Financial Glossary

Created At: Jan 12, 2024 Last Updated: Jul 26, 2024

Accumulated Dividend
non-paid dividends due to cumulative, preferred stockholders
Acquisition
taking control of another company
Advanced Refunding
changing a government security prior to its due date for another government security with a later maturity date. Also bonds sold at a lesser interest rate before the call date of previously issued bonds
AMBAC
an insurance company that indemnifies bonds. In the event of the bond being defaulted, the company pays the investor the par price
ADR
stock of a foreign corporation that is held by a bank for an investor. The bank handles the currency conversion of dividends, as well as the payment of taxes due.
AMEX
American Stock Exchange
Average
arithmetic mean price of a security
Basis
  • Adjusted Basis: adjusted, net sales price of stock or bonds after adjusting for stock splits and deducting commissions
  • Cost Basis: original price of an asset
  • Tax Basis: purchase price of a stock or bond, including any commission charged
Bill
federally taxed US government security issued in a $1000 minimum denomination and having a maturity of 10 years or longer
Block the lessor
10,000 or more shares of stock or $200,000 worth of stock
Bond
a corporate or governmental security of a long-term nature, which has a fixed interest rate and dates upon which principal and interest are to be paid.
  • Baby Bond: bond with a par value of less than $1000
  • Bearer Bond: bond certificate with coupons attached for the bearer to use to collect interest at state intervals
  • Callable Bond: bond redeemed, prior to maturity by the issuer, for a premium price to the holder
  • Corporate Bond: taxable bond of a private corporation with a par value of $1000 and having a fixed term
  • Coupon Bond: same as bearer bond
  • Discount Bond: bond offered at a discount, or being sold for less than you paid for it.
  • Flower Bond: government bond whose par value is accepted as payment for a decedent's estate taxes provided the decedent was the hold on the date of death.
  • General Obligation Bond: a municipal bond backed by the full faith and credit (taxing power) of the municipality.
  • Hospital Revenue Bond: bond issued by a government on order to finance hospital or nursing home construction
  • Long Bond: 30 year Treasury bond or bond maturing after 10 years
  • Mortgage Bond: corporate bond secured by a mortgage on specific real estate, with the principal and interest being paid back in installments prior to maturity
  • Municipal Bond: issued for a par value of at least $5000 and tax exempt for federal purposes and in the state of issue
  • Par Bond: a bond selling for its face value of par
  • Prerefunded Bond: corporate or municipal bond having repayment guaranteed by a second bond issue. Put bond redeemed before maturity at full face value.
  • Redeemable Bond: same as Callable
  • Revenue Bond: same as Municipal Revenue
  • Savings Bond: U.S. Savings bond that is discounted and nontransferable upon issue and pays face value at maturity at which time it is federally taxable (issued in denominations of $50 to $10,000)
  • Serial Bond: municipal bonds with varying maturity dates for the purpose of gradually retiring the entire issue over the period of fixed redemption rates
  • Short Bond: bond having a short maturity period from 1 to 2 years or less
  • Tax Exempt Bond: same as Municipal Bond
  • Treasury Bond: U.S. Treasury Bond that is federally taxable and issued for 10 years at a minimum value of $1000.
  • Zero-Coupon Bond: bond that pays a lump sum of interest at maturity
Brokers
  • Full-Service Broker: brokers who do research and give advice, while charging high fees
  • Independent Broker: a member of the New York Stock Exchange who handles overflow security trades for floor brokers; or brokerage firms without floor brokers
  • Institutional Broker: a broker dealing in large volumes of securities for banks, mutual funds, pension finds, insurance companies and other institutional investors
  • Stock Broker: employee of brokerage house who acts as an agent for investors in buying and selling securities
Call
security that is redeemed before maturity by the issuer
Call Feature
agreement between the buyer and bond issuer detailing the redemption price when the bond is called before maturity
Call Option
the option or right to buy a certain number of shares of a stock or commodity at a preset price on or before a specific date, usually at a premium
Capital Changes
historical corporate securities data
CD - Certificate of Deposit
interest-paying certificate issued for funds deposited in a bank of a set time period
Certificate
documentary evidence of indebtedness of a corporation, or ownership in a corporation
Class
classification of a corporation's securities based on their specific features
Close
the last or closing price of a security at the end of the trading day
CMO
Collateralized Mortgage Obligation: mortgage pool bond with different maturity class(tranches) that pay via payments and prepayments of principal and interest
Consolidation
the merging of 2 or more corporations into 1 with the dissolution of the original companies
Coupon
removable portion of bond certificate which the holder gives to the issuer for periodic payment of interest due the holder for the life of the bond
  • Long Coupon: an interest payment on a bond that is issued more than 6 months prior to the first interest payment date
  • Short Coupon: a bond interest payment covering a period less than 6 months
Cumulative Preferred
preferred stock whose dividends accumulate until paid
CUSIP®
Committee on Uniform Securities Identification Procedures - Unique identifying numbers/letters assigned to an individual security
Custodian
financial institution having custody of securities for a client
Dates
  • Dated Date: start date of interest accruing on a bond
  • Date Declared: date corporate directors declare that a dividend is going to be paid
  • Ex-Dividend Date: date that a stock goes ex-dividend (4 days before the record date and about 3 weeks before the dividend is paid). Anyone buying stock after this date is not entitled to the dividend
  • Maturity Date: the date on which a bond expires and the holder is entitled to the face value of the bond
  • Payment Date: date of payment for a declared stock dividend or bond interest payment
  • Record Date: date upon which stock dividends are paid to shareholders whose names exist on the corporate books as of that date
  • Settlement Date: the date upon which the securities are delivered and paid for after being bought or sold. For stocks and bonds it is the 5th business day after the trade. For listed options and government securities, it is the next business day after the transaction
  • Trade Date: date upon which a security is traded
Dealer
people who buy and sell securities as principal, versus a broker who is someone's agent
Debenture
a corporate bond that is backer by the credit of the issuer
Delisting
removing a security from an exchange for cause
Discount Yield
percentage a security yields at maturity when sold at a discount
Dividend
periodic corporate earnings distributed to stockholders in the form of money or stock
Escrow
money or securities held by third parties pending completion of some contract terms
Estate
cash, securities and property held by a decedent at the time of death
Estate Tax
state or federal tax imposed on assets of an estate
Exchange Rate
currency price received for exchanging one country's currency for another country's currency
Face Value
value of a security that is displayed on the certificate
FHLMC
Federal Home Loan Mortgage Corporation - Agency that pools and resells residential mortgages
FNMA
Federal National Loan Mortgage Association Corporation, sponsored by the government, which purchases mortgages from lenders and sells them to investors
Fiduciary
the asset trust holder for a beneficiary
Fixed Income
Investment security paying a fixed amount of interest on a regular basis
Floater
variable interest rate security whose rate is tied to another interest rate
Foreign Corporation
a corporation organized under the laws of a foreign country
Fractional Share
less than one full share of stock
Freddie Mac
Federal Home Loan Mortgage Corp (FHLMC). Mortgage backed securities that are packages, sold and guaranteed by FHLMC and issued in denominations of $25,000
Funds
  • Agency Fund: fund of securities of a corporation that is government sponsored
  • Close-Ended Fund: fund of securities having a fixed number of shares, traded on a large stock exchange and usually sold at a discount form net asset value. They are also called "exchange traded" or "over the counter" funds.
  • Equity Fund: fund comprising only stock. Also called stock fund
  • Index Fund: a mutual fund containing a portfolio of an index that is broad based and reflects the composite of the market
  • International Fund: overseas funds invested in foreign markets. It also includes global funds (US and foreign securities), regional funds (fund invested in specific geographic regions) and country funds (fund invested in a specific foreign country)
  • Money Market Fund: pooled funds invested in short-term debt obligations
  • Mutual Fund: a collection of stocks, bonds or other types of securities that a group of investors own, but is managed by a professional investment company
  • Sinking Fund: a cash reserve that is established at the time that a bond is issued and is used to pay for bond calls
  • Treasury Fund: fund of short or long term US government securities
Ginnie Mae
Government National Mortgage Association (GNMA) - Guaranteed payments, from mortgage principal and interest payments (less bank service charges), paid to investors
Government Obligations
US Treasury bonds, bills, notes, and savings bonds representing debts that the government promises to repay investors
Holder of Record
a company's owner of securities on a specific date as recorded in the company's book. Also called stockholder of record
Income
the monetary payment received for services performed, goods sold, or revenue from investments
Inheritance Tax Return
state income tax return required of executors and administrators of estate for determination of income taxes due the state
Institutional Investor
an organization investing in large amounts of securities with its own funds or the funds of others which are entrusted to it
Interest
money charged, over a fixed period of time, for usage of money loaned to a borrower
  • Accrued Interest: accumulated interest from last payment to date of sale
  • Ordinary Interest: interest that is calculated based on a year of 360 days
Issuer
trust, agency, corporation, municipality, or government having the legal right to issue securities
Limited Partnership
investment partner sharing limited liability and having no managerial functions, while receiving some return on investment
Municipal Note
a municipal debt with a maturity date of no more that 2 years
NASDAQ
computerized system of security quotations by the National Association of Securities Dealers, enabling brokers and dealers to have instant access of security quotations for over-the-counter and many NYSE listed securities
Note
written guarantee to pay a specified amount to a lender on a specific date
NYSE
New York Stock Exchange that prices and trades securities of major corporations in the country
OID
Original Issue Discount for a bond that is issued below its face amount
Option
the right to buy or sell a security for a specific price for a specific time period
Original Maturity
the time from a bond's original issue date to its maturity date
PAR
face value of a bond
Paydown
the deduction resulting from the refunding of a bond issue for an issue of a lower value
Paying Agent
agent or band that receives (for a fee) funds from stock and bond issuers for payment of dividends to stockholders, and principal plus interest to bond holders
Pool
investment funds pooled for purposes of diversification and increased return on investments
Price
  • Asked Price: the lowest price at which a security is being offered for sales at 4 P.M. EST
  • Bid Price: the highest price at which a security can be bought at 4 P.M. EST
  • Call Price: the price at which a Call Feature security can be redeemed
  • Closing Price: same as Close
  • Conversion Price: a bond's par value cash amount when it is converted to a share of common stock
  • High Price: the highest closing price for a stock
  • Low Price: lowest price paid for a security
  • Mean Price: average of the high and low price of a stock
  • Quoted Price: the last sale or purchase price of a security
Principal Amount
the face amount of an obligation that the borrower must pay back at maturity
Privately Held
corporate securities that are not available to the public
Probate
process whereby a will is submitted to a Probate Court for appointment of an executor/administrator to carry out the terms of the will
Publicly Held
corporate securities that are available to the public
Rate of Exchange
see Exchange Rule
Refunding
a new security debt obligation replaces an old obligation in order to secure lower interest cost
Right
limited time stock offerings to stockholders to buy more shares at below market price
Round Lot
stocks sold or bought in multiples of 100 shares
Secondary Market
exchanges or markets where bonds and debt instruments are bought and sold via brokers after their original issue date
Securities Analyst
employee of a bank, brokerage. or investment firm who researches the financial status of corporations or industries
Security
written certificate or electronic record showing proof of ownership in a stock or bond
  • Convertible Security: bonds and preferred stock that can be exchanged for other securities
  • Federal Agency Security: debt instrument issued by a government agency and not backed by the Treasury
  • Pass-through-security: debt obligation pooled as a share that intermediaries receive from debtors
  • Tax Exempt Security: a security that is exempt from taxation
  • Unlisted Security: a security that is traded over-the-counter and not listed on any exchange
Share
basic unit of ownership of a corporation in the form of stock
Shareholder
person having equity ownership in a company or corporation by way of owning stock certificates showing the amount of shares owned.
Split
the number of shares are increased, while the value per share decreases in order to encourage investors to buy more shares
Sponsor
person or institution promoting investment in limited partnerships, mutual funds or stocks
Stock
certificate denoting ownership in a corporation
  • Common Stock: ownership of a corporation with the right to vote and receive dividends
  • Preferred Stock: corporate stock with guaranteed dividend payments that do not increase with increased profits and with greater chance of return upon failure of the corporation
  • Unissued Stock: a corporation's stock that is authorized by its charter, but never issued for sale
Stock Certificate
written proof of ownership in a corporation showing the owners name, number of shares owned and the par value of the shares.
Stock Exchange
market location where stocks and bonds are traded by members of the exchange
Stock Holder
individual having ownership in a corporation and possessing a stock certificate as proof of ownership
Stock Option
the right to buy or the obligation to sell a particular investment at a predetermined price for a set time period Subordinated debt that is lower in claim than other debt
Ticker Symbol
alphabetic letters serving as abbreviated security identification for trading purposes
Trader
a person buying or selling securities for a profit
Transfer Agent
a corporation or financial institution appointed by a corporation to serve as its agent for maintaining stock and bond records, and having the authority to issue or cancel certificates
Treasury Strip
US government zero-coupon bond sold at a deep discount or a fraction of their par value initially and close to par near maturity
Trust
the property (real or financial) held by a person or institution for the benefit of another person
  • Irrevocable Trust: a trust that once created cannot be terminated without the consent of the beneficiary
  • Municipal Investment Trust: unit investment trust that purchases municipal bonds that pay tax-free, monthly interest to trust shareholders
  • Revocable Trust: a trust allowing you to change the terms over a period of time
  • Unit Investment Trust: a specialized kind of investment company, which assembles a fixed portfolio of securities (usually tax exempt municipal bonds) and offers interest in that portfolio to the public with minimum investment of $1000 to $5000.
Trustee
person holding title to a trust
Unit
basic quantity of securities accepted for trade
Unit of Trading
minimum number of a security accepted for trading on an exchange. This is usually 100 shares for stock and $1000 to $5000 par value for bonds.
Warrant
right issued by corporations for investors to buy stock at a preset price for a limited time.