Quick Jump: 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

EARNINGS 
Net income for the company during the period.  

EARNINGS PER SHARE (EPS) 
Also referred to as Primary Earnings Per Share. Net income for the past 12 months divided by the number of common shares outstanding, as reported by a company. The company often uses a weighted average of shares outstanding over reporting term.  

EARNINGS YIELD 
The ratio of Earnings Per Share after allowing for tax and interest payments on fixed interest debt, to the current share price. The inverse of the Price/Earnings ratio. It's the Total Twelve Months Earnings divided by number of outstanding shares, divided by the recent price, multiplied by 100. The end result is shown in percentage.  

EQUITY 
The value of the common stockholders' equity in a company as listed on the balance sheet.  

EQUITY OPTIONS 
Securities that give the holder the right to buy or sell a specified number of shares of stock, at a specified price for a certain (limited) time period. Typically one option equals 100 shares of stock.  

EXCHANGE 
The marketplace in which shares, options and futures on stocks, bonds, commodities and indices are traded. Principal US stock exchanges are: New York Stock Exchange (NYSE), American Stock Exchange (AMEX) and the National Association of Securities Dealers (NASDAQ)  

EX-DIVIDEND DATE 
The first day of trading when the seller, rather than the buyer, of a stock will be entitled to the most recently announced dividend payment. This date set by the NYSE (and generally followed on other US exchanges) is currently two business days before the record date. A stock that has gone ex-dividend is marked with an x in newspaper listings on that date.  

EXECUTION 
The process of completing an order to buy or sell securities. Once a trade is executed, it is reported by a Confirmation Report; settlement (payment and transfer of ownership) occurs in the U.S. between 1 (mutual funds) and 5 (stocks) days after an order is executed. Settlement times for exchange listed stocks are in the process of being reduced to three days in the U.S.  

EXERCISE 
To implement the right of the holder of an option to buy (in the case of a call) or sell (in the case of a put) the underlying security.  

EXPENSE RATIO 
The percentage of the assets that were spent to run a mutual fund (as of the last annual statement). This includes expenses such as management and advisory fees, overhead costs and 12b-1 (distribution and advertising ) fees. The expense ratio does not include brokerage costs for trading the portfolio, although these are reported as a percentage of assets to the SEC by the funds in a Statement of Additional Information (SAI). the SAI is available to shareholders on request. Neither the expense ratio or the SAI includes the transaction costs of spreads, normally incurred in unlisted securities and foreign stocks. These two costs can add significantly to the reported expenses of a fund. The expense ratio is often termed an Operating Expense Ratio (OER).  

EXPIRATION CYCLE 
An expiration cycle relates to the dates on which options on a particular security expire. A given option will be placed in 1 of 3 cycles, the January cycle, the February cycle, or the March cycle. At any point in time, an option will have contracts with 4 expiration dates outstanding, 2 in near-term months and 2 in far-term months.  

EXPIRATION DATE 
The last day (in the case of American-style) or the only day (in the case of European- style) on which an option may be exercised. For stock options, this date is the Saturday immediately following the 3d Friday of the expiration month; however, brokerage firms may set an earlier deadline for notification of an option holder's intention to exercise. If Friday is a holiday, the last trading day will be the preceding Thursday.  

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FUND FAMILY 
The management company that runs and/or sells shares of the fund. Fund families often offer several funds with different investment objectives.  

FUNDS FROM OPERATIONS (FFO) 
Used by real estate and other investment trusts to define the cash flow from trust operations. It is earnings with depreciation and amortization added back. A similar term increasingly used is Funds Available for Distribution (FAD), which is FFO less capital investments in trust property and the amortization of mortgages.  

FUTURES CONTRACT 
Agreement to buy or sell a set number of shares of a specific stock in a designated future month at a price agreed upon by the buyer and seller. The contracts themselves are often traded on the futures market. A futures contract differs from an option because an option is the right to buy or sell, whereas a futures contract is the promise to actually make a transaction. 

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GOOD 'TIL CANCELED 
Sometimes simply called "GTC", it means an order to buy or sell stock that is good until you cancel it. Brokerages usually set a limit of 30-60 days, at which the GTC expires if not restated.  

GROWTH RATES 
Compound annual growth rate for the number of full fiscal years shown. If there is a negative or zero value for the first or last year, the growth is NM (not meaningful).  

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HEAD & SHOULDERS 
In technical analysis, a chart formation in which a stock price reaches a peak and declines, rises above its former peak and again declines and rises again but not to the second peak and then again declines. The first and third peaks are shoulders, while the second peak is the formation's head. Technical analysts generally consider a head and shoulders formation to be a very bearish indication.  

HEDGING 
A strategy designed to reduce investment risk using "call" options, "put" options, "short" selling, or futures contracts. A hedge can help lock in existing profits. Its purpose is to reduce the potential volatility of a portfolio, by reducing the risk of loss.     

HOLDING COMPANY 
A corporation that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors.

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INDICATED DIVIDEND 
Total amount of dividends that would be paid on a share of stock over the next 12 months if each dividend were the same amount as the most recent dividend. Usually represent by the letter e in stock tables  

INDICATED YIELD 
The yield, based on the most recent quarterly rate times four. To determine the yield, divide the annual dividend by the price of the stock. The resulting number is represented as a percentage.  

INDUSTRY 
The category describing a company's primary business activity. This usually is determined by the largest portion of revenue.  

INITIAL PUBLIC OFFERING (IPO) 
A company's first sale of stock to the public. Securities offered in an IPO are often, but not always, those of young, small companies seeking outside equity capital and a public market for their stock. Investors purchasing stock in IPOs generally must be prepared to accept very large risks for the possibility of large gains. IPO's by investment companies (closed end funds) usually contain underwriting fees which represent a load to buyers.  

INSIDER INFORMATION 
Relevant information about a company that has not yet been made public. It is illegal for holders of this information to make trades based on it, however received.  

IN-THE-MONEY 
A "call" option is in-the-money if the strike price is less than the market price of the underlying security. A "put" option is in-the-money if the strike price is greater than the market price of the underlying security. For example, an xyz "call" option with a 52 strike price is in-the-money when xyz trades at 52 1/8 or higher. An xyz "put" option with a 52 strike price is in-the-money when xyz is trading at 51 7/8 or lower.  

INVENTORY 
For companies: Raw materials, items available for sale or in the process of being made ready for sale. They can be individually valued by several different means, including cost or current market value, and collectively by FIFO, LIFO or other techniques. The lower value of alternatives is usually used to preclude overstating earnings and assets. For security firms: securities bought and held by a broker or dealer for resale.  

INVENTORY TURNOVER 
The ratio of annual sales to inventory. Low turnover is an unhealthy sign, indicating excess stocks and/or poor sales.  

INVESTMENT TRUST 
A closed-end fund regulated by the Investment Company Act of 1940. These funds have a fixed number of shares which are traded on the secondary markets similarly to corporate stocks. The market price may exceed the net asset value per share, in which case it is considered at a "premium." When the market price falls below the NAV/share, it is at a "discount." Many closed end funds are of a specialized nature, with the portfolio representing a particular industry, country, etc. These funds are usually listed on US and foreign exchanges.  

IRA/KEOGH ACCOUNTS 
Special accounts where you can save and invest, and the taxes are deferred until money is withdrawn. These plans are subject to frequent changes in law with respect to the deductibility of contributions. Withdrawals of tax deferred contributuons are taxed as income, including the capital gains from such accounts.

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LAST SPLIT 
After a stock split, the number of shares distributed for each share held and the date of the distribution.  

LIMIT ORDER 
An order to buy a stock at or below a specified price or to sell a stock at or above a specified price. For instance, you could tell a broker "Buy me 100 shares of xyz Corp at $8 or less" or to "sell 100 shares of xyz at $10 or better."  

LOAD FUND 
A mutual fund with shares sold at a price including a sales charge--typically 4 % to 8% of the net amount indicated. Some "no-load" funds have distribution fees permitted by article 12b1 of the Investment Company Act; these are typically 0.25%. A "true no-load" fund has neither a sales charge not 12b1 fee. A load implies that the fund purchaser receives some investment advice or other service worthy of the charge.  

LONG POSITION 
Occurs when an individual owns securities. An owner of 1000 shares of stock is said to be "Long the Stock."  

LONG TERM ASSETS 
Value of property, equipment and other capital assets minus the depreciation. This is an entry in the bookkeeping records of a company, usually on a "cost" basis and thus does not necessarily reflect the market value of the assets.  

LONG TERM DEBT 
Value of obligations of over 1 year that require that interest be paid.  

LONG TERM DEBT/CAPITALIZATION 
Indicator of financial leverage. Shows long term debt as a proportion of the capital available. Determined by dividing long term debt by the sum of long term debt, preferred stock and common stockholders' equity.  

LONG TERM LIABILITIES 
Amount owed for leases, bond repayment and other items due after 1 year.

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MANAGEMENT/CLOSELY HELD SHARES 
Percentage of shares held by persons closely related to a company, as defined by the Securities and Exchange Commission. Part of these percentages often is included in Institutional Holdings--making the combined total of these percentages over 100. There is overlap as institutions sometimes acquire enough stock to be considered by the SEC to be closely allied to the company.  

MARGIN ACCOUNT (STOCKS) 
A leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock and, if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are federally regulated, but margin requirements and interest may vary among broker/dealers.  

MARGIN REQUIREMENT (OPTIONS) 
The amount of cash an uncovered (naked) option writer is required to deposit and maintain to cover his daily position valuation and reasonably foreseeable intra- day price changes.  

MARKET CAPITALIZATION  
The total dollar value of all outstanding shares. Computed as shares times current market price. It is a measure of corporate size.  

MARKET CYCLE 
The period between the 2 latest highs or lows of the S&P 500, showing net performance of a fund through both an up and a down market. A market cycle is complete when the S&P is 15 % below the highest point or 15 % above the lowest point (ending a down market). The dates of the last market cycle are: 12/04/87 to 10/11/90 (low to low).  

MARKET ORDER 
An order to buy or sell a stock at the going price.  

MARKET MAKER
The NASD member firms that use their own capital, research, retail and/or systems resources to represent stocks and compete with each other to buy and sell stocks they represent.  

MONEY MARKET FUND 
A mutual fund that invests only in short term securities, such as bankers' acceptances, commercial paper, repurchase agreements and government bills. The net asset value per share is maintained at $1.00. Such funds are not federally insured, although the portfolio may consist of guaranteed securities and/or the fund may have private insurance protection.  

MOVING AVERAGE 
Used in charts and technical analysis, the average of security or commodity prices constructed in a period as short as a few days or as long as several years and showing trends for the latest interval. As each new variable is included in calculating the average, the last variable of the series is deleted.  

MUTUAL FUND 
An open end investment company that pools investors' money to invest in a variety of stocks, bonds, or other securities. A mutual fund issues and redeems shares to meet demand, and the redemption value per share is the net asset value per share, less in some cases a redemption fee which represents a rear-end load. A closed end fund, often incorrectly called a mutual fund, is instead an investment trust. Both are investment companies regulated by the Investment Company Act of 1940. 

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NET ASSET VALUE (NAV) 
The value of a fund's investments. For a mutual fund, the net asset value per share usually represents the fund's market price, subject to a possible sales or redemption charge. For a closed end fund, the market price may vary significantly from the net asset value.  

NET INCOME 
The company's total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses  

NOISE 
Price and volume fluctuations that can confuse interpretation of market direction.  

NO LOAD MUTUAL FUND An open-end investment company, shares of which are sold without a sales charge. There can be other distribution charges, however, such as Article 12b-1 fees. A true "no load" fund will have neither a sales charge nor a distribution fee.  

NM 
Abbreviation for Not Meaningful.  

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OPENING PURCHASE 
A transaction in which the purchaser's intention is to create or increase a long position in a given series of options.  

OPENING SALE 
A transaction in which the seller's intention is to create or increase a short position in a given series of options.  

OPEN INTEREST 
The number of outstanding option contracts in the exchange market or in a particular class or series.  

OPTION 
Gives the buyer the right, but not the obligation, to buy or sell stock at a set price on or before a given date. Investors, not companies, issue options. Investors who purchase call options bet the stock will be worth more than the price set by the option (the strike price), plus the price they paid for the option itself. Buyers of put options bet the stock's price will go down below the price set by the option.  

OTHER CURRENT ASSETS 
Value of non-cash assets, including prepaid expenses and accounts receivable, due within 1 year.  

OTHER LONG TERM LIABILITIES 
value of leases, future employee benefits, deferred taxes and other obligations not requiring interest payments that must be paid over a period of more than 1 year.  

OUT OF THE MONEY 
A call option is out-of-the-money if the strike price is greater than the market price of the underlying security. A put option is out-of-the-money if the strike price is less than the market price of the underlying security.  

OVERBOUGHT\OVERSOLD INDICATOR 
An indicator that attempts to define when prices have moved too far and too fast in either direction and thus are vulnerable to reaction.

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PAYMENT DATE 
Date on which a declared stock dividend or a bond interest payment is scheduled to be made.  

PIVOT 
Price level established as being significant by market's failure to penetrate or as being significant when a sudden increase in volume accompanies the move through the price level.  

PREFERRED STOCK 
A security that shows ownership in a corporation and gives the holder a claim, prior to the claim of common stockholders, on earnings and also generally on assets in the event of liquidation. Most preferred stock pays a fixed dividend, stated in a dollar amount or as a percentage of par value. This stock does not usually carry voting rights.  

PREMIUM 
The price of an option contract, determined on the exchange, which the buyer of the option pays to the option writer for the rights to the option contract.  

PRICES 
Price of a share of common stock on the date shown. Highs and lows are based on the highest and lowest intraday trading price.  

PRICE/BOOK RATIO 
Compares a stock's market value to the value of total assets less total liabilities (book). Determined by dividing current price by common stockholders' equity per share (book value), adjusted for stock splits. Also called Market-to-Book.  

PRICE/EARNINGS RATIO 
Shows the "multiple" of earnings at which a stock sells. Determined by dividing current price by current earnings per share (adjusted for stock splits). Earnings per share for the P/E ratio is determined by dividing earnings for past 12 months by the number of common shares outstanding. Higher "multiple" means investors have higher expectations for future growth, and have bid up the stock's price.  

P/E RATIO EQUATION 
Assume XYZ Co sells for $25.50 per share and has earned $2.55 per share this year  
$25.50 = 10 times $2.55  
XYZ stock sells for 10 times earnings.  

PRICE/SALES RATIO 
Determined by dividing stock's current price by revenue per share (adjusted for stock splits). Revenue per share for the P/S ratio is determined by dividing revenue for past 12 months by number of shares outstanding.  

PROFIT MARGIN 
Indicator of profitability. Determined by dividing net income by revenue for the same 12-month period. Result is shown as a percentage.  

PROGRAM TRADING 
Trades based on signals from computer programs, usually entered directly from the trader's computer to the market's computer system and executed automatically.  

PROSPECTUS 
Formal written document to sell securities that describes the plan for a proposed business enterprise, or the facts concerning an existing one, that an investor needs to make an informed decision. Prospectuses are used by Mutual Funds to describe the fund objectives, risks and other essential information.  

PROXY 
Document intended to provide shareholders with information necessary to vote in an informed manner on matters to be brought up at a stockholders' meeting. Includes information on closely held shares. Shareholders can and often do give management their proxy, representing the right and responsibility to vote their shares as specified in the proxy statement.  

PUT OPTION 
An option contract that gives the holder the right to sell (or "put"), and places upon the writer the obligation to purchase, a specified number of shares of the underlying stock at the given strike price on or before the expiration date of the contract.  

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QUICK RATIO 
Indicator of a company's financial strength (or weakness). Calculated by taking current assets less inventories, divided by current liabilities. Also called Acid Test.   

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