURITIES ACTS AMDENDMENTS OF 1975 |
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Definition
| required the SEC and the securities industry to develop a competitive national system for trading securities. The SEC abolished fized commission schedules, thereby providing for negotiated commissions. |
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Term
| THE INVESTMENT ADVISERS ACT of 1940 |
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Definition
| To protect investors against potential abuses by investment advisers - persons hired by investors to advise them about security investments. It requires the advisors disclose all relevant info about their backgrounds, conflicts of interestst. |
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Term
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Definition
| An amendment to Securities Exchange Act of 1934, established trade associations to self-regulate teh secutities industry. Trade association NASD (National Association of Securities Dealers) |
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Term
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Definition
| When an insufficient amount of maintenance margin exists, they recieve notice that gives them a short period of time (72 hours) to bring the equity up to the initial margin. If this doesn't happen the broker is authorized to sell enouhg of the investor's margined holdings to bring the equity in the account up to this standard. |
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Term
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Definition
| one who'se equity is less than the inital margin requirement. |
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Term
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Definition
| the amount of money borroed in a margin loan. |
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Term
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Definition
| generally defined as the practice of selling borrowed securities. Investors primarily short sell to seek speculative profits when they expect the price of a security to drop. Betting against the market. |
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Term
| DESCRIPTIVE INVESTMENT INFO |
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Definition
| Presents factual data on past behavior of the economy, the market, the company, the industry or a given investment vehicle. |
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Term
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Definition
| Presents available current data in conjunction with recommendations about potential investments. |
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Term
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Definition
| requires senior execs to disclose critical info such as earnings forecasts and news of mergers and new products simultaneously to investment professionals and the public via press releases or SEC filings. |
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Term
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Definition
| The illegal use of nonpublic info about a company to make profitable securities transactions. |
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Term
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Definition
| reflects price of all shares traded on the American Stock Exchange. |
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Term
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Definition
| represents the total dollar value of 5000 actively traded stocks including all those on the NYSE and AMEX in addition to OTC Stocks. |
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Term
| SECURITIES PROTECTION ACT OF 1970 |
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Definition
| authorized the Securities Investor Protection Corporation |
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Term
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Definition
| Cash or near cash that is periodically recieved as as result of owning an investment (Interest, dividends, etc) |
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Term
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Definition
| sum of current income and capital gain (or loss) earned over a period of time |
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Term
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Definition
| interest paid only on the initial deposit for the amount of time it is held. |
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Term
| True rate of interest (return) |
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Definition
| the actual rate of interest earned. |
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Term
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Definition
| The amount to which a current deposit will grow over a period of time when it is placed in an account paying comound interest. |
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Term
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Definition
| a stream of equal cash flows that occur at equal intervals over time. |
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Term
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Definition
| An annuity for which the cash flow occurs at the end of each period. |
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Term
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Definition
| The value today of a sum to be recieved at some future date, the inverse of future value. |
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Term
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Definition
| THe annual rate of return that could be earned currently on a similar investment, used when finding present value aka opportunity cost. |
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Term
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Definition
| a stream of returns that unlike an annuity exhibits no special pattern |
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Term
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Definition
| An investment whose present value of benefits (discounted at the appropriate rate) equals or exceeds the present value of its costs. |
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Term
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Definition
| the rate of return an investor must earn on an investment to be fully compensated for its risk. |
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Term
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Definition
| teh rate of return tha could be earned in a perfect world where all outcomes are known and certain - where there was no risk. |
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Term
| EXPECTED INFLATION PREMIUM |
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Definition
| the averagae rate of inflation expected in the future. |
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Term
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Definition
| the rate of return that can be earned on a risk free investment, the sum of the real rate of return and the expected inflation premium. |
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Term
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Definition
| a return premium that reflects the issue and issuer characteristics associated with a given investment vehicle. |
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Term
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Definition
| the compound annual rate of return earned by a long-term investment, the discount rate that produces a present value of the investment's benefits that just equals its cost. |
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Term
| FULLY COMPOUNDED RATE OF RETURN |
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Definition
| the rate of return that includes interest earned on interest. |
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Term
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Definition
| The compound annual rate of change in the value of a stream of income. |
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Term
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Definition
| The chance that the actual return from an investment may differ from what is expected. |
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Term
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Definition
| the relationship between risk and return, in which investments with more risk should provide higher returns, and vice versa. |
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Term
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Definition
| the degree of uncertainty associated with an investment's earnings and the investment's ability to pay the returns owed investors. |
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Term
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Definition
| the degree of uncertainty of payment attributable to the mix of debt and equity used to finance a business, the larger the proportion of debt financing, the greater the risk. |
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Term
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Definition
| The chance that inflation or deflation will adversely affect investment returns. |
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Term
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Definition
| the chance that changes in interest rates will adversely affect a security's value. |
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Term
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Definition
| risk odf decline in investment returns because of market factors independent of the given investment. |
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Term
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Definition
| risk that comes from an unexpected event that has a significant and usually immediate effect on the underlying value of an investment. |
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Term
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Definition
| a statistic used to measure the variation of returns around an asset's average or expected return. |
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Term
| COEFFICIENT OF VARIATION (CV) |
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Definition
| a statistic used to measure the relative dispersion of an asset's returns, it is useful in comapris the risk of assets with differing average or expected incomes. |
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Term
| COEFFICEINT OF VARIATION EQUATION |
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Definition
| Standard deviation/average or expected returns |
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Term
| perfectly positively correlated |
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Definition
| describes two positively correlated series that have a correlation coeffecient of +1 |
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Term
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Definition
| (unsystematic) risk- the portion of an investments risk that results from uncontrollable or random events hat are firm-specific, can be elimated through diversification. |
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Term
| nondiversifiable risk (Systematic) |
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Definition
| the inescapable prtion of an investment's risk attributable to forces that affect all investments and therefore are not unique to a given vehicle. |
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Term
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Definition
| the sum of an investment's nondiversifiable risk and no diversifiable risk. |
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Term
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Definition
| a measure of nondiversifiable ror market risk that indicates how the price of a security responds to market forces. |
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Term
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Definition
| the average return on all stocks. |
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Term
| Capital Asset Pricing Model CAPM |
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Definition
| model that formally links the notions of risk and return, it uses beta, the risk free rate, and the market return to help investors define the required return on an investment. |
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Term
| Secrurity Market Line SML |
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Definition
| the graphical depiction of CAPM. Reflects the investor's requred return for each level f nondiversifiable risk, measured by beta. |
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Term
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Definition
| the leftmost boundary of the feasible set of portfolios - that includes all efficient portfolios - those providing the best attaiblable tradeoff between ris and return. |
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Term
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Definition
| risk that is nondiversifiable. |
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Term
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Definition
| asset allocation plan in which a fixed percentage of the portfolio is allocated to each asset category. |
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Term
| FLexible-weightings approach |
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Definition
| asset allocation plan in whih th weights for each asset category are adjusted periodically based on market analysis. |
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Term
| Tactical asset allocation |
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Definition
| asset allocation plan that uses stock indext futures and bond futures to change a portfolios allocation based on market behavior. |
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Term
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Definition
| a mutual fund that seeks to reduce the variability of retrns by investing in the right assets at the right time. |
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Term
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Definition
| owners/stockholders of a firm who are entitiled to divident income and a prorated share of the firms earnings only after the firms other obligations have been met. |
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Term
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Definition
| risk that is nondiversifiable. |
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Term
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Definition
| the reutn an investor can earn on a risk free investment such as US Tbills or ansured money market acct. |
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Term
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Definition
| conversion of one of a firms subsidiaries to a standalone company by distribution of a stock in the new company to existing shareholders. |
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Term
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Definition
| a maneuver in which a company increases thenumber of sharesotstanding by exchanging a specified number of new shares of stock for each outstanding share. |
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Term
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Definition
| shares of stock that have been sold and subsequently repurchased by teh issuing firm. |
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Term
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Definition
| common stock issued by a company in different classes each of which offers different privledges and benefits to its holders. |
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Term
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Definition
| the amount o stockholder equity in a firm, equals teh amount of the firms assets minus the firms liabilities and preferred stock. |
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Term
|
Definition
| teh prevailing market price of a security |
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Term
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Definition
| the amount that investors beliee a security should be trading for or what they think its worth. |
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Term
|
Definition
| the date on which and investor must be a registered shareholder of a firm to be entitled to recieve dividends. |
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Term
|
Definition
| thea ctual date on which the company will mail divident checks to shareholders (payable date) |
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Term
|
Definition
| three days before the date of record. |
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Term
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Definition
| stocks hose earnings and overall market perofrmance are closely linked to the general state of the economy. |
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Term
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Definition
| stocks that tend to hold their own and even do well when the economy starts to falter. |
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Term
|
Definition
| Current Assets/Current Liabilities |
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Term
|
Definition
| Current assets - current liabilities |
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Term
| ACCOUNTS RECIEVABLE TURNOVER |
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Definition
| ANNUAL SALES/ACCOUNTS RECIEVABLE |
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Term
|
Definition
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Term
|
Definition
| Annual Sales/Total Assets |
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Term
|
Definition
| Real rate of return + expected inflation |
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Term
|
Definition
| Risk Free + [Beta x (Market Return - Rf] |
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Term
|
Definition
Net Profit -perferred dividends
__________________________________
# of shares |
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|
Term
| Co-efficient of variation |
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Definition
| Standard Deviation/Average or expected return |
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Term
|
Definition
| Long-term debt/Stockholder equity |
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Term
|
Definition
Earnings before interest and taxes/
interest expense |
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Term
|
Definition
| Net profit after tax/Total Revenue |
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Term
|
Definition
| Net Profit/Total Assets or Net Profit Margin x Total Asset turnover |
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Term
|
Definition
| Net Profit/Stockholder's equity |
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|
Term
| STOCK PRICE EARNINGS RATIO |
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Definition
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Term
|
Definition
Financial ratio that relates a stock's price/earnings multiple to the company's rateo f grown in earnings
PEG Ratio = Stock's PE Ratio/3-4 year growth rate |
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Term
|
Definition
| Dividends paid annually/number of shares oustanding |
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Term
|
Definition
| Dividends per share/earnings per share |
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Term
|
Definition
| Common Stockholders equity/# of shares |
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Term
|
Definition
| MARKET PRICE of common stock/Book Value per share |
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Term
| PERFORMANCE 0 EARININGS RATIO (PE) |
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Definition
| Market price of common stock/EPS |
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Term
|
Definition
| Average PE for entire market |
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Term
|
Definition
| Specific stock PE/Market multiple (PE) |
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Term
|
Definition
| ROE x Book value per share |
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|
Term
| Estimated dividends in future |
|
Definition
| Estimated EPS x Estimated payout ratio |
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|
Term
| Estimated share price in future |
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Definition
| Estimated EPS x estimated P/E ratio |
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Term
|
Definition
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Term
|
Definition
| THe rate at which the firm is using up its supply of cash over time. |
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Term
|
Definition
| The stufy of various forces at work in the marketplace and their effect on stock prices. |
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Term
|
Definition
| the difference between the number of stocks advancing and number declining. |
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Term
|
Definition
| Amount of market activity, good if market is on the rise, bad if it is falling. |
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Term
|
Definition
| Holds that past data on stock prices are no use in predicting the future. |
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Term
|
Definition
| Form of EMH Holding that abnormally large profits cannot be consistently earned using publically available information. |
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Term
|
Definition
| form of the EMH that holds that there is no information public or pricate that allows investors to earn abnormal profits consistently. |
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Term
|
Definition
| Secured debt obligations backed by a legal claim on specific propery of the issuer. |
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Term
|
Definition
| Senior bonds secured by real estate |
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Term
|
Definition
| senior bonds backed by securities owned by the issuer but held in trust by a third party. |
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|
Term
| first and refunding bonds |
|
Definition
| bonds secured in part with both first and second mortgages. |
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Term
|
Definition
| Debt obligations backed only by the promise of the issuer to pay interest and principal in a timely fashion. |
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Term
|
Definition
| another name or type of junior bond. |
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Term
|
Definition
| unsecured bonds whose claim is secondary to other debentures. |
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Term
|
Definition
| unsecured bonds requiring that interest be paid only after a sepcified amount of income is earned. |
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Term
|
Definition
| A bond with a market value in excess of par (Intereest rate drop below coupon rate) |
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Term
|
Definition
| a bond with a market value lowe than par (Interest rates greater than coupon) |
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Term
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Definition
| US Treasury Debt securities that are issued with maturities of 2-10 yeasr or less. |
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| Debt securities by US Treasury with 30 year maturity. |
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| Treasury inflation indexed obligations |
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| a type of treasury security that provides protection against inflation by adjusting investor returns for the anuual rate of inflation. |
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| deby securities issued by various agencies and organizations of teh US govt. |
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Definition
| Municipal bonds are issued of states, counties, cities, and other poltical subdivisions. |
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| Municipal bonds backed by the full faith, credit, and taxing power of the issuer. |
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| Municipal bonds that require payment of principal and interest only if sufficient revenue is generated by the issuer. |
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| Municipal Bond Guarentees |
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Definition
| guarentees from a party other than the issuer that principal and interest paymemnts will be made in a prompt and timely manner. |
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Definition
| the return a fully taxable bond would haev to provide to marth the after-tax return of a lower-yielding tax-free municipal bond. yield of municipal bond/1-federal tax rates. |
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Definition
| a debit issue secured by a pool of home mortgages. |
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Definition
| are highly speculative securities that have recv'd low investment grade ratings. Produce high yields. |
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Definition
| a payment-in-kind junk bond that gives the issuer the right to make annual interest payments in new bonds rather than in cash. |
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Definition
| Measure of the annual interest income a bond provides relative to its current market price. |
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