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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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BALANCE FUND

A mutual fund whose stated investment policy is to have at all times some portion of its investment assets in bonds and preferred stock as well as in common stock in an attempt to provide both growth and income.

BD

See broker-dealer

BEAR

An investor who acts on belief that a security or the market is falling or is expected to fall.

See also bull.

BEAR MARKET

A market in which prices of a certain group of securities are falling or are expected to fall.

BETA COEFFICIENT

A means of measuring the volatility of a security or portfolio of securities in comparison with the market as a whole. A beta of 1 indicates that the security’s price will move with the market. A beta greater than 1 indicates that the security´s price will be more volatile that the market. A beta less than 1 means that it will be less volatile than the market.

BID

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

BLUE CHIP STOCK

The equity issues of financially stable well established companies that have demonstrated their ability to pay dividends in both good and bad times.

BOARD ORDER or MARKET IF TOUCHED ORDER (MIT)

An order that becomes a market order only if the market touches or breaks through the order price. Board orders to buy are placed below the concurred market. Board orders to sell are placed above the concurred market.

Syn. Market –if- touched order.

BONA FIDE QUOTE

An offer from a broker-dealer to buy or sell securities; it indicates a willingness to execute a trade under the terms and conditions accompanying the quote.

See also firm quote; nominal quote; subject quote, workout quote.

BOND

A legal obligation off an issuing company or government to repay the principal of a loan to bond investors at a specified future date. Bonds are usually issued with a par value or face value of $ 1,000, representing the amount of money borrowed. The issuer promises to pay a percentage of the par value as interest on borrowed funds. The interest payment is stated on the face of the bond at issue.

BOOK ENTRY SECURITY

A security sold without delivery of a certificate. Evidence of ownership is maintained on records kept by a central agency; for example, the Treasury keeps records of purchasers of Treasury bills. Transfer of ownership is recorded by entering the change on the books or electronic files.

See also coupon bond; registered as to principal only.

BREAKDOWN

In technical analysis, the movement of a security´s price through an established support.

BREAKOUT

In technical analysis, the movement of a security´s price through an established resistance level.

BROKER

1. An individual or firm that charges a fee or commission for executing buy and sell orders submitted by another individual or firm
  2. The role of a firm when it acts as an agent for a customer and charges the customer a commission for its services.
See also agent; broker-dealer; dealer.

BROKER-DEALER (BD)

A person or firm in the business of buying and selling securities. A firm may act as both broker (agent) or dealer (principal) but not in the same transaction. Broker-dealers normally must register with the SEC, the appropriate SRO’sand any state in which they do business.

BULL (Toro)

An investor who acts on the belief that a security or the market is rising or the market is rising or is expected to rise.

See also bear.

BULL MARKET

A market in which prices of a certain group of securities are rising or are expected to rise.

BUSINESS CYCLE

A predictable long-term pattern of alternating periods of economic growth and decline. The cycle passes through four stages; expansion, peak, contraction, and trough.

BUSINESS DAY

A day on which financial markets are open for trading. Saturdays, Sundays and legal holidays are not considered business day.

BUYING A HEDGE

Purchasing futures options as protection against a future increase in commodities prices.

See also hedge; long hedge; selling a hedge; short hedge.

BUYING POWER

The amount of fully margined securities that a margin client can purchase using only the cash, securities and special memorandum account balance without depositing additional equity.

BUY  STOP ORDER

An order to buy a security that is entered at a price above the current offering price and that is triggered when the market price touches or goes through the buy stop price.