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Investment and Trading Glossary

A B C D E F G H I J K L M N O P  Q  R S T U V W X Y Z

 

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ACCREDITED INVESTOR

An accredited investor is generally accepted to be one who:

  • Has a net worth of $ 1 million or more; or
  • Has had an annual income of $ 200,000 or more in each of the two most recent years (or $ 300,000 jointly with a spouse) and who has a reasonable expectation of reaching the same income level in the concurrent year.

ACCRUED INTEREST

The interest that has accumulated since the last interest payment up to, but not including, the settlement date and that is added to the contract price of a bond transaction.

ACQUISITION FEE

The total charges and commissions paid by any party in connection with the selection or purchase of property by a direct participation program. Included in the total is any real estate commission, acquisition expense, development fee, selection fee or construction fee of a similar nature. The fee is added to the basis in the asset for the purpose of depreciation and calculating gain or loss.

ADR

American depositary receipt

ADS

American Depositary Share

AFFILIATE

1. A person who directly or indirectly owns, controls or holds with power to vote 10% or more of the outstanding voting securities of a company.
  2. With respect to a direct participation program, any person who controls, is controlled by or is under common control with the program´s sponsor and includes any person who beneficially owns 50% or more of the equity interest in the sponsor.
 

3. Under the Investment Company Act of 1940, a person who has any type of control over an investment company´s operations, which includes anyone with 5% or more of the outstanding voting securities of the investment company hold 5% or more of outstanding securities.

See also control person; insider.

AGENT

1.  An individual or firm that effects securities transactions for the accounts of others.
  2.  A person licensed by a state as a life insurance agent.
 

3.  A securities salesperson who represents a broker-dealer or issuer when selling or trying to sell securities to the investing public; this individual is considered an agent whether he actually receives or simply solicits orders.

See also broker; broker-dealer; dealer; principal.

AGGRESSIVE INVESTMENT STRATEGY

A method of portfolio allocation and management aimed at achieving maximum return: Aggressive investors place a high percentage of their investable assets in equity securities and far lower percentage in safer debt securities and cash equivalents, and pursue aggressive policies including margin trading, arbitrage and options trading.

ALL OR NONE ORDER (AON)

An order that instructs the floor broker to execute the entire order in one transaction; if the order cannot be executed in its entirety, it is allowed to expire.

ALPHA COEFFICIENT

A measure of the projected rate of change in a security´s price independent of market-related
factors but based instead on such indicators as the strength of the company´s earnings and the expected level of sales.

See also beta coefficient.

AMERICAN DEPOSITARY RECEIPT (ADR)

A negotiable certificate representing a given number of shares of stock in a foreign corporation; it is bought and sold in the American securities markets, stock is traded.

Syn. American depositary.

   

AMERICAN DEPOSITARY SHARE (ADS)

A U.S. dollar-denominated equity share of a foreign-based company available for purchase on an American stock exchange. American Depositary Shares (ADSs) are issued by depository banks in the U.S. under agreement with the issuing foreign company; the entire issuance is called an American Depositary Receipt (ADR) and the individual shares are referred to as ADSs.

ARBITRAGE

The simultaneous purchase and sale of the same or related securities to take advantage of a market inefficiency.

ASCENDING TRIANGLE

On a technical analyst´s trading activity chart, a pattern which indicates that the market has started to move back up; considered to be a bullish indicator.

ASK

An indication by a trader or a dealer of a willingness to sell a security or a commodity; the price at which an investor can buy from a broker-dealer.

Syn offer.

See also bid; public of offering price; quotation.

ASSET

1.  Anything that an individual or a corporation owns.
  2.  A balance sheet item expressing what a corporation owns.

ASSET ALLOCATION FUND

A mutual fund that splits its investment assets among stocks, bonds and other vehicles in an attempt to provide a consistent return for the investor.

See also mutual fund.

AT THE CLOSE ORDER 

Market on close order.

AT-THE-MONEY

The term used to describe an option when the underlying stock is trading precisely at the exercise price of the option.

See also in-the-money; out-of-the money.

AT THE OPENING ORDER

An order that specifies it is to be executed at the opening of the market or of trading in the security or else it is to be canceled.

AUTHORIZED STOCK

The number of shares of stock that a corporation is permitted to issue. This number of shares is stipulated in the corporation´s state –approved charter, and may be changed by a vote of the corporation´s stock-holders.

AVERAGE

A price at a midpoint among a number of prices. Technical analysts frequently use averages as market indicators.

See also index.

AVERAGE BASIS

An accounting method used when an investor has made multiple purchases at different prices of the same security; the method averages the purchase prices to calculate an investor´s cost basis in shares being liquidated. The difference between the average cost basis and the selling price determines the investor´s tax liability.

See also first in, first out; last in, first out; share identification.