(no subject)
bond (p. 513)
A corporate certificate indicating that a person has lent money to a firm.
buying stock on margin (p. 530)
Purchasing stocks by borrowing some of the purchase cost from the brokerage firm.
capital gains (p. 526)
The positive difference between the purchase price of a stock and its sale price.
commodity exchange (p. 531)
A securities exchange that specializes in the buying and selling of precious metals and minerals (e.g., silver, foreign currencies, gasoline) and agricultural goods (e.g., wheat, cattle, sugar).
common stock (p. 518)
The most basic form of ownership in a firm; it confers voting rights and the right to share in the firm's profits through dividends, if offered by the firm's board of directors.
debenture bonds (p. 515)
Bonds that are unsecured (i.e., not backed by any collateral such as equipment).
diversification (p. 530)
Buying several different investment alternatives to spread the risk of investing.
dividends (p. 516)
Part of a firm's profits that may be distributed to stockholders as either cash payments or additional shares of stock.
Dow Jones Industrial Average (the Dow) (p. 555)
The average cost of 30 selected industrial stocks, used to give an indication of the direction (up or down) of the stock market over time.
exchange-traded funds (ETFs) (p. 528)
Collections of stocks that are traded on exchanges but are traded more like individual stocks than like mutual funds.
futures markets (p. 531)
Commodities markets that involve the purchase and sale of goods for delivery sometime in the future.
initial public offering (IPO) (p. 512)
The first public offering of a corporation's stock.
institutional investors (p. 513)
Large organizations-such as pension funds, mutual funds, insurance companies, and banks-that invest their own funds or the funds of others.
interest (p. 513)
The payment the issuer of the bond makes to the bondholders for use of the borrowed money.
investment bankers (p. 513)
Specialists who assist in the issue and sale of new securities.
junk bonds (p. 530)
High-risk, high-interest bonds.
maturity date (p. 514)
The exact date the issuer of a bond must pay the principal to the bondholder.
mutual fund (p. 527)
An organization that buys stocks and bonds and then sells shares in those securities to the public.
NASDAQ (p. 521)
A nationwide electronic system that communicates over-the-counter trades to brokers.
over-the-counter (OTC) market (p. 520)
Exchange that provides a means to trade stocks not listed on the national exchanges.
preferred stock (p. 517)
Stock that gives its owners preference in the payment of dividends and an earlier claim on assets than common stockholders if the company is forced out of business and its assets sold.
program trading (p. 536)
Giving instructions to computers to automatically sell if the price of a stock dips to a certain point to avoid potential losses.
prospectus (p. 521)
A condensed version of economic and financial information that a company must file with the SEC before issuing stock; the prospectus must be sent to prospective investors.
Securities and Exchange Commission (SEC) (p. 521)
Federal agency that has responsibility for regulating the various exchanges.
sinking fund (p. 515)
A reserve account in which the issuer of a bond periodically retires some part of the bond principal prior to maturity so that enough capital will be accumulated by the maturity date to pay off the bond.
stockbroker (p. 522)
A registered representative who works as a market intermediary to buy and sell securities for clients.
stock certificate (p. 516)
Evidence of stock ownership that specifies the name of the company, the number of shares it represents, and the type of stock being issued.
stock exchange (p. 519)
An organization whose members can buy and sell (exchange) securities for companies and investors.
stocks (p. 516)
Shares of ownership in a company
stock splits (p. 527)
An action by a company that gives stockholders two or more shares of stock for each one they own.