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An order to trade a security, to be executed in pieces at pre-determined price levels.
Created by an act of Congress in 1934, the Securities and Exchange Commission regulates the securities industry and protects investors from fraudulent practices.
Sale of a block of listed or unlisted securities after it has originally been sold by the issuer.
A group of securities that are similar (e.g., maturity, type, rating, industry, etc).
An independent entity that provides automation, data, clearing, and communications for exchanges.
A non-profit corporation established by Congress to insure assets in customer accounts (up to $500,000 or $100,000 in cash) in the event of a brokerage bankruptcy, but not against investment losses. To learn more, go to www.sipc.org
An investment instrument defined by the Securities Exchange Act of 1934 as ‘Any note, stock, treasury stock, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit, for a security, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or in general, any instrument commonly known as a ‘security’; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing; but shall not include currency or any note, draft, bill of exchange, or banker’s acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited.
Conditional trading order that instructs an agent to sell a security at the designated price or higher. Limit orders become market orders when they reach the specified limit and execute at the market price, not the specified limit price.
A seller’s right to select a date of a security’s delivery, within limits prescribed by a contract (usually from not less than two business days to not more than 60 days).
Borrowing a security from a broker and selling it, hoping the price will go down. Eventually, the borrower must buy the stock back on the open market to repay the broker.
A corporate bond arranged so that specified principal amounts become due on specified dates.
When payment is made for an executed trade and the security is delivered.
Certificates or book entries representing ownership in a corporation.
An investor who has sold a contract to establish a market position and who has not yet closed out this position through an offsetting purchase. Opposite of a long position.
Selling a security that the seller does not own, but is committed to repurchasing eventually (profiting from an expected decline in the security’s price).
Investing with high risk when principal safety is secondary to quick gains.
An investor who attempts to anticipate (and profit from) market price changes, assuming a large amount of risk in the process.
An independent company created from an existing division of another firm by selling or distributing new shares in the spin-off.
An increase in the number of shares (but not the value of shares) held by shareholders. Shareholders maintain the same percentage of equity in the corporation as before the split.
1) The gap between bid and ask prices; 2) The simultaneous purchase and sale of separate contracts for the same asset for delivery in different months; 3) Difference between the price at which an underwriter buys an issue from a firm and the price at which that underwriter sells it to the public; 4) The price an issuer pays above a benchmark fixed-income yield to borrow money.
Measures the fluctuation of returns around the arithmetic average return of the investment. The higher the standard deviation, the greater the variable (and the risk) of the investment return.
Ownership of a corporation, represented by shares, which in turn represent a piece of that corporation’s assets and earnings.
Payment of a dividend in shares of stock rather than cash.
A formal organization, approved and regulated by the SEC, made up of members who use the exchange to trade certain common stocks.
Lettered symbols (up to four letters per symbol) assigned to securities and mutual funds trading on U.S. exchanges.
Registered holder of an issuer’s securities.
A stop order that designates a price limit. In contrast to the stop order (which becomes a market order once the stop is reached), the stop limit order becomes a limit order once the stop is reached.
An order to buy or sell at the market when a definite price is reached, either above (on a buy) or below (on a sell) the price that prevailed when the order was given. Stop orders become market orders when they reach the specified limit and execute at the market price, not the specified limit price.
Brokers, dealers, underwriters, and other knowledgeable members of the financial community.
The stated price per share for which underlying stock may be purchased (in the case of a call) or sold (in the case of a put) by the option holder upon exercise of the option contract.
An agreement to settle a lawsuit involving specific payments made over a period of time.
Account in which a brokerage firm takes all the excess available funds at the close of each business day and invests them on behalf of the firm.
A group of brokerage firms that act jointly, temporarily, to loan money in a bank credit or to underwrite a new issue of bonds.