Financial Definitions; L thru Q

The ever increasing number of investing merchandises and financial services in the marketplace today can be confusing. We have got set together this glossary of financial definitions designed to assist you understand some of the more than common investing and financial terms you may encounter. Your financial advisor can explicate these terms more completely and discourse with you those which are relevant to your situation.

Legal List - A listing of investings selected by assorted states in which certain establishments and fiduciaries, such as as insurance companies and banks, may invest. Legal listings are often restricted to high quality securities meeting certain specifications.

Leverage - The consequence on a company when the company have bonds, preferable stock, or both outstanding. Example: If the earnings of a company with 1,000,000 common shares additions from $1,000,000 to $1,500,000 - earnings per share would travel up from $1 to $1.50, or an addition of 50 percent. But if earnings of a company that had to pay $500,000 in chemical bond interest increased that much - earnings per common share would leap from 50 cents to $1 a share, or 100 percent.

Liabilities - All the claims against a corporation. Liabilities include accounts, wages, and wages payable; dividends declared payable; accrued taxes payable; fixed or long-term liabilities, such as as mortgage bonds, unsecured bonds and bank loans.

Limit, Limited Order, or Limited Price Order - An order to purchase or sell a declared amount of a security at a specified price, or at a better price, if gettable after the order is represented in the trading crowd.

Liquidation - The procedure of converting securities or other property into cash. The dissolving of a company, with cash remaining after sale of its assets and payment of all indebtedness being distributed to the shareholders.

Liquidity - The ability of the market in a peculiar security to absorb a sensible amount of purchasing or merchandising at sensible terms changes. Liquid is one of the most of import features of a good market.

Listed Stock - The stock of a company that is traded on a securities exchange.

Load - The part of the offering terms of shares of open-end investment companies in extra of the value of the implicit in assets. Covers sales committees and all other costs of distribution. The loading is usually incurred only on purchase, there being, in most cases, no charge when the shares are sold (redeemed).

Locked In - Investors are said to be locked in when they have got net income on a security they have but make not sell because their net income would immediately go subject to the capital additions tax.

Long - Signifies ownership of securities. "I am long 100 U.S. Steel" intends the talker have 100 shares.

Manipulation - An illegal operation. Buying or merchandising a security for the intent of creating false or misleading visual aspect of active trading or for the intent of raising or blue the terms to bring on purchase or sale by others.

Margin - The amount paid by the client when using a broker's credit to purchase or sell a security. Under Federal Soldier Modesty regulations, the initial border demand since 1945 have ranged from the current rate of 50 percent of the purchase terms up to 100 percent.

Margin Call - A demand upon a client to set up money or securities with the broker. The phone call is made when a purchase is made; also if a customer's account diminutions below a minimum criterion set by the Exchange or by the firm.

Market Order - An order to purchase or sell a declared amount of a security at the most advantageous terms gettable after the order is represented in the trading crowd.

Market Price - The last reported terms at which the stock or chemical chemical bond sold, or the current quote.

Maturity - The day of the month on which a loan or bond come ups owed and is to be paid off.

Member Corporation - A securities brokerage firm, organized as a corporation, with at least one member of the New House Of House Of House Of York Stock Exchange who is an officer or employee of the corporation.

Member Firm - A securities brokerage firm organized as a partnership and having at least one general spouse or employee who is a member of the New York Stock Exchange.

Member Organization - The term includes New York Stock Exchange member Firms and Member Corporations.

Merger - Combination of two or more than corporations.

Money Market Fund - A common monetary fund whose investings are in high-yield money market instruments such as as federal securities, CDs and commercial paper. Its purpose is to do such as instruments, normally purchased in large denominations by institutions, available indirectly to individuals.

Mortgage Chemical Bond - A chemical bond secured by a mortgage on a property. The value of the property may or may not equal the value of the chemical bonds issued against it.

Municipal Chemical Bond - A chemical bond issued by a state or a political subdivision, such as as county, city, town or village. The term also designates chemical bonds issued by state agencies and authorities. In general, interest paid on municipal chemical bonds is exempt from federal income taxes and state and local taxes within the state of issue.

Naked Option - An option place that is not offset by an equal and opposite place in the implicit in security.

NASD - The National Association of Securities Dealers, an association of brokers and dealers in the over-the-counter securities business.

NASDAQ - An automated information web that supplies brokers and dealers with terms citations on securities traded over-the-counter. NASDAQ is an acronym for National Association of Securities Dealers Automated Quotations.

Negotiable - Refers to a security, statute title to which is transferable by delivery.

Net Asset Value - Usually used in connexion with investing companies to intend nett plus value per share. An investing company calculates its assets daily, or even twice daily, by totaling the market value of all securities owned. All liabilities are deducted, and the balance divided by the number of share outstanding. The consequent figure is the nett plus value per share.

Net Change - The change in the terms of a security from the shutting terms on one twenty-four hours to the shutting terms on the adjacent twenty-four hours on which the stock is traded. The nett change is ordinarily the last figure in the newspaper stock terms list. The grade +1 1/8 agency up $1.125 a share from the last sale on the former twenty-four hours the stock traded.

New Issue - A stock or chemical bond sold by a corporation for the first time. Return may be used to retire outstanding securities of the company, for new works or equipment, for further workings capital, or to get a public ownership interest in the company for private owners.

New House Of House Of House Of York Futures Exchange (NYFE) - A subordinate of the New York Stock Exchange devoted to the trading of hereafters products.

New York Stock Exchange (NYSE) - The largest organized securities market in the United States, founded in 1792. The Exchange itself makes not buy, sell, own, or set the terms of securities traded there. The terms are determined by public supply and demand. The Exchange is a not-for-profit corporation of 1,366 person members, governed by a Board of Directors consisting of 10 populace representatives, 10 Exchange members or allied members and a full-time chairman, executive director frailty president and president.

Non-cumulative - Somes type of preferable stock on which unpaid dividends make not accrue. Omitted dividends are, as a rule, gone forever.

NYSE Complex Index - The composite index covering terms motions of all common pillory listed on the New House Of York Stock Exchange. It is based on the stopping point of the market December 31, 1965 as 50.00 and is weighted according to the number of shares listed for each issue. The index is computed continuously and printed on the heart tape. Point changes in the index are converted to dollars and cents so as to supply a meaningful measurement of changes in the average terms of listed stocks. The composite index is supplemented by separate indexes for four industry groups: industrial, transportation, public utility and finance.

Odd Batch - An amount of stock less than the constituted 100-share unit.

Off-Board - This term may mention to transactions over-the-counter in unlisted securities or to a transaction of listed shares that is not executed on a national securities exchange.

Offer - The terms at which a individual is ready to sell. Opposed to bid, the terms at which one is ready to buy.

Open Interest - In options and hereafters trading, the number of outstanding option contracts, at a given point in time, which have got got not been exercised and have not yet reached expiration.

Option - A right to purchase (call) or sell (put) a fixed amount of a given stock at a specified terms within a limited clip period of time. The purchaser trusts that the stock's terms will travel up (a call) or down (a put) by an amount sufficient to supply a net income when the option is sold. If the stock terms throws steady or moves in the antonym direction, the terms paid for the option is lost entirely. There are respective other types of options available to the public but these are basically combinations of put option and calls. Individuals may compose (sell) as well as purchase options. Options are also traded on stock indexes, futures, and debt instruments.

Overbought - An sentiment as to terms levels. May mention to a security that have had a crisp rise or to the market as a whole after a time period of vigorous purchasing which, it may be argued, have left terms "too high."

Oversold - The contrary of overbought. Somes single security or a market which, it is believed, have declined to an unreasonable level.

Over-The-Counter - A market for securities made up of securities dealers who may or may not be members of a securities exchange. The over-the-counter market is conducted over the telephone and deals mainly with pillory of companies without sufficient shares, stockholders, or earnings to justify listing on an exchange. Over-the-counter dealers may move either as principals or as brokers for customers. The over-the-counter market is the principal market for chemical bonds of all types.

Paper Net Income (Loss) - An unfulfilled net income or loss on a security still held. Paper net income and losings go realized only when the security is sold.

Par - In the lawsuit of a common share, par intends a dollar amount assigned to the share by the company's charter. Par value may also be used to calculate the dollar amount of common shares on the balance sheet. Par value have small human relationship to the market value of common stock. Many companies issue no-par stock but give a declared per share value on the balance sheet. In the lawsuit of preferable pillory it signifies the dollar value upon which dividends are figured. With bonds, par value is the human face amount, usually $1,000.

Participating Preferred - A preferable stock, that is entitled to its declared dividend and, also, to further dividends on a specified footing upon payment of dividends on the common stock.

Passed Dividend - Omission of a regular or scheduled dividend.

Penny Pillory - Low-priced issues, often highly speculative, selling at less than $1 a share. Frequently used as a term of disparagement, although some penny pillory have got developed into investing quality issues.

Point - In the lawsuit of shares of stock, a point intends $1. If rudiment shares rise 3 points, each share have risen $3. In the lawsuit of chemical bonds a point intends $10, since a chemical bond is quoted as a percentage of $1,000. A chemical bond that rises 3 points additions 3 percent in $1,000, or $30 in value. An advance from 87 to 90 would intend an advance in dollar value from $870 to $900. In the lawsuit of market averages, the word point intends merely that and no more. If, for example, the New York Stock Exchange Complex Index lifts from 90.25 to 91.25, it have risen a point. A point in this index, however, is not like to $1.

Portfolio - Holdings of securities by an individual or institution. A portfolio may incorporate bonds, preferable stocks, common pillory and other securities.

Preferred Stock - A social class of stock with a claim on the company's earnings before payment may be made on the common stock and usually entitled to precedence over common stock if the company liquidates. Usually entitled to dividends at a specified rate - when declared by the Board of Directors and before payment of a dividend on the common stock - depending upon the terms of the issue.

Premium - The amount by which a chemical bond or preferable stock may sell above its par value. For options, the terms that the buyer pays the author for an option contract ("option premium" is synonymous with "the terms of an option"). May refer, also, to salvation terms of a chemical bond or preferable stock if it is higher than human face value.

Price-Earnings Ratio - A popular manner to compare pillory selling at assorted terms levels. The pe ratio is the terms of a share of stock divided by earnings per share for a twelve-month period. For example, a stock merchandising for $50 a share and earning $5 a share is said to be merchandising at a price-earnings ratio of 10.

Primary Distribution - Also called primary or public offering. The original sale of a company’s securities.

Prime Rate - The lowest interest rate charged by commercial banks to their most credit-worthy customers; other interest rates, such as as personal, automobile, commercial and funding loans are often pegged to the prime.

Principal - The individual for whom a broker carries an order, or dealers buying or merchandising for their ain accounts. The term "principal" may also mention to a person's capital or to the human face amount of a bond.

Profit-Taking - Selling stock which have appreciated in value since purchase, in order to recognize the profit. The term is often used to explicate a downswing in the market following a time period of rising prices.

Prospectus - The functionary merchandising round that must be given to purchasers of new securities registered with the Securities and Exchange Commission. It highlights the much longer Registration Statement data file with the Commission.

Proxy - Written mandate given by a shareholder to person else to stand for him or her and ballot his or her shares at a shareholders' meeting.

Proxy Statement - Information given to stockholders in conjunction with the solicitation of proxies.

Prudent Man Rule - An investing standard. In some states, the law necessitates that a fiduciary, such as as a trustee, may put the fund's money only in a listing of securities designated by the state - the so-called legal list. In other states, the legal guardian may put in a security if it is one that would be bought by a prudent individual of discretion and intelligence, who is seeking a sensible income and saving of capital.

Quote - The highest command to purchase and the lowest offer to sell a security in a given market at a given time. If you inquire your broker for a "quote" on a stock, he or she may come up back with something like "45 1/4 to 45 1/2." This agency that $45.25 is the highest terms any buyer wanted to pay at the clip the quote was given on the flooring of the Exchange and that $45.50 was the lowest terms that any marketer would take at the same time.

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