| Bond |
A debt instrument,
normally paying a fixed interest rate or "coupon." |
| Brokerage |
A company that has the
right to buy or sell stock on your behalf on a stock exchange. |
| Calls |
Generally, an option to
buy 100 shares of stock at a future date and at a set price. |
| CDO |
Collateralized Debt Obligation. A bundle of
debt obligations secured by (usually) non-mortgage assets (loans). The
buying/selling of complex CDOs contributed to the liquidity crisis of
2007-NN. Risk became hard to assess and financial institutions were
hesitant to buy them. |
| Coupon |
Old bond payment tickets.
Part of a paper bond would be cut, then brought to a transfer agent and
paid. Today, slang for the interest rate on a bond. |
| Dividend |
An amount paid each year
by companies to its shareholders as an incentive to own its stock. |
| Equities |
Stocks; you own equity in
a company. |
| ETF |
Exchange Traded Fund.
A mutual fund that trades on a stock market. Non-ETF mutual funds
are priced at their Net Asset Value at the end of the day. |
| Futures |
Contracts to buy a
commodity or other financial instruments at a future date and at a set
price. |
| IPO |
Initial Public Offering.
When a company goes public and sells stock for the first time. |
| Long |
To buy a stock (as
opposed to shorting it). |
| M and A |
Merger and Acquisitions.
A term often used when companies are buying other companies. |
| Margin |
The interest rate charged
when you buy stocks on credit. |
| Mutual Fund |
A company that pools the
money of many investors and buys stocks or bonds with this money.
Risk is reduced when many stocks or bonds are bought. |
| NASDAQ |
National Association of
Securities Dealers. An electronic stock exchange. |
| Options |
Contracts to buy stocks
or other financial instruments at a future date and at a set price.
Normally, a call option (long), or put option (short). |
| P/E Ratio |
The price of a stock
divided by earnings per share. It is used to compare with other
companies in the same industry. |
| Puts |
Generally, an option to
sell 100 shares of stock (short) at a future date and at a set price. |
| Short |
To sell as stock you
don't own (borrow the shares from someone else). |
| SIV |
Structured Investment Vehicle. A fund that
borrows (issues debt) at short term interest rates, and invests the
proceeds in long term debt that yields a higher interest rate. That is,
a fund that borrows short term and invests long term. The risk is: (1)
the value of the long term debt falls below the short term debt and
causes insolvency, and (2) the interest received from the long term debt
is less than the interest payments that are due on the short term debt,
causing a liquidity crisis, forcing the fund to sell long term debt to
cover the short term interest. SIVs liquidity issues greatly contributed
to the crisis of 2007-NN. |
| Symbol |
An abbreviation of a
company name. All stocks, bonds, and mutual funds have symbols.
Ticker Symbol, may also be used. |
| Ticker Tape |
Before computers, stock
prices were telegraphed around the country onto a piece of paper tape.
It still exists electronically, and is just known as The Tape. |
| X-Dividend
Date |
The date a stock's
dividend is deducted from its price, usually 3 days before the record
date. You must own the stock before the X date and retain it until
after the record date to receive the dividend. |
| Yield Curve |
A graph of interest
rates. Rates are on the vertical axis, and time is on the
horizontal. It usually rises from left to right (longer term,
higher rate). |
